A business cycle manager may not have the expertise and education of optimizing and controlling this important function. They may know the basic concepts but lack the analytical tools to identify problems and improvements. Executives may not know which indicators (ratios) to establish for good revenue cycle management and review Days in accounts receivable, a typical gauge of how AR is managed, is one of many key indicator! AR managers are usually too busy in dealing with the "issue of the day" and do not focus on the long-term management of accounts receivable. Are the executives the “watch dog” of the AR manager? Most likely not.
All industries have revenuecycles. The process of providing the service, generating revenue and collecting revenue is a basic business function. In the health care industry it is complex, cumbersome and costly. In developing an optimum AR reporting system it is essential to develop an RCM model with various target performance indicators(ratios) to be analyzed, compared and reported. Actual vs. target indicators reporting is a must in insuring the effectiveness of a revenue RCM program.
RCM also includes billing for cost based payers. Therefore good accounting systems have to be in place to insure payments from payers such as Medicare, Schools, grantors, state funders such as DHS are maximized. Providing managers with timely cost and budget data is essential. Insuring an overhead allocation system that accurately charges cost based payers is essential. Companies should have a cost accounting system to determine the cost of goods or services sold. This can assist in determining the most profitable services. Cost data will allow intelligent and educated negotiations when contracting with payers or clients (e.g .hospital contracts). Collections, write offs and adjustments also need to be managed!
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Business Management@Marketing.Revenue Cycle Management
This document talks about the Revenue Cycle Management and its importance