If you have problems with collections and billing in your medical practice, know that it’s a common issue. One of the best ways to alleviate the issues you have, including revenue leakage, is to work with a revenue cycle management services company (RCM).
Before you do that, you might want to learn more about revenue leakage and how it’s affecting your practice.
The following are critical points to keep in mind.
What is Revenue Leakage?
Revenue leakage is a term that just means the loss of revenue. More specifically than that, revenue leakage is unintended or unnoticed loss.
Leaks can come from either expenditures or revenue, and with revenue leakage specifically, the reference is usually about either not billing customers or under-billing them.
Other issues that can lead to revenue leakage include negligence or errors, delays in payments, or mismanagement.
Common Sources of Revenue Leakage in Medical Practices
RCM is complex in medical businesses, and there are hundreds of ways a business can lose reimbursement. Then all these can add up, and while reimbursement rates are dropping, other costs are soaring.
The biggest sources of revenue loss and leakage in medical practices include the following:
- Issues with your billing staff: Regardless of how good your software is, if you have staff who aren’t using it properly, then you’re going to face revenue leakage and other likely issues. You could lose thousands of dollars a month because of sub-par staff or staff who aren’t well-trained.
- Problems with reporting: Your system might track payer denials, but maybe not the claims that aren’t paid or denied. Then a claim is gone from view until it shows up maybe 60 or 90 days later. With good practice management software, you might be able to avoid having these aging claims go out of view until much later.
- Front desk staff issues: If your front end is experiencing problems, it’s going to then flow throughout the entire organization. If, for example, the wrong insurance plan is included with a patient account, then there’s going to be a claim denial which in turn leads to revenue leakage.
- Not pursuing denied claims: It’s resource-intensive in terms of time and money to go after denied claims, so then it’s just not done. If it is done, it’s not done especially well. Claims that are denied and aren’t subsequently pursued can mean write-offs, and that is a source of revenue leakage.
- Low-quality software: Software can’t do everything for you, but the differences between good and low-quality software can mean big differences in revenue. If your software is outdated or not user-friendly, then the features aren’t going to be taken advantage of by the staff, therefore you’re not getting the full value of the software.
- Claims that aren’t billed: A missed charged means that you’re going to see a dip in your net profit.
Avoiding Revenue Leakage
Along with identifying specific issues, the following are some considerations to cut down on revenue leakage.
- You need to consider the quality of your contracts rather than your payers when you’re figuring out how well you’re doing with reimbursement. If your practice does rely primarily on government payers, it’s a challenge because they do provide lower reimbursements and you’re not able to negotiate those into terms that are more profitable. Having an RCM services partner is a good way to deal with this issue because they can negotiate contracts with terms that are going to maximize your practice profitability.
- Know where your strengths and weaknesses lie. Do an audit to figure out where you see the most revenue leakage because until you have a true baseline, you’re not going to know how to make improvements. For example, is your issue dealing with bad management of account collections?
- Are you using data analytics? Using the data of your practice is critical to make smart, numbers-driven, and strategic business decisions. If you don’t know what’s going on with accounts receivable, you’re never going to be able to have a true grasp of revenue leakage.
Overall, working with an RCM services company is going to be the best route to optimize your revenue cycle and cut leakage. You can deal with simpler and more complex problems, and you can maximize your reimbursements with a combination of both private and government payers. You can also make sure your contracts are profitable.
Then, with these benefits comes less waste, more efficiency, and full optimization of your resources and your staff.
