Healthcare Facility and Healthcare

Healthcare and Revenue Cycles

When it comes to the revenue cycle and receivables management, a healthcare organization faces unique challenges. These challenges include the fact that many clients (patients) cannot afford the care they are there to receive because of the extremely high cost of healthcare. Thus, they are either covered completely by insurance, covered partially, covered by the state (Medicaid or Medicare), or are self-payers or indigent patients (cannot pay at all and rely on financial assistance from the organization). The facility cannot deny care to patients so must be able to balance providing quality care with the need to maintain a functioning, financially stable facility (the facility after all does have its own costs). For that reason, a healthcare facility must seek to prevent denials of claims while effecting a clear and apparent process of billing for patients. Revenue cycle management must also be efficient so that billings do not pile up and cause the facility to be underfunded. Collections, whether through individuals or through insurance companies, are a major part of operating a healthcare organization. Handling these claims, making sure payment is processed and revenue is established is essential to any business but in healthcare the process can go on for years because it begins at the time that a patient sets an appointment and goes until the day the patient's account balance has been paid in full. The fact that this process can go for so long without being resolved is important because a healthcare facility must be able to tell which accounts are being paid, which are likely to go unpaid, and when revenue streams will be impactful. Without proper management of the revenue cycle, a healthcare facility could be completely wiped out.

2. Just-in-time (JIT) inventory systems can be used by healthcare providers, but they have their own advantages and disadvantages. While a perfect JIT system should not have any stock, in the healthcare world it is impossible to employ such a stockless system -- yet a healthcare firm can use a JIT system that does have a limited amount of stock in inventory. The great advantage of course is that the JIT system lowers a facility's costs (keeping stock can drain resources and space rather quickly as well as worker energy -- after all, someone has to move stock, store it, maintain it, etc.). The downside to the JIT system in a healthcare setting is that there is a service fee which distributors tack on for those using JIT; there is also the risk of running out of stock in something that is needed for a patient -- a major faux-pa for a clinic; lastly, JIT can cause facilities to become wholly dependent on one supplier, who could gradually raise the costs and make JIT no longer valuable in terms of savings. Suppliers are not always happy to store what the facility does not want to store -- but someone has to store it. So figuring this out in an affordable way for all parties is one of the major challenges for healthcare facilities.

3. As the ACA is having a big impact on healthcare in terms of reimbursements, the big revenue cycle activity that will be affected for revenue cycle managers will be collections (RevCycle Intelligence, 2016). With patient volumes increasing and reimbursement dwindling, providers are stuck holding the bag with margins disappearing. The healthcare world also has to focus on medical billing compliance in order to be in line with the ACA's role in reducing healthcare fraud. Thus, accounting is a major activity too that a revenue cycle manager now has to pay more attention to so as to comply with the federal legislation. With an increase in the number of Medicare reimbursements that are "flagged as improper payments" hospitals are having to appeal many more claims than usual, which is very costly too. Budgeting is now a major issue and one that can create problems for healthcare providers as costs increase and no one wishes to cover them.