Healthcare Revenue Cycle Management: Challenges & Solutions

Healthy and consistent revenue cycle management (RCM) is the financial backbone of healthcare organizations, ensuring providers are paid for the care they deliver. Maintaining RCM integrity is increasingly challenging as providers face obstacles at every stage of the cycle.

‍Healthcare software & solutions are already transforming the revenue cycle for many organizations. Below are some common RCM challenges and how hospitals have overcome them with technology-based solutions.

Understanding the Revenue Cycle Management Process in Healthcare

Healthcare revenue cycle management involves all the administrative and clinical functions that contribute to capturing, managing, and collecting patient service revenue. The cycle begins with scheduling and registration, moves through insurance verification, treatment, documentation, coding, and billing, and ends with collections. Throughout it all, providers must understand and maintain compliance with payer requirements, federal and state regulations, and industry best practices to avoid uncompensated care.

Even minor breakdowns (or “leaks”) can cause significant revenue loss. With razor-thin margins, many hospitals and providers can't afford inefficiencies. That’s why it's critical to identify and address these common RCM pitfalls.

Delayed Payments from Patients

The Challenge

More than 40% of Americans report having medical debt, and 25% say they have no way to pay it. There are many reasons for medical debt, including:

• Increasingly higher deductibles lead to higher out-of-pocket costs.
• An increase in self-pay patients from Medicaid redetermination, expected to increase given the recent passage of the One Big Beautiful Bill Act.
• Patients receiving inaccurate cost estimates before treatment, or no estimate at all.

Whatever the reason, delayed payments disrupt cash flow and operations. A lack of financial stability delays growth initiatives and can negatively impact patient care. 

The Solution

There are many ways to improve patient collections, including switching to digital payment options for patients. According to Experian Health data, 60% of patients say they prefer digital access options from their provider. This could come in the form of a website, patient portal or app that allows patients to book appointments, fill out digital paperwork, pay bills online with multiple options and more.

Software-based options make patients more likely to engage in the payment process as it puts them in control. Digital platforms also keep records of billing communications, deliver payment terms to patients and automate payment reminders, none of which requires a significant manual lift from staff.

Claim Denials & Rejections

The Challenge

A 2024 survey found that 41% of healthcare organizations consider claim denials a top challenge in RCM. Claim denials are on the rise, increasing by 16% between 2018 and 2024.

‍Denials often result from coding errors, incorrect patient information, incomplete documentation or noncompliance with regulatory requirements. Each denial requires staff time spent reworking and resubmitting the claim, with as many as 60% never resubmitted. 

The Solution

Automated claims management solutions can scrub claims to ensure accuracy the first time around, leading to clean claims submission. These solutions can also help with resubmission by prioritizing denials with the highest chance of reimbursement.

Furthermore, software solutions provide analytics services to identify the root cause of denials so problems can be addressed and avoided in the future. 

Complexity of Regulations & Compliance

The Challenge

Providers must comply with several sources of regulatory standards:

• Federal legislation (i.e., No Surprises Act) 
• State legislation, which especially impacts Medicaid
• Changing commercial payer requirements
• Regulatory organizations (i.e., Council of Health Insurance’s Minimum Data Set requirements)

Noncompliance with these regulatory bodies can have negative consequences, including hefty fines.

The Solution

The solution is simple: Good software is always up to date with these changing policies without intervention from staff. It’s essential to train staff and keep them up-to-date on new policies, but automatic updates can prevent compliance errors. 

Labor Shortage & Training Gaps

The Challenge

Hospitals often struggle to hire and keep qualified RCM staff, especially specialists. One survey found that 63% of providers report RCM staffing shortages. Medical coders are reportedly the most difficult to hire (34% of respondents), followed by billing staff and schedulers. 

Even after staff are hired and trained, the hospital must retain talented staff members in positions that often see high turnover.

The Solution

Healthcare software solutions help providers do more with less, allowing staff to work smarter even with fewer people and resources available. It prevents overworking existing employees, promoting satisfaction and a healthy workplace. 

With automation and AI, staff no longer have to engage in hefty manual labor or tiresome and repetitive tasks and avoid workplace frustration from too many human errors. Every feature and tool discussed in this article makes life easier for employees, ultimately helping to shrink labor shortages and training gaps. 

Lack of Visibility into Revenue

The Challenge

Many providers lack adequate analytics for the RCM process. Critical KPIs and trends around claims submission, denials, and revenue gaps make it difficult to make improvements or major decisions. Lack of insight also prevents providers from forecasting future cash flow, disrupting business operations and financial planning.

The Solution

Good software offers robust, customizable reporting and analytics with real-time insights. An at-a-glance dashboard allows providers to stay on top of things without getting bogged down while having the option to generate more in-depth reports when needed. Software can also automatically generate reports regularly to track KPIs, identify trends and assist in making better decisions for revenue cycle health. 

Finding the Right Healthcare Software Solution

Revenue cycle management is a complex but critical function of any healthcare organization. Each revenue cycle stage comes with its own challenges, but the right software solution can make a significant difference. 

At Office Ally, we offer integrated healthcare revenue cycle management solutions that simplify each part of the revenue cycle. Our suite of tools helps streamline claims processing, automates patient communications, provides real-time analytics and more. 

Want to strengthen your revenue cycle management? Contact us to learn how Office Ally can help you improve efficiency, increase revenue and enhance the patient experience.