Prepare your practice for revenue cycle success in 2025 with our guide on optimizing your process for better payment and patient experience.
As 2024 ends, many hospital and health system leaders aim to streamline operations and boost efficiency to better position for 2025. Many have already identified several key areas for improvement, with a focus on the front office and operating rooms. These healthcare leaders are also looking for ways to increase revenue, reduce costs, and increase patient care volume. However, while wanting to make those improvements is one thing, figuring out how to optimize the revenue cycle while addressing significant challenges is another. Significant challenges have impeded the revenue cycle efficiency and success in many practices over the past years.
Revenue cycle management (RCM) costs for healthcare organizations range from 3% to 5% of total patient revenue. For a mid-size hospital with approximately 100-300 beds generating $250 million in revenue, this equates to $7.5 million to $12.5 million per year. Patient liability for healthcare costs has increased due to high deductibles and increased cost-sharing health plans.
To tackle these challenges and improve revenue cycles, healthcare practices must adopt strategies that maximize cash flow, minimize administrative burdens, and improve patient satisfaction. With the right strategies, practices can ensure timely and accurate reimbursements, reduce operational costs, and promote positive patient experiences.
Understand the Current State of Your Revenue Cycle
Before attempting to bring your revenue cycle back to life, you must clearly understand its current state. To optimize your cycle for 2025, start by evaluating current key metrics like days in A/R and collection rates. These KPIs provide insights into your practice's financial health and operational efficiency.
To truly optimize your revenue cycle for 2025, you have to identify and address bottlenecks. Common bottlenecks include slow reimbursements, limited patient payment options, and billing errors. Manual data entry in healthcare is an open invitation to error, with human error rates ranging from 1% to 5%. Slow reimbursements can result in cash flow issues, while a lack of payment options can lead to patient frustration and delayed payments. By proactively identifying and resolving these bottlenecks, you can streamline your cycle and ensure a more efficient and profitable operation for the future.
So, how can healthcare practices weigh the benefits of optimizing their cycle against the potential costs and challenges? Establishing SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound—is essential. For example, decreasing days in A/R by 10% within a six-month window or increasing collection rates by 5% by the end of the year. Your goals should align with your practice's overall financial objectives and patient care priorities, providing a roadmap for success and a benchmark for evaluating progress throughout 2025. Regularly review and modify these goals as needed to ensure they remain relevant and achievable.
Streamline Billing and Payment Processes
Offering multiple billing channels, such as mailed, emailed, and text options, caters to the different preferences of your patient population. Practices offering multi-channel billing options generally experience higher payment collection rates compared to those relying on a single method. Patients who receive bills through their preferred channels are also more likely to stay on top of their statements, decreasing the chances of late payments.
Implementing a multi-channel billing system allows practices to cater to a wider range of patients and helps identify the most effective communication channels for billing. By offering flexible billing options, practices demonstrate a patient-centered approach that builds trust and loyalty.
BillFlash's services are designed to streamline multi-channel billing, making it easier for practices to reach patients through their preferred communication method. Through BillFlash, practices can send bills through mail, email, or text. This ensures patients receive medical bills quickly and in a format that suits them best.
In addition to providing multiple billing channels, offering multiple payment methods to patients is crucial to improving collections. Helping your patients have an easy pay experience influences them to pay faster. Including credit cards, checks, Apple Pay, Google Pay, over-the-phone payments, and a user-friendly payment portal can make all the difference.
Practices can go further by capturing payments before patients visit with pre-visit billing that can significantly reduce days in A/R. By informing patients of their financial responsibilities before their visit, transactions become smoother and billing disputes are minimized. Healthcare practices can enhance their revenue cycle management and improve overall financial performance by implementing these strategies through the utilization of cutting-edge automated tools like BillFlash.
Reduce Administrative Burden With Automation
Embracing automation within the revenue cycle can drive healthcare practices toward transformative innovation. AI and automation have the potential to significantly improve revenue cycle performance. In healthcare, there have been efforts to promote electronic transactions, reducing the need for phone calls regarding eligibility and benefits. As healthcare utilization increases, so will transaction volumes, contributing to higher medical spending. So, more efficient processes are needed, especially when patients and healthcare practices can all benefit.
An example of how automation can contribute positively is through electronic verification. Electronic verification saves an average of 14 minutes per transaction, translating to significant cost savings. Instead of spending valuable time manually checking each patient's insurance status and benefits, staff can rely on automated systems to perform these checks instantly and accurately.
Integrated platforms also make collections easy for medical practices. They allow practices to set up guidelines for collections, track accounts flagged for collections, and trigger collections automatically. By automating most of the processes, practices have increased visibility and control throughout the collections process, so collections never fall by the wayside.
BillFlash provides practices with the solutions needed to streamline processes while allowing practices to maintain control and transparency of the payment collections process. Aside from integrated platforms, data analytics is another important tool for optimizing the revenue cycle process. With data analytics, practices avoid unnecessary overspending by examining the revenue cycle in full. With key metrics tracked and analyzed, practices can make decisions based on those metrics. This leads to actions that are better suited for their cycle.
Focus on Patient Education and Communication
Communicating effectively with patients is essential in improving your payment rate and keeping patient satisfaction high. Being transparent about responsibility, offering financial options, and simplifying the experience greatly influences patients' perception of your practice and care. Making payment expectations clear to patients in advance reduces surprises and increases collection rates.
Transparent communication regarding costs and payment can improve patient satisfaction and minimize payment delays. In addition to supporting patients with high-deductible health plans, giving payment plans or financing options ensures practices get paid for their services. This financial flexibility can ease the pressure on the patients and increase the chances of timely payments.
BillFlash FlexPay allows practices to get paid in full immediately while allowing patients to pay in monthly installments — a real win-win scenario for both sides. With BillFlash FlexPay, 90% of patients are approved with a 0% interest option. Offering FlexPay makes care more accessible and improves patient-provider relations.
Stay Compliant and Ready for 2025's Regulatory Changes
Compliance with regulatory standards is necessary to avoid penalties and experience hassle-free claims processing. Practices must implement regular compliance reviews, have secure systems, and be ready for coding and policy changes. Regular compliance reviews ensure practices are aware of recent regulatory updates, helping avoid penalties. Following standards improves claims processing success, reducing the risk of denials.
If 2024 has taught us anything, practices must implement secure systems to maintain patient trust and avoid costly breaches. Safe, HIPAA-compliant software protects Protected Health Information (PHI) and ensures regulatory compliance. Healthcare billing codes and payer policies often change. Preparing for what's ahead allows practices to adapt quickly and maintain efficient revenue cycle workflows.
Get Your Practice Ready for 2025 Revenue Cycle Success
As you prepare your practice for revenue cycle success in 2025, focus on automating your billing and payment processes, improving the patient experience, optimizing your revenue cycle analytics, and leveraging integrated technology solutions. By implementing these key strategies, you can streamline your administrative tasks, reduce errors, accelerate cash flow, and deliver a seamless patient experience.
To discover how BillFlash's billing, payment, and collection software can help optimize your revenue cycle in 2025 and beyond. Schedule a demo with our team today. We'll provide a personalized demonstration and show you how our solutions can drive financial success for your practice.