Definition health care revenue cycle management

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Definition Health care revenue cycle management consists of the tools, methodologies and  techniques that medical institutions use to review patients' financial situation, issue invoices  and collect payments from the federal and state governments,  insurance companies  and other  organizations. Significance A health care institution must adequately manage revenues to stay financially afloat.  Some institutions use revenue management software to record transactions and  prepare  accounting reports  at the end of each month and quarter. Without sound revenue 
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cycle management procedures, a health care institution might experience financial distress  and file for bankruptcy. Types Health care revenue cycle management involves many strategies, including  procedures that hospitals and clinics use to improve cash collections and meet liquidity  goals. These strategies also include customer receivables valuation, underpayment recovery  policies and transactions involving federal government programs such as Medicare and  Medicaid. Medical practices have 2 types of patients - walk-in patients and corporate patients. Walk-ins usually pay by cash or credit card, corporates are billed once monthly and they pay when billed. All this is revenue to the practice. It's only a question of when you see the cash - immediately or in a month's time. Collections can mean different things to different people. To the cashier, it could mean that day's collections as per the patients seen cos she has to tally them both. To the boss, collections probably mean the practice's cash flow, as in how much money came in this month? That would mean cash inflow from all sources. A medical office would more than likely be hindered by disparity in these two areas. Separating collections and receivables in the medical office situation in to two categories would put a strain on resources, and cost the office more in the long run. It would also make it more difficult to define because the tow areas are very closely linked together. Having the two areas in two different rooms, away from each other, for example, would make it very difficult for the office to operate smoothly. Whilst separating the two areas would make it clear what is owed by receivables and what is owed by collections, initially separating the two would be difficult. Receivables may also take more time to process and so could hinder the process of collections, but at the same time it would again mean hiring more staff that this would mean more expense to the office. The office may also use an outside company to sort out its collections and receivables.
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