The Basics of Revenue Cycle Management

Hospitals and health systems use the healthcare revenue cycle to manage administrative and clinical data. It is a complex process involving data from multiple departments of the hospital. Ensuring accurate data is vital to successful management.

Revenue cycle management steps involve executing all functions contributing to the management, capture and patient service data collection. It encompasses the entire span of a patient’s account from registration to bill payment.


Deciding how to handle your processing is the first step to the cycle.


This step is crucial in the revenue cycle because it can potentially provide financial benefits to both parties. It saves time filling out the forms in the waiting room, enabling them to see the doctor more quickly. It also helps them to assess their out-of-pocket costs ahead of time. Patients are more likely to pay bills on time when there are no surprise costs. Pre-registration streamlines the process and increases patient satisfaction.


Checking eligibility and benefits can be a rather time-consuming process. Medical office software that includes automatic checking of patient eligibility via the internet can speed up the work involved.


The next step is the pre-authorization of each patient. A health insurer or plan decides that a prescription, procedure or service is medically necessary. Pre-authorization does not necessarily mean the insurer will cover the cost. Patients and providers must verify coverage.


Codes translate written descriptions of procedures and services into numeric or alphanumeric codes. Medical billers use these codes to file and create insurance claims and bills for patients.


Capturing the bill’s service charges and submitting them to the insurance provider is crucial in ensuring that hospitals get fully reimbursed by the payers. Correctly submitting claims for the services provided to patients determine insurance payments. Practice management software can submit these automatically and detect mistakes. Having control over the claims process and finding errors accelerates cash flow to the healthcare facility.


Claims review confirms that the plan provides coverage for the provided medical services. Facilities receive payments after the insurance companies review the submitted claims.

Patient Collections

This process involves pursuing payment for outstanding balances. Hospitals must present accurate pricing because patients will be reluctant to pay a higher bill than expected.


Detailed reports are vital to medical facilities. Reports must include management information, financial data and key performance indicators to ensure the practice meets benchmarks.

The healthcare facility’s responsibility is to have accurate data and a clear communication path that ensures the revenue cycle’s proper maintenance.