Achieving financial resiliency through innovative revenue cycle practices

A perfect storm of regulatory, economic, and demographic headwinds is taking its toll on many small-town hospitals, which lack the resources to meet their communities' health care needs. 

The passage of the One Big Beautiful Bill Act (OBBBA) added new challenges for these facilities. Provisions of the OBBBA call for spending cuts and eligibility restrictions on federally subsidized health care programs.

The legislation will inevitably have its greatest impact on rural hospitals, which rely heavily on these programs to stay financially afloat. It’s expected to result in more uninsured patients, increased uncompensated care, and lower Medicaid reimbursements.

OBBA’s passage comes at a time when many small hospitals struggle to retain critical services for their communities. According to the Chartis Center for Rural Health, 46 percent of rural hospitals are operating at a loss, while more than 430 are deemed vulnerable to closure.

Overcoming these challenges requires providers to eliminate revenue cycle inefficiencies that threaten performance and stability.

A viable solution to bolster revenue cycle performance

To help mitigate OBBA’s impact, providers must transform their revenue cycle management (RCM) systems and processes from back-office expenses into strategic drivers of financial strength and long-term sustainability. Doing so helps expedite payments, reduce denials, minimize costs, and foster resiliency.

Rural hospitals stand to benefit the most from maximizing RCM. They are more prone to inefficient billing and collection practices than their larger counterparts, which typically have more resources to withstand the demands of today’s challenging health care environment. In rural health care, the problem largely stems from facilities lacking experienced personnel and the technology needed to optimize the revenue cycle.    

Inefficient revenue cycle practices can lead to a 3 to 5 percent annual loss in net patient revenue, a significant amount for many small hospitals and health systems challenged by razor-thin margins.

Transforming the revenue cycle into workable solutions  

Hospitals can encounter problems at any stage of the revenue cycle. This process consists of the front end, middle, and back end, each of which is crucial for accelerating payments for services provided.

Optimizing front-end revenue capture strategies significantly reduces denial volume. Mid-cycle improvements bolster efficiency, reducing the number of staff needed to handle this part of the revenue cycle. On the back end, experienced personnel and advanced technology can improve the recovery of aging receivables while reducing outsourced labor costs.

Approaching the revenue cycle as a tactical driver allows CFOs to optimize revenue capture and efficiency. To be successful, RCM solutions need to:

• Resolve root causes: Analyze billing and payment patterns to identify issues like registration errors or coding gaps. Target these activities for process improvement and training.
• Strengthen revenue integrity and charge capture: Maintain the latest charge master reviews and ensure clinical documentation supports accurate billing to minimize revenue leakage and compliance risk.
• Focus support where it’s needed most: Rather than addressing the entire revenue cycle at once, focus on specific pain points like denial resolution or contract modeling for focused impact.
• Invest in staff development: Train registration, coding, and billing teams in error-prevention best practices to enhance accuracy and save time.
• Establish operational dashboards: Use key performance indicators such as denial rate, clean claim percentage, discharge not final billed days, and charge capture rate to monitor progress and guide interventions.
  
  

RCM partner checklist

Selecting the right RCM partner or vendor is vital to achieving your revenue cycle optimization goals. Here are some criteria to consider:    

• Define mission and goal alignment
• Develop a strategy to improve an organization’s financial approach with tailored solutions to its unique structure, payer mix, and technology
• Number of years or dedicated experience in this space
• Price transparency
• Scalable offerings that match needs (rather than only one option of comprehensive outsourcing with unessential technologies and features)
• Determine whether the partner uses on-shore or off-shore contractors and how that may matter to your hospital (off-shore may not be suitable for hospitals in rural markets that like close-knit, personable resources)
• ROI for accelerated cash flow and improved overall financial performance
• Vendor versus partner: dedicated support and communication, an extension of the hospital team
• Electronic health record compatibility

Get the RCM help you need 

CHC Consulting, the consulting arm of Community Hospital Corporation (CHC), offers an innovative solution to challenges impacting hospitals’ financial condition. CHC’s Options RCM, a newly launched service, provides a highly effective and efficient way to improve the revenue cycle through advanced technology, proven processes, and access to experienced personnel.

NRHA adapted the above piece from CHC Consulting, a trusted NRHA partner, for publication within the Association’s Rural Health Voices blog.
 

David Yackell is vice president of hospital financial operations for Community Hospital Corporation. With more than 30 years of experience, he provides expertise in financial reporting, budgeting, revenue cycle performance metrics, forecasting and analysis, and productivity system implementation to help hospitals achieve and maintain the best financial performance.