O’Neal, B., Friemel, A., Glowczewski, J., Coggins, J., Macchia, M., & Forrey, R. et al. (2018). Optimizing the revenue cycle to promote growth of the pharmacy enterprise. American Journal of Health-System Pharmacy, 75(12), 853-855. https://doi.org/10.2146/ajhp170335.

The article Optimizing the Revenue Cycle to Promote Growth of the Pharmacy Enterprise by Brian O’Neil and others describes the components of the revenue cycle and appropriate ways to ensure revenue cycle management. The authors use various approaches to optimize and manage the revenue cycle and the role and responsibility of the pharmacy leader in establishing an effective RCM process. The article discusses a broad array of topics, including prior authorization, bill auditing, payer engagement, and waste management as approaches to RCM.

The authors clearly define RCM as a series of clinical and administrative processes that ensures payment of services provided. In a pharmaceutical setup, this means paying for the purchase, dispensing, and administration of a pharmacy. The authors consider that 10-20% of the total charges in a health institution are composed of pharmaceutical charges. Therefore, the pharmacy leader should have knowledge of the revenue cycle to ensure no revenue leakage.

The authors consider prior authorizations, coverage determinants, and reviewing of compensation denials as essential tools in RCM. Prior authorization involves seeking approval and verification from the health insurance provider when rendering services to a patient. This ensures that high-cost medical care is paid since many insurers might reject the claim if not notified. Ensuring that authorizations are completed and obtained is essential before medication is administered. The leader should also review the insurance provider denials. Denial occurs in most cases when prior authorization for high-cost medical care is not pre-approved.

The maintenance of an audit process has been discussed as another approach to optimizing revenue cycle management. There should be a continuous audit to identify pricing errors and other inaccurate information that form part of billing and reimbursement procedures. Changes in reimbursement rates such as Medicare and other providers change from time to time, and it should be reviewed as it changes.

The authors also consider waste reduction and billing for waste initiatives to help enhance the institution’s margins by avoiding unnecessary costs. When a product is purchased and goes to waste without appearing on the patient bills represents lost revenue. The use of single-dose vials for high-cost infusion medications on a single patient can result in wastage if the remainder of the single-dose package must be discarded. The hospital should consider scheduling patients in batches to minimize wastage.

The authors admit that RCM is a complex and fast-evolving process that provides opportunities for pharmacists to generate interventions. The pharmacist is able to understand drug billing, authorizations, and bill for wastage. A health institution can incur heavy losses of revenue if pharmacists are not involved in revenue cycle management.

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. https://doi.org/10.1080/07421222.2017.1373005.

The article IT-Enabled Revenue Cycle Transformation in Resource-Constrained Hospitals: A Collaborative Digital Options Inquiry by Rajendra Singh, Vitali Model, and Lars Mathiasen discusses how IT theory can be expanded to include revenue cycle transformation. The article also discusses how hospitals facing resource constraints can enhance financial performance by investing in low-cost IT solutions in the revenue cycle. With the health sector in the US being complex, wasteful and underperforming, the authors noted that it is essential to regulate wastage in administrative health care operations. The expenditure in the health sector is the highest in the world. Despite this, many health institutions continue to face financial challenges due to rising costs and reducing reimbursement rates from insurance payers. This leaves many hospitals operating at a loss.

Integrating IT into the daily operations enhances the hospital’s ability to capture the value and improve performance. Hospitals can use IT to improve revenue cycle performance leading to significant gains. However, many small hospitals, particularly in rural areas, face resource constraints to implement IT. This article discusses a hospital revenue cycle management that begins when a patient determines a need for medical services and ends when payments have been resolved. The revenue cycle involves a host of other transactions and other payers, including Medicare, Medicaid, and private insurance. Therefore, managing a stable revenue flow is crucial if the hospital eliminates the complexity in the revenue cycle.

The research reported that hospitals in rural areas without sufficient resources had various RCM related problems. The authors proposed the development of digital options to improve RCM performance. Investing in IT helped the hospitals under observation to improve patient care and outcomes and improve business operations. Use of existing and low-cost, simple software solutions can be alternatives in these hospitals. Acquisition of costly RCM systems might be out of reach for resource-constrained hospitals. These hospitals struggle to maintain stable cash flow and must find other ways to leverage IT into their revenue cycle. Acquisition of low-cost software solutions can result in significant improvements. In acquiring the appropriate digital system, the hospitals need to determine the information requirements in various stages of RCM. This ensures that the software system acquired will fit the needs of that particular hospital. Efficient use of IT can help RCM staff identify and correct revenue cycle issues on time. Of importance is to reduce and detect front-end problems in the revenue cycle and detect other issues so that they can be addressed before they can negatively impact the overall RCM performance.

References

O’Neal, B., Friemel, A., Glowczewski, J., Coggins, J., Macchia, M., & Forrey, R. et al. (2018). Optimizing the revenue cycle to promote growth of the pharmacy enterprise. American Journal Of Health-System Pharmacy, 75(12), 853-855. https://doi.org/10.2146/ajhp170335.

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. https://doi.org/10.1080/07421222.2017.1373005.