REVENUE CYCLE AND REIMBURSEMENT INTERRELATIONSHIP 2

Revenue Cycle and Reimbursement Interrelationship

Hospital organizations need revenues to sustain their operations and provide effective
care for patients. They generate the revenue through payments that they receive for healthcare
services that they provide to patients as well as the medicines that they sell to them. Thus, the
clinical department is the hospital’s main source of revenue. While in some cases the payment is
made by patients themselves, the vast majority of revenues that hospitals get come from
reimbursement by healthcare providers of the patients (Harrington, 2015).
The process of getting this reimbursement is not a straightforward one. For hospitals to
get the required reimbursement from healthcare insurance providers they need to provide a
comprehensive list of all billable items to the insurance provider of the patient (Rauscher &
Wheeler, 2008). It is only then that they can be reimbursed. Reimbursement is, therefore, the
final phase of revenue cycle. This cycle includes both administrative and clinical functions that
help in the capturing as well as management and collection of revenues for services provided to
patients (Rauscher & Wheeler, 2008). When the revenue cycle management is not done properly,
healthcare organizations run the risk of being underpaid or experiencing long delays before they
get paid. The speed of reimbursement and the amounts of money involved are, therefore, directly
related with the effectiveness and efficiency of the revenue cycle management. Timely
reimbursements in the desired amounts lead to even more efficient revenue cycles.
There are healthcare facilities who struggle in establishing effective revenue cycle
management because of, among other factors, difficulties in complying with strict standards and
poor coding. However, these and other problems have been minimized through standardization
and automation.

REVENUE CYCLE AND REIMBURSEMENT INTERRELATIONSHIP 3
These solutions are particularly crucial in maintaining an effective and efficient
Chargemaster which contains the list of all billable items that hospitals present to patient’s health
insurance providers for reimbursement (Harrington, 2015). An effective Chargemaster helps in
maintenance of accurate codes, definitions, and costs which significantly increase the integrity of
revenue cycle thus making sure that the hospital receives proper reimbursement for the
healthcare services that it provides.

REVENUE CYCLE AND REIMBURSEMENT INTERRELATIONSHIP 4

References

Harrington, M. K. (2015). Health Care Finance and the Mechanics of Insurance and
Reimbursement. Jones & Bartlett Publishers.
Rauscher, S., & Wheeler, J. R. (2008). Effective hospital revenue cycle management: Is there a
trade-off between the amount of patient revenue and the speed of revenue
collection?. Journal of Healthcare Management, 53(6).