In today’s rapidly evolving health care landscape, the economics of care delivery are under constant pressure. Consumer-driven expectations, technological advancements, regulatory changes and the shift toward value-based care are all reshaping how health care organizations operate. At the heart of these challenges lies Revenue Cycle Management (RCM) -- a critical function that directly impacts the financial stability and growth of any health care organization. Without an effective RCM strategy, organizations risk increased operational costs, reduced cash flow and a decline in overall financial performance.
The past three years have introduced unprecedented changes to health care, leading to mind-boggling impacts that health care organizations -- of a range of sizes -- are encountering on a day-to-basis.
Consider these staggering statistics:
• 30% increase in claim denials, with the final denial rate for inpatient claims in 2023 more than 50% higher than in 2021
• 33% surge in Accounts Receivable (AR) past 90 days
• 25% increase in self-pay patients
• 80% net collection rate -- falling short of the industry’s desired benchmarks
These figures reflect the growing complexity of managing revenue cycles in health care. Drawing from our work with a wide range of health care organizations, here are three essential steps every organization must take to optimize RCM performance and navigate today’s financial challenges.
#1 Leverage RCM maturity models to assess and improve performance Understanding where your organization stands in its RCM journey is critical to improving performance. RCM maturity models provide a structured framework to assess your current revenue cycle capabilities across human capital, processes, technology, performance insights, governance and services delivery structure. By critically reviewing the existing operating model through benchmarking and establishing a desired target operating model, organizations can define prioritized initiatives that will yield desired outcomes and a return on investment. Not every organization needs to be at the top end of the maturity curve. What’s important is to know where you stand with your RCM operating model—it is about your business and the challenges your organization is facing.
Those organizations at the foundational level of RCM maturity have significant transformational opportunities, while those that are optimizing maturity should focus on continuous improvement. By benchmarking against industry standards, organizations can identify gaps, prioritize initiatives and tailor strategies to their unique challenges.
