Mastering the Healthcare Revenue Cycle with Automation

In a recent industry survey, 92% of medical practitioners said operating expenses are higher than last year.1 In fact, many practice leaders said the costs are outpacing revenues.2 These increasing costs are also coming at a time when practices expect funding program cuts.

In 2024, the Centers for Medicaid and Medicare Services (CMS) reduced the physician payment schedule by over three percent (3.37%). While the CMS later updated the conversion factor by almost two percent (1.68%), the agency is now recommending another reduction of nearly three percent (2.8%) to the schedule in 2025.3

Increases in expenses and reductions in payments directly affect the bottom line. Medical practices must balance these two factors to improve the revenue cycle in healthcare.

Why are medical practice costs increasing?

Healthcare organizations, like every other U.S. business, are feeling the effects of inflation. Labor and administrative costs are primary contributors to increased spending among medical practices.

• Medical practices are paying higher compensation.

  Retirement, burnout, and lower enrollments in medical institutions and training will continue to reduce the number of healthcare workers in the coming years. Global human resources consulting firm Mercer predicts a shortage of 100,000 critical healthcare workers by 2028.4
  
  To address employee attrition and fill open roles, healthcare employers are offering higher compensation. According to a recent survey, 90% of health system and hospital leaders raised minimum wages or starting salaries, 77% offered signing bonuses and 58% offered retention bonuses.5 Healthcare organizations are also paying higher overtime rates (35%).6 While these are positive moves for healthcare workers, higher compensation places further pressure on already strained administrative budgets.

• Medical billing is complex and expensive.

  The U.S. has one of the most complex healthcare systems in the world. Medical personnel spend hours completing billing and insurance paperwork, including doctors who dedicate about 20 hours per week to duties.7 Combined with multiple systems, often manual processes and reduced staff, these tasks are inefficient and costly. Administrative costs account for approximately 15% of practice spending.8

• Medical claim denials and payment delays are increasing.

  Though medical staff spend countless hours on paperwork, requests for health care reimbursements may be delayed or rejected. According to Experian Health, 73% of providers said claim denials are rising – an increase of 31% in just two years.9 Sixty-seven percent said reimbursement time is also increasing.10 The study cites frequent payer policy changes (77%), claims processing errors (55%) and missing or inaccurate data (46%) as reasons for reimbursement issues.11

Inefficient medical claims processing and slow payments are clearly two leading causes of revenue shortfalls. Fortunately, practitioners can transform both with automation.

Automated data processing is key to accurate medical claims.

Many medical practices still rely on written documentation and manual processes that are not only time consuming, but also increase the likelihood of errors. The first step in reducing paperwork is eliminating manual forms and documents. Next, digitalization automates patient intake, insurance verification and authorization, patient care, coding, billing and other necessary steps.

Automated data processing streamlines healthcare revenue cycle management, reducing errors and improving accuracy, as well as enhancing analytics and reporting. Improved data accuracy helps to reduce medical claim denials.

Reducing accounts receivable days improves the revenue cycle in healthcare.

The solution to balancing costs and reimbursements is to expedite accounts receivable for faster cash conversion. Integrated, automated AR solutions accelerate and optimize the entire receivables process, delivering faster collections and fewer follow-up delays. Corporations that automated more than 50% of AR workflows reduced days sales outstanding (DSO) 32% which is equivalent to 19 days.12 Even organizations with less than 50% automation reduced DSO 25%.13

An automated AR suite also provides straight-through processing (STP) across all payment channels, aggregating electronic and check payments regardless of location, type, or channel. This reduces unnecessary deductions, cuts labor costs, and better manages payment relationships. Artificial intelligence capabilities increase STP and quicken the application of cash to the balance sheet. Integrating all payment data into a central repository with a dashboard gives providers visibility into the entire AR lifecycle.

You can master healthcare revenue cycle management.

Recognized among the best banks in the Southeast, Synovus has the expertise to help corporations transform accounts receivable to increase revenue. For more information on our AR services, complete a short form and a Synovus Treasury & Payment Solutions Consultant will contact you with more details. You can also stop by one of our local branches.