Revenue Cycle Management in Healthcare

Revenue cycle management allows hospitals to increase their revenues using the most efficient technologies and administrative tools. The wastes are one of the main reasons hospitals’ revenues are low, and such improvements allow decreasing them. There are many payment systems that ensure that both doctor and patient will be satisfied. The revenue cycle management plan should be created to use payment systems appropriately, with a clearly stated purpose, goals to achieve it, and specific objectives. It will improve the financial situation of the hospital and increase its efficiency. Modern technologies should also be used for that purpose, as they can make all medical work processes, such as diagnostics and patient entry, much easier.

Hospitals use various payment systems to ensure that both patients and physicians are satisfied: the former should be capable of paying, and the latter should obtain sufficient payment for their work. One example is a diagnosis-related group (DRG), which classifies patients based on their diagnoses (Davis, 2021). A hospital gets paid based on each patient’s diagnosis and disease severity and the costs a hospital uses to provide the treatment. Another one is the resource-based relative value scale (RBRVS), where payments for services are calculated based on necessary resources to give each service (American Medical Association, 2016). In addition, hospitals use chargemaster and claims management to evaluate medical spendings and costs that the client should pay. Chargemaster is a document that assesses all hospital services and shows charges (Bai & Anderson, 2016). Claims management is identifying and satisfying patient claims, which is used in health insurance. All those systems are used to evaluate a hospital’s financial situation and see how to improve it.

The Purpose

The purpose of this plan will be the creation of a management system that facilitates the most efficient cash flow. It means decreasing all maintenance costs and spendings and increasing incomes while providing accessible prices for patients. Information exchange is an essential process in satisfying it, and it is based on X12 standards that provide a markup language for it (X12 – Home, 2021). Such purpose can be achieved by setting specific goals and making up the objective of how they can be fulfilled.

The Goals

The hospital hopes to increase its revenues and minimize wastes by ensuring high-quality patient care, facilitating the document flow and administrative functions, and providing preventive medical care. To improve patient care, the hospital should provide an efficient communication process between doctors and patients and increase transparency, enabling patients to see and understand their medical diagnoses, prescriptions, and other relevant documents. Improving the document flow means decreasing costs for document maintenance and making them easily accessible. The preventive medical care services include health insurance and the evaluation of the general healthcare situation in the region. To achieve the stated goals and fulfill the purpose, the hospital will develop several objectives to address the common issues in hospital management. They are primarily based on information technologies (IT) as they enable to solve many problems that lead to expenses and lower revenues.

The Objectives

Objective 1. Create a Personal Account System for Patients

As one can see, many expenses are from ineffective communications: administrative spendings and lack of trustful communications with patients. The hospital can implement the patient system with a personal account for each patient to cut off those expenses. They should easily access their accounts and see their data: if they are first contacting the hospital, they can choose the reception date and know that they will be received (Singh et al., 2017). They will see their diagnoses and prescribed medicine, with links to obtain them. In addition, they will be able to pay all their bills online and contact the doctor anytime without a charge.

Objective 2. Create a Database with All Administrative Records

To further reduce administrative spendings, it is good to create a database where all administrative records can be stored and easily accessed anytime. All documents, including patient reports and diagnoses, will be saved on the encrypted server (Singh et al., 2017). Costs will be needed only for server purchase and maintenance, along with the salaries for the hospital IT staff. Each doctor and nurse will be easily able to access the necessary record and know about the current status of their patients. It will save their time and make their work much more manageable.

Objective 3. Implement Big Data technologies

This objective can be the hardest to achieve, but its revenues can be significant, as Big Data technologies can be implemented in various fields, increasing their efficiency. Big Data tools allow quick and effective data manipulation and making conclusions and decisions based on them. Medical diagnoses based on data interpreted by physicians will be much more precise than those made simply based on a physician’s knowledge. Big Data can also be used for medical research, enabling analyzing thousands of articles and extracting the necessary information from them (Kamble et al., 2018). Their range of possible usage is extensive, and while implementing, the hospital should precisely formulate how and where they will be used.

Objective 4. Provide a full set of insurance services

Insurance can be a big field for revenues for hospitals; along with the implementation of digital technologies to improve hospital management, providing healthcare insurance would be a good objective for revenue management. By calculating all costs necessary to provide services, the hospital can calculate the best prices for its chargemaster, giving a competitive advantage to it. In addition, Big Data technologies enable monitoring the healthcare situation based on various statistics: the hospital can use it to propose multiple services in various areas, further increasing its incomes.

Performance Improvement

Objective 1. Create a Personal Account System for Patients

This objective aims to facilitate communications between the hospital and patients. First, they should sign up here and obtain an invitation to admission. It will save their time and increase satisfaction while the hospital will be able to take more patients, distributing their reception time. Second, the personal account should include all medical records relevant to the patient. The hospital’s IT department should create this system, and doctors should register in it and be ready to contact their patients. Other services, such as health insurance, should also be provided via this system. The accounting department should calculate costs for maintaining this system.

Objective 2. Create a Database with All Administrative Records

Administrative records for the hospital are patient data, diagnoses, licenses, income and spending lists, the chargemaster. The database, which contains all those records in digital form, facilitates access to them and ensures that they all are in place and easy to read. To implement this, the hospital’s IT department should buy the encrypted server and ensure that each staff member has access to documents relevant to them. All paper records should be scanned and sent to the server. All staff members should know how to use programs to access those records and manipulate them. The accounting department should calculate server purchase and maintenance costs and all database software and compare them with administrative expenses reduction.

Objective 3. Implement Big Data Technologies

The first two steps toward this objective are purchasing the programs for data analysis and searching for the staff who have the necessary knowledge to perform it. Big Data becomes more and more actual for healthcare, and the number of experts in this field constantly grows (Kamble et al., 2018). Next, a precise implementation plan should be created: it will include all areas where Big Data will be implemented, how the data will be analyzed, and how the hospital staff will access them. All staff members should be trained to use the programs that will show them the results of data analysis. The IT department should ensure that the implementation process will be successful. The accounting department should calculate all expenses and incomes generated and when it will be a payback.

Objective 4. Insurance services and Preventive Medicine

To do this, the hospital should calculate precisely all spendings on its medical services, including the physicians’ salaries and medical tools maintenance. Digital technologies, used in other objectives, can help provide those calculations and show which expenses are necessary and which the hospital can avoid. Based on the data, the hospital can give efficient insurance services to prevent health problems or solve them as soon as they emerge. The hospital reception staff will be responsible for implementing them and proposing to the clients. The accounting department should calculate which additional income would come from this service, based on the estimated number of clients and which expenses are necessary to implement it.


American Medical Association. (2016). RBRVS overview. Web.

Bai, G., & Anderson, G. F. (2016). US Hospitals Are Still Using Chargemaster Markups To Maximize Revenues. Health Affairs, 35(9), 1658–1664. Web.

Davis, E. (2021). Health insurance: How does a DRG determine what a hospital gets paid? Verywell Health. Web.

Kamble, S. S., Gunasekaran, A., Goswami, M., & Manda, J. (2018). A systematic perspective on the applications of big data analytics in healthcare management. International Journal of Healthcare Management, 12(3), 226–240. Web.

Qi, K., & Han, S. (2020). Does IT improve revenue management in hospitals? Journal of the Association for Information Systems, 21, 1486–1506. Web.

Singh, R., Mindel, V., & Mathiassen, L. (2017). IT-Enabled revenue cycle transformation in Resource-Constrained hospitals: A collaborative digital options inquiry. Journal of Management Information Systems, 34(3), 695–726. Web.

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