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Revenue cycle management or RCM is one of the most crucial factors in running a successful medical practice.

Every healthcare organization needs strict control over the revenue flow. RCM lets you be in the power of your medical practice revenue. 

Let’s dive into an in-depth analysis of RCM, its components, benefits, challenges, and what the future holds.

What Is Revenue Cycle and Its Management?

A revenue cycle means all the administrative and clinical functions essential for collecting and managing patient service revenue. Usually, it includes registration and scheduling, data verification, coding, and collecting payments. 

Apart from these, tasks like claim submission to the insurance companies, payment follow-up, review utilization, and remittance processing are also a part. This system is used in the healthcare industry, while logistics and manufacturing companies may also use it.

Revenue cycle management (RCM) refers to the financial process used by healthcare facilities to track various stages of patient care. 

To do so, it unifies the clinical and commercial aspects of healthcare with the assistance of administrative data, including a patient’s name, demography, other personal data, treatment received, and insurance provider name.

Benefits of the Revenue Cycle Management

#1. RCM implementation helps healthcare providers identify the place of error that occurred within the revenue cycle and locate the preventable technical issues.

#2. RCM decreases the administrative workload of a hospital by preventing claim denials and simplifies the interaction between the patients and healthcare personnel, leading to a satisfactory experience.

#3. A sophisticated RCM system enables you to prevent healthcare fraud and abuse. Acquiring accurate billing and facilitating proper coding stops both intentional and unintentional frauds.

#4. Patient dishonesty can be responsible for healthcare fraud that might take place due to two reasons. Either they engage in medical identity theft or provide false information. Both these can be avoided during the pre-authorization phase with the help of RCM.

#5. Finally, RCM benefits the healthcare providers by increasing their overall healthcare facility revenue by helping them avoid claim denials, technical errors, fraud investigations, and delayed reimbursements.

Major Parts of the Revenue Cycle Management

#1. First of all, a patient has to go through the scheduling. Here, hospitals collect demographic and insurance data of the patients that can be used later.

#2. Online verification of insurance eligibility through secure channels is another stage of RCM that is often done next. Hospitals do it to verify if someone is eligible for a particular benefit. 

#3. Coding is another vital part of revenue cycle management as it is needed for payments, physician reimbursement, benchmarking measurement, quality assessment, and general medical data collection. Hospitals code the patients properly for successful revenue generation.

#4. To ensure direct and effortless reimbursement, hospitals must file and submit the claims properly. RCM personnel has to file an error-free claim to ensure the payer reimburses the money in time. 

#5. Sometimes, the health plan does not cover all the medical services a patient availed. The professionals involved in RCM need to follow up with the Insurance Company, make necessary adjustments, and file the errors during the billing.

#6. Denial management is an integral part of RCM. During any claim rejection, RCM professionals have to intervene to resolve the coding errors and resubmit the claims on time.

How Does the RCM Process Function?

The revenue cycle management system works through the following steps:


For any revenue cycle, scheduling plays a vital part. A streamlined scheduling process that includes email and SMS notifications will generate revenue for the healthcare providers while offering quality services.  

The scheduling should be flexible and focused on the patient’s convenience. Otherwise, there will be high no-shows and significantly negative physician referrals.

Patient Pre-Registration

Pre-registration ensures that the health care provider, the hospital, can deliver a seamless experience to its patients. During this process, the RCM software operator enters vital data like name, address, payment mode, insurer’s name, and medical history.  

The pre-registration phase helps the hospital gauge the patient’s liquidity capacity.

Patient Registration

During this process, all the necessary data on a patient is collected. In case of any error in the form filled up by a patient, the staff immediately asks them to fix it. Without fixing it, the hospitals might suffer long delays while trying to get compensation from payers.

Capture and Charge Entry

At this phase of medical billing, healthcare providers document the services they would offer the patients and then send the fees to the insurance companies. This step, also known as revenue integrity, is essential from the perspective of revenue cycle management, as this ensures that hospitals receive total compensation.

Utilization Management

Next, the health insurance companies inspect the request made by the hospitals for medical treatment. This review aims to confirm whether the insurer provides coverage for the requested medical services. Moreover, this step helps the hospitals to evaluate if the suggested treatment is suitable.

Medical Coding

A health care center provides thousands of services. Hence, sending insurance claim forms in written descriptions is impossible. Instead, medical billing professionals use alphanumerical codes to represent various procedures, lab tests, e-prescribing, etc. 

Since the coding relates directly to claim acceptance, the RCM operator must take extra precautions.

Eligibility and Benefits Verification

Delayed payments, non-payment, and errors during billing are directly related to benefits and eligibility verification. At the time of pre-registration, the revenue cycle management executive should verify the insurance policy. The operator should ask the patient to go with cash payments if it is invalid.

Claim Submission

In this phase, the billing team of a hospital submits payment claims to the insurer of sponsored patients. Any mistake in the claim will result in less than actual invoice payment, denial of the bill, extensive scrutiny, etc. 

Denial Management

It is the phase when insurance companies either accept or reject the received claims. The accounts staff analyzes the insurance provider’s or the payer’s payment to check for approval or discrepancy. 

If there is a mistake, the claim might be redirected to the clearinghouse for additional assessment and clearance. 

Insurance Follow-up

American Medical Association (AMA) says that the average claim submission and processing accuracy is only 80%. Hospitals must employ additional staff to scrutinize and follow up with insurance providers to deal with non-payments, underpayments, and payment denials.  

Patient Billing and Collections

Once the patient completes their treatments, a statement is prepared based on the calculation of patient balances and obligations. In case of any outstanding accounts, careful tracking is essential. Since the number of high-deductible health programs is growing, patient payments are becoming more crucial for hospitals’ earnings.

Cash Posting

The hospital management and accounting team can only know about the efficiency of the hospital’s medical billing system when the cash reflects in the books. The posting system could be automated and manual. Large hospitals use automated electronic cash posting to avoid human errors.


By reporting, hospitals can stay on track by avoiding costly mistakes. However, organizations should have quality reporting tools in their RCM. These applications embedded in the billing system can quickly identify the common mistakes affecting revenue in the long run. 

Furthermore, it facilitates the efficient functioning of the revenue cycle management process.

Improving Enterprise’s Efficiency With RCM

Accurate Data Collection

As you start using the RCM system in your medical facility, the data collection starts during scheduling. The same data can be used in the following healthcare phases: registration, billing, and payment.

Avoid Claims Denials

Using RCM will help reduce the number of denied claims. As this system can pinpoint the root cause and amounts denied, hospitals can easily find the denial rates and patterns for review and compliance.

Utilizing EHR Technology

EHR system promotes accurate data processing and streamlines additional processes such as coding and claims. Revenue cycle management includes using EHR; thus, professionals and hospitals can enjoy quick patient data processing. 

Enforce the ICD-11 Guidelines

ICD 11, the International Classification of Diseases by WHO, came into effect in January 2022. RCM will help you adopt this seamlessly into your system and reduce the scope of error.

Major Challenges of RCM Process

#1. To adopt the RCM system into your organization correctly, your employees must undergo rigorous training with a steep learning curve. 

#2. While you can collect patient data through the revenue management system, it is useless unless you analyze it. Additionally, you need a trained data analyst for that purpose.

#3. Following HIPAA compliance standards is necessary for hospitals that want to implement the RCM strategy. Otherwise, they can fall prey to fraud and abuse lawsuits.

#4. A big portion of hospital revenue comes from direct patient payments exclusive to insurance. Collecting patient balance often becomes a time taking process due to various reasons. However, many hospitals implement up-front payment plans and policies for quick payment.

#5. For RCM, hospitals need a technology-based robust infrastructure for billing and other processes. It also requires integration with EHR and facility to manage registration, billing, payments, and reporting under one umbrella.

#6. Once you are a part of an RCM system, you must follow up on certain things regularly. Otherwise, collection letters, appeals, and payment plans will not be answered promptly. 

Factors Affecting Revenue Cycle Management

RCM Software

Using automated RCM software streamlines the entire process and reduces the odds of errors. Healthcare providers can deploy dedicated RCM systems to bring all steps under one roof — from creating electronic health records (EHR) to storing medical bills.

Online Systems

With web-based services, hospitals can seamlessly improve billing and payment processes while catering to other patient requirements. Using online RCM means checking insurance eligibility verification in real-time, reducing denial risks, and having better patient-provider communication.

Updated Regulations

Healthcare industry regulations evolve with time to reflect updated government and international policies. Hence, healthcare providers must also be flexible to keep pace with it. Thus, they can provide the best patient care and smoothly collect revenue.  

Internal and External Factors

Apart from the abovementioned points, various internal and external factors always affect revenue collection. While it is possible to control the internal factor such as patient volume and service fees, managing external dynamics like insurance claim review can be difficult.

Best Practices for Revenue Cycle Management


Staff should check a patient’s insurance and other benefits eligibility at this stage. Discussing the payment method and obtaining prior authorization for specific procedures is also essential.

Claim Submission

Accurate coding through RCM software should be done before submitting claims to the patients for rendered services. Also, look for coding inconsistencies to reduce the chances of claims denial.


Use RCM software to generate an accurate bill and offer an electronic payment mode to the patient.

Denial Management

The RCM team must review all unprocessed claims. It should give out some patterns that you can avoid in the future. 


Designated staff must consistently monitor the pending payments of both insurer and patient. To ease up the collection burden of the patient, hospitals must offer convenient payment options and set clear expectations beforehand.


Staff needs to generate personalized reports on KPIs, financial data, and other management information to help hospitals resolve revenue problems and meet their goals.

Revenue Cycle Management: the Future

According to Becker’s Healthcare’s recent eBook review, Healthcare IT and CorroHealth reported that by 2025, RCM will no longer stay as a back office function. Instead, it will become integral to the health care service delivery sector.

The eBook also suggests the following advancements in the RCM process or tools: 

  • Higher rate of artificial intelligence (AI) adoption
  • More hospitals will replace manual authorizations with electronic approvals
  • Integration of new payment methods
  • RCM tool developers will earn dividends from investments like AI, adjusted processes, and talented staff

Another report from Allied Market Research suggests that the market cap of revenue cycle management could go up to $329.71 billion by 2030.


A revenue cycle management system enables healthcare providers to offer a holistic service to their patients while not losing on their revenue. It also paves the way for smooth communication between the patients and the providers.

This article discussed everything you need to know about RCM so that you can make an informed decision before choosing any RCM tool for your organization. Additionally, knowing about healthcare CRM solutions for hospitals will also be beneficial to you.

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  • Tamal Das
    Tamal is a freelance writer at Geekflare. He has an MS in Science and has worked at reputable IT consultancy companies to gain hands-on experience with IT technologies and business management. Now, he writes content on popular B2B and B2C IT…

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