Revenue cycle management (RCM) plays a pivotal role in how healthcare organizations get paid—from the moment a patient schedules an appointment to the final payment of a bill. As the financial backbone of healthcare operations, revenue cycle management directly impacts cash flow, compliance, and the patient experience.
In today’s environment of rising costs, staffing shortages, and shifting reimbursement models, many health systems are reevaluating their approach to RCM. The question is no longer just, “What is revenue cycle management?”, but, “How can it be optimized?”
In this article, we’ll break down the core components of RCM, explore common pain points, and highlight how leading organizations are transforming their revenue cycle with automation, analytics, and strategic partnerships.
Let’s dive in!
What Is Revenue Cycle Management
Revenue cycle management is the end-to-end process healthcare providers use to track patient care from initial appointment scheduling to final payment. It encompasses all the administrative and clinical functions that contribute to capturing, managing, and collecting patient service revenue.
At its core, RCM ensures that providers are reimbursed accurately and efficiently for the care they deliver. Done well, it keeps operations running smoothly and financially sustainable. Done poorly, it can lead to delayed payments, denied claims, and frustrated patients.
The revenue cycle includes several interconnected steps:
Patient registration and eligibility verification → Collecting patient information and confirming insurance coverage at the start of care.
Charge capture and coding → Accurately recording services provided and translating them into standardized medical codes.
Claims submission → Sending coded claims to payers (like insurance companies) for reimbursement.
Payment processing → Receiving and reconciling payments from payers and patients.
Denial management → Addressing and resolving denied or underpaid claims.
Patient billing and collections → Communicating patient balances and collecting outstanding amounts.
Each step must be handled with accuracy and speed to prevent revenue leakage and maintain a healthy bottom line. When the process works well, patients are billed correctly, claims are processed quickly, and providers have the cash flow they need to deliver high-quality care.
Despite the importance of RCM, the entire process is full of friction points that can slow things down and drive up costs—especially in today’s healthcare environment.
Common Revenue Cycle Management Challenges
Even with a defined revenue cycle management strategy, many healthcare organizations find themselves constantly battling inefficiencies that affect everything from reimbursements to patient relationships. Here are some of the most common—and costly—roadblocks in today’s RCM landscape.
Staffing Shortages and Turnover
Healthcare providers across the country are facing a widespread staffing crisis—and RCM departments are no exception. Medical billing, coding, and collections require highly specialized knowledge, yet many organizations are struggling to retain experienced staff. When turnover is high or departments are understaffed, the entire revenue cycle slows down. Errors increase, follow-ups are delayed, and tasks like denial management or collections can fall through the cracks. Even small gaps in staffing can quickly ripple into major revenue delays.
Fragmented Technology Systems
The average health system may be juggling multiple systems for EHR, billing, coding, and claims processing—and in many cases, those systems aren’t integrated. This lack of interoperability leads to duplicated data entry, inconsistent reporting, and a higher risk of mistakes. Staff waste valuable time switching between platforms and reconciling information manually. The result? Slower cycles, more denials, and a poor experience for both patients and providers.
High Claim Denial Rates
Denied claims aren’t just frustrating—they’re expensive. According to the State of Claims Report from Experian, healthcare providers are currently seeing rejection rates as high as 10-15% on their first submission, and up to 65% of those denials are never resubmitted. Common causes include incorrect coding, eligibility errors, and missing documentation. For revenue cycle teams already stretched thin, appealing denials can feel like an uphill battle. Without a clear process and the right tools in place, revenue stays denied.
Manual, Error-Prone Processes
Despite advances in automation, many organizations still rely heavily on manual processes to manage critical RCM tasks like charge entry, billing, and payment posting. These workflows are time-consuming and leave too much room for human error. A single typo can delay payment or result in a denied claim. Over time, these small inefficiencies add up to major financial leakage and administrative burden.
These challenges don’t just affect financial performance—they directly influence the patient experience. From confusing bills to long wait times for resolution, outdated revenue cycle practices can erode trust and damage a provider’s reputation.
That’s why many forward-thinking health systems are stepping back and reimagining their approach to revenue cycle management.
How Leading Health Systems are Rethinking RCM
As the healthcare landscape evolves, leading health systems are taking a more strategic, technology-forward approach to revenue cycle management. Rather than treating RCM as a back-office function, they’re using it as a lever for better financial outcomes, stronger compliance, and a more patient-centered experience.
Automation and Integration
One of the most impactful shifts is the widespread adoption of automation and integrated platforms. From eligibility checks to claims submission and payment posting, automation reduces errors and accelerates turnaround times. Integrated systems also improve data sharing between departments, enabling a more coordinated, real-time approach to managing the revenue cycle.
A Strategic Approach to Outsourcing
Selective outsourcing is on the rise, with health systems turning to specialized partners to manage specific RCM functions—or even the full cycle. Outsourcing areas like billing, collections, and denial management gives organizations access to deeper expertise, more advanced technology, and predictable performance—without expanding internal headcount.
Data-Driven Optimization
More providers are using analytics and KPIs to guide decision-making across the revenue cycle. By tracking metrics like days in A/R, denial rates, and clean claim percentages, they can quickly spot inefficiencies and make informed process improvements that drive real financial impact.
Improving the Patient Financial Experience
Patient satisfaction doesn’t end at the point of care—it extends into billing and collections. Leading organizations are modernizing the patient’s financial journey with tools like online payment portals, upfront cost estimates, and personalized communication that make it easier for patients to understand and manage their bills.
More Than Cost-Cutting
While cost savings are part of the equation, the real goal is performance. Smarter RCM strategies lead to faster reimbursement, stronger compliance, fewer write-offs, and better adaptability to payer changes. For health systems shifting toward value-based care, aligning RCM with quality metrics and patient outcomes is becoming equally important.
To bring these strategies to life, many health systems are turning to business process outsourcing (BPO) and third-party administrators (TPAs) for hands-on support in key areas of the revenue cycle.
BPO and TPA Services For Revenue Cycle Management
As health systems look to modernize their revenue cycle management strategies, many are discovering that they don’t have to do it alone. Business process outsourcing (BPO) providers and third-party administrators (TPAs) can serve as valuable extensions of internal teams—bringing specialized expertise, scalable infrastructure, and technology-enabled processes to the table.
BPO and TPA services are especially effective in high-volume, resource-intensive areas of the revenue cycle, including:
Eligibility Verification
Ensuring patient insurance coverage is verified accurately and up front helps prevent downstream issues like claim denials or delayed payments. Experienced partners can manage this process efficiently, using automated tools and payer integration to improve speed and accuracy.
Claims Management and Adjudication
From coding and claim submission to adjudication and payment integrity, outside partners can help reduce administrative load and improve reimbursement outcomes. Organizations like BHPS also support this process through advanced reporting and oversight tools that improve visibility across the payment lifecycle.
Billing, Collections, and Member Support
TPA and BPO teams can provide structured billing workflows, patient collections support, and responsive call center services to help resolve patient questions and drive better financial engagement. These functions often integrate with related services such as pharmacy, dental, and wellness benefits—creating a more seamless member experience.
Medical Management and Direct Contracting Support
Some partners also assist with prior authorizations, utilization management, or direct-to-employer contracting. These capabilities allow health systems to strengthen operational efficiency across both clinical and financial touchpoints.
Rather than replacing internal teams, the right BPO or TPA provider complements them—helping health systems streamline core revenue functions, adapt to payer demands, and focus more time on delivering quality care.
What to Look for in a Revenue Cycle Management Partner
Choosing a partner to support your revenue cycle operations is a strategic decision—one that can directly impact your organization’s financial performance, compliance, and patient experience. Here are four key qualities to prioritize when evaluating potential RCM vendors or third-party administrators:
Deep Healthcare Expertise
Revenue cycle management isn’t one-size-fits-all. Your partner should have a strong foundation in healthcare operations and a clear understanding of payer policies, clinical workflows, and industry regulations. Look for organizations with experience working alongside hospitals, health systems, and provider groups—not just generic back-office support providers.
Proven Results with Similar Organizations
Case studies, references, and performance metrics matter. A strong RCM partner should be able to demonstrate success in organizations similar to yours—whether that’s by reducing denial rates, accelerating days in A/R, or improving collections. This track record shows they understand your challenges and know how to navigate them.
A Scalable, Flexible Approach
No two health systems are exactly alike. The ideal partner can tailor their services to meet your specific needs today—and scale as those needs evolve. Whether you’re outsourcing a single function or a broader set of processes, flexibility and responsiveness are essential.
Transparent Reporting and Communication
RCM success requires visibility. Your partner should offer clear, consistent reporting and be available to talk through trends, troubleshoot issues, and collaborate on improvements. This level of transparency builds trust and ensures alignment as your strategy evolves.
Organizations like BHPS focus on delivering this kind of partnership—grounded in healthcare experience, backed by data, and cutting edge technology and integrations built around each client’s unique goals.
Frequently Asked Questions About RCM
What is revenue cycle management in healthcare?
In healthcare, the revenue cycle refers to the entire financial process that begins when a patient schedules an appointment and ends when the provider receives full payment. It includes everything from insurance verification and medical coding to claims submission, payment posting, and patient billing.
What’s the difference between revenue cycle management and medical billing?
Medical billing is a major component of revenue cycle management, but it’s just one piece of the broader picture. RCM is a broader, end-to-end process that covers all administrative and financial tasks related to patient care and reimbursement. While medical billing focuses on submitting and tracking claims, RCM includes additional functions like eligibility verification, denial management, and financial reporting.
How can an organization improve its revenue cycle management?
Improvement starts with identifying where breakdowns occur—whether that’s in eligibility verification, claim submission, or patient collections. From there, organizations can take steps such as:
- Automating repetitive, error-prone tasks
- Integrating systems to reduce manual handoffs
- Monitoring key metrics like denial rates and days in A/R
- Providing clearer, more transparent patient billing
- Partnering with experienced vendors or a third party administrator for added support
The most effective improvements focus on both performance and patient experience—ensuring the revenue cycle runs efficiently without creating unnecessary friction for staff or patients.
What are the benefits of outsourcing parts of the revenue cycle?
Outsourcing can help reduce errors, improve turnaround times, and free up internal staff to focus on higher-value activities. It also allows health systems to access specialized expertise, advanced tools, and scalable support without having to build or maintain that infrastructure in-house.
Is automation and technology replacing revenue cycle teams?
Technology and automation are transforming many aspects of the revenue cycle—but not replacing human teams. Instead, it’s being used to handle repetitive, rules-based tasks (like claims scrubbing or eligibility checks) so that staff can focus on more strategic work. The most effective RCM strategies blend automation with skilled human oversight.
Final Thoughts on Revenue Cycle Management
In today’s healthcare environment, revenue cycle management isn’t just an operational necessity—it’s a strategic asset. When managed effectively, it drives better financial performance, supports compliance, and creates a smoother experience for patients and staff alike.
But the revenue cycle is evolving. Health systems are rethinking traditional models in favor of smarter, more flexible solutions—from automation and analytics to selective outsourcing and TPA support. The most successful organizations are those that take a proactive approach: identifying inefficiencies, embracing innovation, and aligning their RCM strategy with broader organizational goals.
If you’re looking for a strategic partner to help improve your revenue cycle, contact us today to see how our dedicated team can help.