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Contract negotiations benefit the revenue cycle because they allow hospitals to identify which areas they want to improve.
Fremont, CA: We live in a rapidly changing digital world where data is shared from person to person across various networks every second. As a result of this shift, businesses have access to the most up-to-date technology not only to serve their customers directly but also to enable their own employees to improve the financial performance of their company.
And the healthcare industry is no exception.
In order to provide high-quality patient care, hospitals and health systems of all sizes are constantly forced to manage massive amounts of data.
Because each patient has a unique medical history and treatment plan, hospitals need to focus on individual quality of care in order to prevent future health complications.
Below listed are key benefits of healthcare revenue cycle management:
Reducing Bad Debt
This is especially true for hospitals that want to provide their patients with transparent pricing, regardless of the procedure. Accurate price estimates make it much easier for patients to know their upfront costs ahead of time, which not only demonstrates hospitals' good faith but also helps providers receive payment sooner, thereby reducing bad debt.
This bad debt is typically caused by patients who have yet to pay their bills, forcing hospitals to compensate for the loss until the patient can pay the bill in full.
Increasing patients' understanding of the financial portion of their bill not only results in fewer surprise bills but also has the potential to increase competition in the local market, lowering overall healthcare costs.
Negotiating Favorable Payer Contracts
Contract negotiations benefit the revenue cycle because they allow hospitals to identify which areas they want to improve. For example, hospitals may notice that their patients are paying more than the allowable amount due to high deductible plans, causing a shift in negotiation strategy with the payer.
Taking these factors into account, contract negotiations enable hospitals to negotiate more favorable contracts, resulting in higher reimbursement rates for the hospitals.
However, with so many contracts in place with multiple insurance companies/payers (both governmental and commercial), managing all of this data can be the most difficult challenge that providers face when attempting to maintain a consistent level of data accuracy.
As a result, many hospitals and health systems have evolved to implement software that can help sort, manage, and even analyze this data, whereas other providers continue to manage the data manually, using programs such as Microsoft Excel.
Many of the top providers would agree that failing to use revenue cycle management software is an unnecessary risk that jeopardizes an organization's data accuracy.
Correct Reimbursement from Payers
The prime financial goal of hospitals is to receive the right amount of reimbursement from insurance companies (or payers), especially when dealing with underpayments and denials.
In fact, denials account for 2-4 percent of payment inaccuracies in healthcare today, with contractual variances accounting for the remaining 1-2 percent. And, as payer contract terms and policies become more complex, hospitals' ability to calculate reimbursement accurately has never been more important.