What causes most organizations to close following an unexpected economic disruption? Usually it is cash flow. Many organizations don’t have enough cash on hand—or access to enough working capital—to survive a temporary revenue downturn and/or the costs of restructuring their business models and bringing them to profitability.
That is why a cash management plan is an essential part of any crisis management program (see Strategy In Uncertain Times: Planning Resources For The New Normal). There are a few key elements to cash management— negotiating extended payments to vendors and more speedy payments from customers where possible, streamlining operations to reduce costs, discontinuing unprofitable service lines, and improving the speed of payments. For most provider organizations, the last item is their revenue cycle management (RCM) function. Under the best circumstances, an organization’s RCM functions are working well and only need a tweak for any crisis-related issues. But if RCM functions aren’t working well—and billing and collections are not producing maximum revenue—an emergency that interrupts cash flow should be a driver for getting those processes operating optimally.
My colleague and OPEN MINDS senior associate Joe Naughton-Travers is our resident RCM expert and he always asks a management team four questions to determine how their RCM systems are working:
- Are you collecting 98% or more of net revenues?
- Can you detail your bad debt losses year-to-date, by reason, at a moment’s notice?
- Do you have an RCM team that meets at least monthly (preferably weekly) to review claims held, the aged trial balance by payer, write-offs, and bad debt reasons – and the days in accounts receivable?
- Are you billing claims at least on a weekly basis (preferably daily)?
If the answer to any of these questions is no, now is the time to get “best practices” for RCM in place. Those best practices were the focus of a presentation, Rethinking Revenue Cycle Management: How To Optimize Operations For A Value-Driven World, that Mr. Naughton-Travers conducted with Vanessa R. Lane, MBA, vice president of revenue cycle management/data analytics, Grafton Integrated Health, at the 2020 OPEN MINDS Performance Management Institute. They spoke about the four phases of RCM and how to optimize them for better payment collections.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
Source: Openminds