Reducing health care revenue cycle management costs involves outsourcing areas which administrative departments may be ill-equipped to handle.

Decreasing overhead enables health care providers to dedicate limited financial resources to where they are most useful: procuring new equipment, hiring personnel, training existing staff and other investments. Allaying financial scarcity entails identifying the largest costs and implementing processes to reduce them.

The hospital revenue cycle is a major source of fiduciary waste in health care institutions. A study from McKinsey & Company found that revenue cycle inefficiencies cost 15 cents on every dollar health care institutions obtain. In a $2.7 trillion industry, $400 billion goes to claims processing, billing, and revenue cycle management. How can providers reduce this financial burden while maintaining compliance and without compromising the patient experience? Here are three powerful strategies to consider.


  1. Outsource Workers’ Compensation and Auto Accident RCM

Given the financial and regulatory pressures under which hospitals operate, they rarely possess the administrative resources to optimize the revenue cycle, especially with respect to receiving payment from auto insurers and workers’ compensation programs.

Consider the following situation: A New Hampshire hospital treats a patient from Massachusetts who was in a serious car accident. Delivering the care costs $12,000. In this case, the hospital will have to coordinate benefits between the patient’s automotive insurer and his health insurer to determine proper reimbursement allowed on the claim, according to Massachusetts State Law.

The patient finance department may not have the technology or expertise needed to efficiently orchestrate payment from both parties. Collecting payments from a Massachusetts-based auto insurer will follow different regulations then obtaining payment from an auto insurer in New Hampshire, given that the latter state possesses at-fault laws. In addition, if the hospital discovers minor injuries that require treatment, but may or may not be related to the accident, the auto insurer will deny which charges it is not responsible to pay.

To reduce health care RCM costs, hospitals should consider outsourcing their workers’ compensation and automotive insurance payments management to parties that provide health billing services, manage attorney correspondence, negotiate claims, and conduct other administrative responsibilities. According to Black Book Market Research, 54 percent of health care financial executives believe outsourcing RCM enables them to increase efficiency and improve fiduciary well-being.

  1. Find an RCM Partner Who Optimizes IT Consumption

IT can either be burdensome or advantageous, depending on the way administrators utilize existing systems. When outsourcing their RCM, hospitals must assess their partners’ technical wherewithal and resources, asking the following questions:

  • Is partner’s application proprietary? If so, does it have a robust, responsive and dedicated development team?
  • How does the application support claims management?
  • Is the application compatible with in-house resources? Does it require any special integration?
  • What differentiates the partner’s application from third-party solutions?

These questions warrant further discussion. The value an RCM partner’s technology brings to the table depends on how well the partner integrates its knowledge expertise into the application’s function. For example, the solution must bring clarity to complex claims processes involving interstate communications while acknowledging the state laws and guidelines.

  1. Keep Patients Informed on Medical Billing

Hospitals must also educate patients as to who will pay their bills under specific circumstances. Chad Sandefur, director, and healthcare analyst at AArete, explained that ensuring patients develop this knowledge is critical to avoiding bad debt, RevCycleIntelligence reported.

“By training staff to collaborate with patients and to educate them early, it removes the surprises when the bills come and that facilitates the payment component,” Sandefur told the publication.

Providing such knowledge does involve detailed instruction, however. RCM partners can assist administration in educating staff to mitigate the burden of transferring information to professionals interacting with patients.


PROMEDICAL, a national healthcare revenue cycle management company. Known for innovation, quality, and exceptional client service. PROMEDICAL provides third party liability solutions including workers’ compensation and motor vehicle accident billing.

For additional information or questions, please contact Roze Seale at 251.232.3742 or by email