This document summarizes a paper on approaching revenue cycle management. The paper introduced the issue of poor performing accounts receivable revenue cycles, defined the problem as being caused by improperly structured securitization, a lack of process improvement methods, varying metrics and poor leadership. It reviewed literature on improving cash flow through benchmarking receivables and redesigning revenue cycles. Recommendations included benchmarking exemplary organizations, implementing a multidisciplinary recovery program, updating financial policies to include patient financing, and properly structuring securitization. An implementation plan with monitoring and control was also outlined.

1. Running head: APPROACHING REVENUE CYCLE MANAGEMENT 1
Stephanie, This paper was to:
 introduce the issue;
 define the problem;
 analyze the problem;
 evaluate possible solutions;
 develop an implementation plan; and
 justify why and how your solution will solve the identified problem.
You did a fantastic job on this paper. This paper was thorough and complete. I appreciated
your conclusion and can use this information in the future. You did good research. See the
rubric and comments for details. Congratulations, you did a superb job! Mary
Category Points % Description
Documentation and
Formatting
30 15
A quality paper will include a title page, an abstract,
proper citation, and a bibliography.
Organization and
Cohesiveness
40 20
A quality paper will include an introduction based
upon a well-formed thesis statement. The logical
order of the content will be derived from the thesis
statement. The content will be properly subdivided
into sections derived from the outline. In a quality
paper, the conclusion will summarize the previously
presented content and will complement the thesis
statement from the introduction.
Editing 30 15
A quality paper will be free of any spelling,
punctuation, or grammatical errors. Sentences and
paragraphs will be clear, concise, and factually
correct.
Content 100 50
A quality paper will have significant scope and
depth of research to support any statements.
Relevant illustration or examples are encouraged. A
quality paper will employ sound use of reasoning
and logic to reinforce conclusions.
Total 200 100
A quality paper will meet or exceed all of the above
requirements.

2. APPROACHING REVENUE CYCLE MANAGEMENT 2
APPROACHING REVENUE CYCLE MANAGEMENT
Stephanie D. Walker
HSM 543 – Health Services Finance
June 21, 2015
Professor Mary Black

3. APPROACHING REVENUE CYCLE MANAGEMENT 3
Table of Contents
Page
1. Abstract.............................................................................................................................3
2. Introduction – Overview of Healthcare Account Receivables................................4 - 5
3. Problem Statement......................................................................................................5 - 7
A. Description of Issues
a. Improperly structured securitization of receivables
b. Lack of formal process improvement methodologies
c. Varying performance metrics
d. Poor revenue cycle leadership
4. Literature Review .......................................................................................................7 - 9
A. Success under reform through revenue cycle excellence
B. A reform-era revenue cycle
C. Achieving revenue integrity in hospitals and health systems
D. Integrate your revenue cycle
5. Recommendations .....................................................................................................9 - 11
A. Description of Alternatives
a. Improving cash flow through benchmarking
b. Increasing revenue through A/R recovery, revenue-cycle redesign
c. Updating financial policy to include patient financing
d. Securitization
6. Implementation ......................................................................................................11 - 12
A. Monitoring and Control
7. Summary.........................................................................................................................12
8. References................................................................................................................13 - 14

4. APPROACHING REVENUE CYCLE MANAGEMENT 4
Abstract
The American Hospital Association asserts that approximately one-third of the hospitals
in the United States (U.S.) are losing money; another third are barely breaking even. This type
of vulnerability to economic pressure makes it difficult for hospitals and health systems to attain
high performance. As a result of new reform, effective hospital revenue cycle management
practices have grown in significance in the hospital business environment. Historically, hospital
revenue cycle management has concentrated on reducing the average collection period; a shorter
average collection period infers that cash in-flows from providing patient care are received
earlier. Though the traditional focus was on back-end tasks such as billing and collections,
today’s financial managers are directing more of their attention to the front end of the revenue
cycle in order to improve back-end performance - generate more patient revenue and collect
receivables in a more timely manner. Revenue cycle management is critical to the success of
today’s hospital. Healthcare finance leaders are striving to understand each component of a
revenue cycle assessment by researching the best practices from other industries to better
understand and adapt similar principles in managing accounts receivable.
.

5. APPROACHING REVENUE CYCLE MANAGEMENT 5
Introduction – Overview of Healthcare Account Receivables
Although healthcare organizations have been able to make advancements in the revenue
cycle over the course of time patient accounts receivable continue to represent the largest item in
the current assets section of the balance sheet. Further, while providers understand the
importance of liquidity many managers remarkably neglect to take the steps necessary to
improve their liquidity position. Undoubtedly, there are a host of uncontrollable factors that may
undermine a hospital’s endeavors to generate cash flow: payer reimbursement, economic
conditions, competition, cost and supply of labor, demographics, etc. Yet, a consistent focus on
improvement establishes competence and attentiveness and focus.
Challenges to increase liquidity resulting from the Affordable Care Act (ACA), an
increase in the numbers of self-pay patients, and the evolution of high-deductible health plans
presents an unclear revenue picture for healthcare providers throughout the country and is
forcing managers to face the daunting task of significantly reducing bad debts or days in
accounts receivable. And, while state budgets are showing improvement and “integration of
technology, such as electronic health records, holds great long-term promise” (Dickey, R., 2013)
Medicaid reimbursement programs remain ambiguous. Therefore, given the vagueness of
“supply/demand, pricing and expenses,” (Dickey, R., 2013) providers must make every effort to
increase cash flow through circumstances that are within their power.
More frequently than not, healthcare organizations experience inadequate cash flow due
to improper management or to the lack of a sustainable accounts receivable process. According
to Devendra Saharia (Saharia), key performance indicators (KPIs), a set of quantifiable measures
that compare performance in terms of meeting strategic and operational goals are a
recommended approach. Saharia further asserts that, “In the current environment, with

6. APPROACHING REVENUE CYCLE MANAGEMENT 6
implementation of the Affordable Care Act (ACA) and the transition to value-based pricing well
underway,” (Saharia, D., 2014) the following five KPIs will have the most influence on accounts
receivable (A/R) and cash flow:
1. Cash Ratio
2. Medicare Billed A/R over 30 Days
3. Third-Party Aging over 90 Days
4. Bad Debt Expense
5. Customer Experience
All things considered, not only is recognizing the necessity of a high-performing revenue
cycle essential, it is equally as indispensable to have strategies in place to achieve bottom-line
improvement. Consequently, this essay will speak to the problem of a poor performing accounts
receivable revenue cycle, identify key, provide a literary review, make recommendations on how
to successfully convert account receivables into cash, and outline an implementation strategy.
Problem Statement
The performance of accounts receivable is a measurement of the financial strength of a
hospital or health system. The longer receivables remain outstanding, the less money the
organization has for payroll, expenses, expansion, and investment. Inadequate revenue cycle
performance makes it more difficult to forecast cash flows and may bring about the need to
create larger cash reserves in order to honor commitments. There is no way for a hospital to be
certain that it is doing the best job maintaining the efficiency of its revenue cycle if it neglects to
assess the significance of a high-performing revenue cycle (Yarsinsky, J., 2015). Failure to
preserve a viable revenue cycle process – misunderstanding the impact revenue cycle decisions
have on the financial outlook of an organization is often the result of:

7. APPROACHING REVENUE CYCLE MANAGEMENT 7
1. Improperly structured securitization of receivables
2. Lack of formal process improvement methodologies
3. Varying performance metrics
4. Poor revenue cycle leadership
Healthcare providers are able to access an additional funding source when their
receivables are soundly structured. Securitization of receivables allows providers to convert
future receivables into an immediate advance of cash. It gives providers the “tool to manage
cash flow, reduce borrowing costs, and maximize value” (Spradling, M., 2003). However, it is
important that securitization of receivables is properly structured. Establishing the appropriate
structure requires an understanding of “Medicare and Medicaid receivables as well as private
insurance receivables” (Spradling, M., 2003). Further, HIPAA (Health Insurance Portability and
Accountability Act) privacy standards play a critical role in securitization. Though, the
standards permit the use and disclosure of protected health information securitizations must be
carefully structured to protect the value of receivables being transferred (Spradling, M., 2003).
The Healthcare Financial Management Association asserts that no matter the process
areas selected for improvement high performance relies on proven redesigned methodologies.
Formal process improvement requires that high-performing teams be assembled to “examine,
measure, and improve on current processes. Team composition may include revenue cycle staff,
non-revenue cycle business staff, clinicians, and process engineers” (Healthcare Financial
Management Association, 2009). While there is no conventional methodology employed in
healthcare, “creating a framework and a high level of rigor around process measurement and
redesigns is what is important” (Healthcare Financial Management Association, 2009).

8. APPROACHING REVENUE CYCLE MANAGEMENT 8
The absence of discernment of the impact revenue decisions have on the overall financial
outlook is also related to the following: (1) the metrics used by the revenue cycle team to
measure performance and (2) poor revenue cycle leadership. When performance metrics are
inconsistent with the concerns of the central finance office it leads to revenue cycle and finance
functions having different priorities (Clark, K., 2012). Overcoming this issue requires the
implementation of a standardized financial reporting and revenue cycle monitoring platform.
This facilitates a more accurate estimation of accounts receivable reserves, streamlines the
month-end closing process, and reinforces internal controls. Successful implementation of a
revenue cycle solution relies heavily on leadership support; gaining the sponsorship of senior
leadership is a critical step. “Depending on the hospital or hospital system and its size, the
steward of change should be the CFO (Chief Financial Officer) or vice president of revenue
cycle or patient financial services” (Callahan, M., 2008). Developing a philosophy of revenue
cycle excellence starts at the top – elevating the visibility of the revenue makes an immense
difference.
Literature Review
In the research article by Thiry, Evans, Walter, & Ramanathan (2011) suggestions to help
hospitals and health systems improve their revenue cycle performance were presented: (1)
collecting patient responsibility amounts up-front, (2) reducing the balance of credit accounts, (3)
limiting no-shows by pre-registered patients, and (4) identifying and managing unbilled accounts
receivable (Thiry, et al., 2011). It was also asserted that clinical coding; clinical documentation
improvement (CDI) and information technology (IT) would play significant roles as hospitals
prepare for healthcare reform (Thiry, et al., 2011). The story also hypothesized that after all
elements of the revenue cycle are assessed, the next step involves the expansion of a detailed

9. APPROACHING REVENUE CYCLE MANAGEMENT 9
work plan that guarantees the implementation of all recommendations. More pointedly, the
narrative implied that “Too many hospitals make hope a strategy in a reform era when they
should be seeking opportunities for bottom-line improvement” (Thiry, et al., 2011).
Another article relative to healthcare reform in the United States (U.S.) asserted that
while the law was created to ease the bad debts of service providers it is likely to relieve revenue
cycle pressures Healthcare Financial Management (2010). The study submitted that instead of
depending on clinical personnel whose primary job is patient care, hospitals should focus on
revenue cycle initiatives that propel optimal performance: charge capture, pricing, and patient
access. Further provide in the article were the following opportunities for improving accounts
receivable during the era of reform:
1. Certifying patient financial communications are reader-friendly and clearly establishes
expectations;
2. Offering convenient business office hours and a variety of methods for receiving
payment;
3. Instructing patient admission staff on the importance of point-of-service (POS) cash
collection;
4. Reinforcing financial assistance eligibility screening;
5. Prioritizing back-end collection efforts; and
6. Benchmarking revenue cycle performance to identify and address disputes close to time
of occurrence (Healthcare Financial Management, 2010),
The next topic in relation to approaching revenue cycle management is addressed
according to revenue integrity. Schoen & Najera (2012) offered that hospitals across the U.S. are
discovering that sustainability amidst the reductions in payment requires revenue optimization

10. APPROACHING REVENUE CYCLE MANAGEMENT 10
through the enhancement of revenue integrity. In a 2011 survey sixty percent of healthcare
executives responded that “revenue integrity is essential to their organization’s financial health,
while another 5 percent said they were investigating organization models supporting revenue
integrity” (Schoen, et al., 2012). The study further revealed that the following areas: operational
efficiencies, charge capture and coding, and denials prevention provide the best opportunities to
improve financial performance (Schoen, et al., 2012).
The final topic relative to a high performing revenue cycle discussed integrating the
revenue cycle. Morrissey (2011) cited that because the revenue cycle is a pivotal part of
business hospitals and health systems must “liberate claims payment and collection functions
from the financial silo and incorporate within health care services one inclusive revenue cycle
that starts before the patient shows up and ends when the account has been closed (Morrissey, J.,
2011). The article stressed that while accountability resides with finance, success of the revenue
cycle requires commitments from colleagues throughout the health system. Specifically, the
clinical and financial worlds must interact. Tensions must be resolved so that the clinical staff is
equally as concerned with patient care as with finances (Morrissey, J., 2011).
Recommendations
Revenue cycle success does more than enable health care organizations to keep the
electricity on. It supports operational and financial improvements, enriches patient services and
strengthens the potential for financial gains; financial gains support long-term strategic success.
Accomplishing revenue cycle success is comprised of more than taking a shot in the dark –
bottom-line attainment involves more than balancing the books. Health care leaders must have a
clear picture of where they want to go which involves considering and implementing multiple
processes.

11. APPROACHING REVENUE CYCLE MANAGEMENT 11
Benchmarking, a term pioneered in 1970 by Xerox Corporation has become a common
practice among “forward-thinking healthcare organizations” seeking to advance, shift, and
invigorate their facilities in order to stay competitive in the healthcare industry. The following
techniques are most common relative to benchmarking: (1) studying the accounts receivable
statistics of exemplary healthcare organizations; and (2) visiting exemplary organizations to get a
first-hand look at how they conduct business. Benchmarking is important because the healthcare
industry is “in the midst of a paradigm shift” and being among the best performers is essential to
survival (Nelson, B., 1994).
The ability of a healthcare provider to collect all of the cash to which it is entitled calls
for more than a functional billing and collections process. Studies indicate that most write-offs
are the result of issues that originate prior to the generation of a claim by the billing department.
Therefore, in addition to benchmarking it is recommended that a health system implement a
multidisciplinary recovery program to redesign its revenue cycle. The typical recovery program
reorganizes business office staff, outsources some of the collection activities, increase efforts to
examine coding, analyze billing errors, update its charge master, and trace payment denials.
Though the work is continual during the initial redesign process the potential for cash flow
increases significantly. Timothy Graham offers that “Considerable net revenue can be gained by
enhancing the revenue cycle” (Graham, T., 2001).
In recent years a market research study provided that 32 percent of patients
acknowledged that in the absence of a clear payment solution they expect their healthcare
provider to function in the role of a financing company by billing them – a role that drastically
impacts the bottom-line. The third recommendation is updating financial policy to include
patient financing; adding this alternative can increase cash flow and lessen accounts receivable

12. APPROACHING REVENUE CYCLE MANAGEMENT 12
(Morris, R., 2011). In lieu of billing patients in the customary manner and managing the risks
and expense of accounts receivable, a more advantageous approach is to “add a third party or
outside patient financing program” (Morris, R., 2011).
The final recommendation is securitization, this process allows healthcare providers to
convert their accounts receivable into cash. Health care receivables securitizations are designed
to allow health service providers to sell their receivables to securitization vehicles in exchange
for cash equivalent to a considerable percentage of net receivables more rapidly than in the
ordinary course of business which improves cash flow and maximizes the recovery of
receivables. “Despite the obvious benefits of securitization transactions, securitization of
healthcare receivables has several unique difficulties,” (Folk, M., 1995). Therefore, healthcare
securitizations must be structured to conform to each legal relationship and must satisfy the
substantive consolidation and true sale legal doctrines (Folk, M., 1995).
Implementation
Every organization is comprised of a culture made up of “shared attitudes, values, and
goals that is puts into practice” (Healthcare Financial Management, 2009). If the right culture is
not in place any effort to improve processes, technology, metrics, and communication will be
ineffective; focusing on issues relating to culture often proves to be the biggest challenge for
healthcare executives. As the recommendations provided suggest, organizations comprised of
high-performance revenue cycles characteristically employ multiple strategies as part of their
efforts. Equally as important as a well-rounded strategy is the successful implementation of
process improvement initiatives.
High performance does not just materialize. The recognition of patient-focused and
value-driven revenue cycle processes requires a commitment to goals – success depends on

13. APPROACHING REVENUE CYCLE MANAGEMENT 13
support from all stakeholders. Executives must set high expectations for revenue cycle positions,
devote the necessary resources to training and compensation, and establish systems to reward
high revenue cycle performance. Patient-focused revenue cycle process improvement must be
encouraged throughout the organization: (1) teams of both revenue cycle staff and non-revenue
cycle staff should be centered on key process challenges. Frequent and actionable performance
monitoring and reporting should be fostered to improve supervision of revenue cycle processes
(Healthcare Financial Management, 2009).
Summary
At a glance these recommendations and suggestions for implementation may seem
daunting, especially given the current environment of healthcare reform. Though, the challenge
should not be justification for lack of action. Historically, high performers do not always have
the latest technology nor do their organizations have the most desirable characteristics. Yet, they
do have determination. Irrespective of the strategy followed, an organization’s commitment to
effective implementation makes the distinction. Plainly stated, the approach to revenue cycle
management makes the difference. Organizations that stay the course on performing well in
accounts receivable will find themselves in the best position for future success (Healthcare
Financial Management, 2009).
.

14. APPROACHING REVENUE CYCLE MANAGEMENT 14
References
Callahan, M.A. (2008). Successfully implementing a revenue cycle self-pay solution.
Hfm (Healthcare Financial Management), 62(9), 82.
Clark, K., & Bang, D.A. (2012). Bridging the gap between financial reporting and the
revenue cycle. Hfm (Healthcare Financial Management), 66
(9), 76.
Dickey, R. (2013). Cashing in on revenue cycle improvements.
Folk, M. D., & Roest, P. R. (1995). Converting accounts receivable into cash. Hfm
(Healthcare Financial Management), 49(9), 74.
Graham, T. (2001). Increasing Revenue through A/R Recovery, Revenue-Cycle Redesign.
Hfm (Healthcare Financial Management), 55(11), 60.
Healthcare Financial Management (2009). Strategies for a high-performance revenue cycle.
Healthcare Financial Management (2010). A reform-era revenue cycle.
Image. Key performance metrics. Retrieved June 20, 2015 from
http://practiceextension.com/2013/05/15/medical-billing-best-practices-metrics-and-key-
performance-indicators/.
Key Strategies for Hospital-Physician Revenue Cycle Integration. (2014). Hfm (Healthcare
Financial Management), 68(9), 1-4.
Morris, R. (2011). Update Your Financial Policy to Include Patient Financing. Podiatry
Management, 30(5), 91-94.
Nelson, B. (1994). Improving cash flow through benchmarking. Hfm (Healthcare Financial
Management), 48(9), 74.
Schoen, M., & Najera, M. (2012). Achieving Revenue Integrity in Hospitals and Health Systems.

15. APPROACHING REVENUE CYCLE MANAGEMENT 15
Hfm (Healthcare Financial Management), 66(9), 114-120.
Spradling, M. (2003). Structuring a Sound Securitization of Healthcare Receivables. Hfm
(Healthcare Financial Management), 57(2), 58.
Thiry, D., Evans, M., Walter, L., & Ramanathan, S. (2011). Success under reform through
revenue cycle excellence. Hfm (Healthcare Financial Management, 65(5), 92.
Yarsinsky, J. (2015). Measuring the Performance of Hospital Accounts Receivables.