Fitch Ratings is one of those organizations that, with a finely worded statement, can send a shudder through an entire industry. As one of America’s ‘Big Three credit rating agencies’, it is renowned for researching and analyzing the financial wellbeing of businesses and entire countries and its insights are widely considered a window into the reality of a sector.
Such was the case earlier this year when Fitch Ratings Senior Director Kevin Holloran declared in a presentation that this was going to be a “make-or-break year” for the hospital sector. On the back of what he dubbed “the worst operating year we’ve ever seen”, he estimated that half of U.S. hospitals were not profitable for the full year and the future for many of them – especially rural facilities – looked bleak.
"In an analysis of 80 nonprofit hospitals’ creditworthiness … Mr Holloran found significant declines in the 2022 period, resulting in Fitch applying a ‘deteriorating’, or negative, outlook for the hospital sector," Beckers Healthcare reported.
“Several financial challenges contributed to hospital margins suffering steep declines … including labor costs and staff shortages, inflation, higher cost of capital, investment losses and the end of federal pandemic-related funds.”
While hospitals do not represent all healthcare providers, a similar burden is weighing on other service providers. Under the ominous headline ‘The Gathering Storm’, research consultancy McKinsey & Co has predicted that annual U.S. national health expenditure will likely be $370 billion higher by 2027 due to the impact of inflation, while another study has found 78% of healthcare providers fail to collect patient fees of more than $1,000 within 30 days as people struggle to manage their medical debts.
Amid such financial pressures, effective revenue cycle management has never been more important for healthcare executives. From patient registration and insurance verification to claims submission, multiple tasks need to be completed to ensure hospitals and health services are promptly paid for the care they provide and this is where optimization of revenue cycle management comes to the fore.
Revenue cycle management (RCM) is the act of managing a healthcare organization’s finances. From the first interaction with a patient to receiving the final payment, it encompasses all aspects of financial management including patient registration, medical billing and coding, insurance verification, claims submission and payment posting.
A quality RCM system has the potential to increase revenue and, in turn, boost a healthcare organization’s financial performance by streamlining processes, reducing administrative burden and ensuring accurate and timely reimbursement for services performed.
In their ongoing bid to maintain strong revenue cycles, healthcare leaders need to be aware of the latest internal and external pressures that can impede their ability to achieve success.
Like many administrative duties, RCM is ideally suited to being sent offshore to outsourcing providers that specialize in delivering better collection rates, denial resolution efficiency and revenue growth.
Revenue cycle management may be a complex process but with the support of a professional and enthusiastic outsourcing partner, there are significant advantages to be gained. From maximizing financial potential to freeing up healthcare staff to focus on what they do best, there is a reason so many hospitals and health practices are looking offshore for their RCM needs.
Few industries have a passion for numbers quite like healthcare. Discover the key statistics that show why so many hospitals and health services are embracing outsourcing, along with insights into its growth drivers and market trends.
 Hospitals faced 'worst operating year' ever in 2022: Fitch (beckershospitalreview.com)
 finvi-wp-july-2023.pdf (asccommunications.com)
 Transformative impact of inflation on the healthcare sector | McKinsey
 InstaMed’s Tenth Annual Report Finds High Consumer Demand for Digitization in Healthcare Payments | Business Wire
 Hospital Claim Denials Up for Most, Driven by Prior Authorizations (revcycleintelligence.com)
 No Surprises Act | Johns Hopkins Medicine
 Initial Report on the Independent Dispute Resolution (IDR) Process (cms.gov)
 Study: Healthcare Lags Other Industries in Digital Transformation, Customer Engagement Tech | Healthcare Innovation (hcinnovationgroup.com)
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