Empower Your Practice

Journal for Practice Managers

Healthcare Revenue Cycle Management: How to Build a Competent Process

Revenue cycle management is one of the most critical factors for a successful medical practice and patient care. Every healthcare organization needs strict control over the flow of money.

In this article, we'll explore RCM in greater detail, its components, advantages, issues, and what lies ahead.

What Is The Revenue Cycle Management Process?

The revenue cycle means all administrative and clinical functions necessary to collect and manage patient service revenue. This usually includes registration and planning, data validation, coding and collection of payments.

Learn how to simplify your practice workflow and free up more time for patients with Medesk.

Open the detailed description >>

In addition, tasks such as claim submission to insurance companies, the billing process, and usage reviews are also included. This system is used in the healthcare industry, but it can also be used by logistics and manufacturing companies.

Revenue cycle management (RCM) refers to the financial process used by medical institutions to track the various stages of patient treatment. To do this, it combines the clinical and commercial aspects of healthcare system with administrative data. This includes patient information, demographic data, other personal data, the treatment received and the name of the insurance company.

Benefits of Revenue Cycle Management

Compared to other methods of income management, revenue cycle management has numerous advantages. Let’s discuss them in more detail.

  1. The implementation of RCM helps healthcare providers identify the location of an error that occurred in the revenue cycle and find technical and front-end problems that can be prevented.
  2. RCM reduces the administrative burden of the hospital, preventing denials to meet requirements and simplifies the interaction between patients and medical staff, which ensures a satisfactory patient experience.
  3. The sophisticated system helps prevent fraud and abuse in the healthcare sector. Getting accurate invoices and promoting correct coding stops both intentional and unintentional fraud.
  4. Dishonesty of the patient can be the cause of fraud in the field of healthcare, which can occur for two reasons. Either they are involved in the theft of medical data, or they provide false information. Both can be avoided at the pre-registration stage of the cycle.
  5. Finally, the system benefits clinicians by increasing the total revenue of their healthcare facilities, helping them avoid claims denials, technical errors, fraud investigations and delays in reimbursement.

Medesk helps automate scheduling and record-keeping, allowing you to recreate an individual approach to each patient, providing them with maximum attention.

Learn more >>

The Main Parts of Revenue Cycle Management

Revenue cycle management

First, the patient must go through the scheduling process. Here, hospitals collect demographic and insurance data of patients, which can be used later. Next, insurance eligibility is verified online through secure channels. Hospitals do this to check whether someone is eligible for a certain benefit.

Coding is another important part of cycle management. This is because it is necessary for cash flow and payments, reimbursement to doctors, comparative analysis, quality assessment and collection of general medical data. Hospitals properly encode patients for successful revenue generation.

In order to provide direct and easy reimbursement, hospitals must perform claim processing properly. So that the patient's account can be credited on time, staff must accurately file a claim.

Sometimes the treatment plan is much more extensive than insurance coverage. In this case, specialists dealing with revenue should contact the insurance company, make the necessary adjustments and report errors during billing.

Denial management is an integral part of the patient revenue cycle. Whenever coding errors have been identified, specialists should intervene and resubmit the application as soon as possible.

How Does The RCM Process Work?

The revenue cycle management system consists of the following stages:


For any revenue cycle, planning plays a vital role. An optimized planning process, including email and SMS notifications, will generate revenue for healthcare providers by offering quality services.

Discover more about the essential features of Medesk and claim your free access today!

Explore now >>

The schedule should be flexible and focus on the convenience of the patient. Otherwise, there will be a lot of no-shows and minimal follow-ups.

Pre-registration of patients

Through pre-registration, clinicians are able to provide unhindered service to their patients. During this process, the software operator enters pertinent data such as name, address, payment method, insurance information and medical history. This stage helps the hospital assess the patient's ability to pay.

Patient registration

During this process, all the necessary data about the patient is collected. In case of any error in the questionnaire filled out by the patient, the staff immediately asks him to correct it. If this is not corrected, hospitals may face long delays when trying to get compensation from payers.

Charge capture

At this stage of billing for medical services, medical institutions document the services they will offer to patients and then send the payment to insurance companies. This step is critical from an income cycle management perspective because it ensures that hospitals receive full compensation.

Usage management

Then, health insurance companies check hospitals' requests for treatment. This check is aimed at confirming whether the insurer provides coverage for the requested medical services. In addition, this step helps hospitals assess whether the proposed treatment is appropriate.

Medical coding

The medical center provides thousands of services. Therefore, it is not possible to send insurance compensation forms with written descriptions. Instead, medical billing professionals use alphanumeric codes to designate various procedures, laboratory tests, electronic prescriptions, etc.

Since coding is directly related to the acceptance of the claim, the operator must take additional precautions.

Eligibility and verification

Payment delays, accounts receivables and billing errors are directly related to receiving benefits and checking compliance with requirements. During pre-registration, the director should check the insurance policy. The operator should ask the patient to continue with cash payments if it is invalid.

Claim Submission

At this stage, the hospital billing group submits applications for payment to the insurer of sponsored patients. Any mistake in the claim will lead to an understated bill payment, refusal to issue an invoice, thorough verification, etc.

Denial Management

Insurance companies either accept or reject claims at this point. An accounting staff member analyzes the insurance company or payer's payment for approval or non-compliance.

In case of an error, the claim can be redirected to the information center for additional evaluation and resolution.


The American Medical Association says that the average accuracy of filing and processing claims is only 80%. Hospitals should hire additional staff to thoroughly check and track cases of non-payments, underpayments and refusals of payment.

Patient billing

After the patient completes treatment, a report is compiled based on the calculation of the patient's balances and liabilities. In the case of outstanding invoices, careful tracking is necessary. As the number of high-deductible programs grows, patient payments are becoming increasingly important to hospital revenues.

Learn how to simplify your practice workflow and free up more time for patients with Medesk.

Open the detailed description >>

Cash transaction

The hospital management and the accounting team can only know about the effectiveness of the hospital billing system for medical services when cash is reflected in the books. Automated systems are superior to manual ones. Many hospitals use practice management software to avoid errors related to the human factor.


By providing reports, hospitals can stay on track, avoiding costly mistakes. However, organizations should have quality reporting tools in their electronic systems. These applications, embedded in the billing system, can quickly identify common errors that affect income in the long run.

In addition, it contributes to the effective optimization of the revenue cycle management process.

Optimization of the revenue cycle management process

Disadvantages of the RCM Process

But of course, there are some disadvantages worthy of mention.

  1. To properly implement the process in your organization, your employees must undergo thorough training with a rigorous course of study.
  2. Although you can collect patient data through a management system, it is useless if you don't analyze it. Also, you need a trained data analyst or coder for this purpose.
  3. Compliance with HIPAA standards is necessary for hospitals that want to implement this strategy. Otherwise, they may become the victim of fraud and abuse lawsuits.
  4. Most of the hospital's income comes from direct payments to patients, excluding insurance. Collecting a patient's balance often takes a long time for various reasons. However, many hospitals are implementing upfront payment plans and a fast payment policy.
  5. For RCM, hospitals need a reliable technological infrastructure for billing and other processes. It also requires integration with EHR and a facility to manage registration, billing, payments and reporting under one roof.
  6. Once you become part of the RCM system, you should regularly monitor some things. Otherwise, letters, appeals, and payment plans will not be promptly answered.

Revenue Cycle Management: The Future

According to Becker Healthcare's recent e-book review, Healthcare IT and CorroHealth have reported that by 2025, RCM will no longer serve as a back office. Instead, it will become an integral part of the health services sector.

The e-book also offers the following improvements to the process or tools:

  • Higher level of artificial intelligence implementation
  • More and more hospitals will replace manual authorization with electronic ones
  • Integration of updated payment methods
  • Developers of RCM tools will receive dividends from investments such as artificial intelligence, improved processes and talented staff.

Another report from PR Newswire suggests that the market capitalization of revenue cycle management could grow to $329.71 billion by 2030.

Final thoughts

In addition to offering comprehensive health care services to their patients, revenue cycle management systems assist healthcare providers in ensuring that they keep all of their revenue. Patients and providers can also communicate seamlessly through this system.

You need to understand everything about RCM before choosing it for your organization. In addition, it will be useful for you to know about CRM solutions for hospitals in the healthcare sector.

Should You Charge Your Patient’s a No-Show Fee? Pros & Cons

Wondering whether or not to charge a doctor’s office no-show fee? Here are the pros & cons to help you decide.

6 Top Medical Practice Management Software For Your Practice in 2024

Explore top practice management software for 2024. Enhance efficiency and patient care with leading solutions: Medesk, Jane, WriteUpp, and more.

How to Start a Physical Therapy Clinic in 2024 [10 Easy Steps]

Thinking of starting a physical therapy clinic? With our comprehensive step-by-step guide, opening a physical therapy clinic has never been easier!