Automating Revenue Cycle Management Can Reduce Costs to Collect
Automation can reduce cost in health systems' revenue cycle management. A survey of U.S. hospitals collections departments found that those that used automation in their revue cycle management had an average cost to collect of 3.51% compared to 3.74% for those that did not use automation.
A survey by the Healthcare Financial Management Association (HFMA) commissioned by AKASA found that hospitals and health systems can improve their revenue cycle management with automation that can lower cost to collect by 0.25%. The survey data, collected from 556 chief financial officers and revenue cycle leaders at hospital and health systems, was analyzed between July 8th, 2022, and August 2nd, 2022.
Healthcare organizations that leverage automation for revenue cycle management can achieve cost to cost collect ratios as low as 3.51%. Almost 40% of the respondents using automation reported an average cost to collect of 2.9% or less.
Meanwhile, those who do not use automation reported an average cost to collect of 3.74%. Half of these respondents reported an average cost to collect of 4% or higher, the survey noted.
The average cost to collect for all respondents was 3.68%, with 35% of healthcare leaders having a cost to collect of 2.9% or less and 43% reporting a cost to collect of 4% or higher.
The Healthcare Financial Management Association (HFMA) claims that the cost to collect refers to costs that drive revenue, such as expenses related to staff, salaries , and technology. Automating revenue cycle management can save hospitals and health systems millions of dollars a year.
Automating a health system's revenue cycle management could result in $11.5 million in savings. A health system with $5 billion in revenue and a cost to collect of 3.74% without using automation would equal $187 million. If the same health system automated its revenue cycle management and had a cost to collect of 3.51%, it would amount to $175.5 million, which signifies $11.5 million in savings from using automation.
"Automation is the key differentiator when moving the needle con cost to collect and creating large scale cost savings," Amy Raymond, Vice President of revenue cycle operations at AKASA, said in the press release. "Although healthcare revenue cycle leaders have been trying to reduce the rates for years, studies show cost to collect has remained stagnant and this collides with significant financial pressures facing most healthcare organizations."
In addition to sharing their progress in automating collections, healthcare financial leaders reported on how their cost to collet has changed compared to 2021.
Approximately 20% of respondents reported a decrease of 0.1% to 0.3% in their cost to collect ratio, while 38.8% reported an increase of 0.1% to 0.3% in cost to collect from the same year. Just over 40% reported no change in this ratio compared to the same time last year.
Automating revenue cycle management operations can help healthcare organizations increase accuracy and efficiency, reduce denials , and in turn, lower the cost to collect.