Hospital Revenue Cycle

Hospital revenue cycle

Hospital revenue cycle management (or “revenue cycle management” or “medical billing cycle management”) is the process by which hospitals generate and collect revenue. The process starts when a patient first contacts a healthcare provider and finishes when the invoice is settled in full and is recorded on a Hospital Information System (HIS).

The following diagram illustrates the key components:

Hospital Revenue Cycle

Revenue management is not just the responsibility of the Hospital Finance or Accounting Department. As the diagram shows, a ‘whole of hospital’ effort is required to manage revenue effectively.

This means that:

  • Both front-office (patient-administration) departments and back-office departments play a role.
  • Both administrative and clinical staff have a shared responsibility.

Front Office (Patient-administration) Departments

  • Patient-administration staff such as Admission Clerks need to ensure that patients understand their financial obligations and payment options through Hospital Accounting Software. This includes providing estimates of treatment costs (where possible) and conducting eligibility checks if the patient intends to claim treatment costs from the government or their private health insurer.
  • The collection process is likely to be much smoother if patients agree to the treatment costs based on a full set of information. Patients that are surprised at the cost of treatment (and/or their lack of insurance or government coverage) are much less likely to pay.
  • A hospital may still choose to treat a patient that they suspect will not be able to pay their invoice, but even then, it’s useful to know that upfront so that appropriate hospital policy can be applied.
Hospital revenue cycle

Administrative Staff

In hospitals which receive government funding, the most visible administrative staff involved in the revenue process are the Clinical Coders. Their work ensures that the hospital gets the greatest amount possible from the government for the services provided.

However, other administrative staff are equally important in making revenue management work effectively. These staff make sure that forms are filled out correctly and signed and that paperwork gets submitted in a timely manner. They make sure that billing processes and procedures are followed and, most importantly, they reduce the burden on busy clinical staff.

Hospital revenue cycle

Clinical Staff

Clinical staff play a pivotal role in the revenue cycle in two keyways:

  • Clinicians must ensure that all relevant documentation (e.g., charge sheets) is completed so that all services provided can be invoiced. If the hospital administration system has not recorded that a service was provided, it cannot bill for it.
  • Clinicians must be aware that part of the treatment costs will be claimed by the government or private health insurance. These 3rd parties will often have their own rules regarding what can be claimed and what cannot. For example, most insurance companies will not pay for treatment unless it is medically necessary, and the onus is on clinicians to thoroughly document their justifications.

Thorough and complete documentation is not only good clinical practice, but it also allows the hospital  information software to generate accurate and complete invoices.

In many hospitals, the information needed to effectively manage revenue is dispersed throughout multiple systems and paper forms. A comprehensive Hospital Information System (HIS) can help to ensure that every component of the revenue collection process can be monitored and optimised.

Hospital revenue cycle

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