In private medical practices, revenue cycle management (RCM) is the foundation of financial stability. From patient registration to final payment, every step of the billing process affects cash flow, operational efficiency and the care you can deliver. But when your RCM is broken or outdated the hidden costs creep up and chip away at your practice’s financial health.
Let’s look at these hidden costs, how they impact you and what you can do to stop them before they hurt your bottom line.
Inefficiencies Drain Your Revenue
1. Late Payments
One of the biggest consequences of bad RCM is late payments. Practices with inefficient billing processes wait 45 days or more to get paid by insurers or patients. This means:
- Cash flow disruptions
- More reliance on lines of credit
- Extra administrative costs for follow-up
Practices that submit claims and follow up with payers faster see payments arrive 60% sooner.
2. High Denial Rates
Denied claims are a direct hit to your revenue. Industry reports show 9% of all medical claims are denied upfront, costing practices billions each year. Many of these denials are avoidable errors such as:
- Patient information errors
- Coding errors
- Missing documentation
Correcting and resubmitting claims takes staff time and resources. Practices with advanced denial management like PUREDI achieve an industry best 90% denial overturn rate and recover revenue that would otherwise be lost.
3. Uncollected Patient Balances
With high-deductible health plans (HDHPs) on the rise, patient balances are a bigger chunk of practice revenue than ever. But collecting from patients is harder than collecting from payers. Research shows healthcare providers collect only 55-60% of patient balances on average.
Uncollected balances aren’t just lost revenue, they’re also administrative overhead as staff have to spend time sending reminders and following up with patients. Automated billing and patient payment tools can improve collection rates and reduce staff workload.
4. Administrative Inefficiencies
Inefficient workflows—from manual data entry to duplicate billing processes—add hidden labor costs to your practice. MGMA says practices spend an average of $118 per claim on administrative tasks.
By automating parts of your RCM like claim submissions, denial tracking and patient billing you can reduce administrative costs and free up staff to focus on higher value tasks like improving the patient experience.
Long Term Consequences of Ignoring RCM Issues
The hidden costs of bad revenue cycle management don’t just affect your short term cash flow; they also pose long term risks to your practice’s financial health and reputation. These include:
- Burnout: Administrative inefficiencies add extra stress to staff leading to higher turnover and recruitment costs.
- Patient Dissatisfaction: Billing errors or delays can frustrate patients and damage trust and loyalty.
- Stunted Growth: Revenue lost to inefficiencies could be reinvested in new services, equipment or staff.
How PUREDI Helps Practices Address Hidden Costs
At PUREDI we know what practices go through when managing their revenue cycles. Our data driven approach helps practices identify and eliminate inefficiencies that lead to hidden costs. Here’s how we do it:
- Faster Claims Resolution: Our clients get 60% faster claims processing so cash flow is steady and disruptions are minimal. We automate submissions and follow ups to reduce delays and improve collection times.
- Advanced Denial Management: Our multi-clearinghouse system tackles denials head on. Practices that work with PUREDI achieve a 90% denial overturn rate and get money back in their bank accounts quickly.
- Reporting Tools: We give you actionable data on your practice’s financial health so you can monitor key metrics like Days in A/R, Net Collection Rate and Denial Rate. This data helps you make informed decisions to grow.
- Patient Payment Support: Our solutions include online payment portals and automated reminders so patients can pay their balances easier. This improves collection rates and the patient experience.
Manage Your Revenue Cycle
The costs of bad revenue cycle management are real but they’re also avoidable. By addressing inefficiencies, tracking the right metrics and working with experts your practice can:
- Reduce cash flow disruptions
- Get revenue back from denied claims
- Minimize administrative costs
- Improve patient satisfaction
Get in touch today. Free billing assessment. Grow your practice.
