---
title: "Transforming RCM Operations: Solutions for Healthcare"
description: Optimize Revenue Cycle Management (RCM) to combat rising healthcare costs and shrinking margins. Learn about the benefits of outsourcing RCM with Flatworld Solutions.
---

[blog](https://pages.flatworldsolutions.com/blog)

# [Transforming RCM Operations: Solutions for Healthcare](https://pages.flatworldsolutions.com/blog/transforming-rcm-operations-solutions-for-healthcare)

 Written by [Flatworldsolutions](https://pages.flatworldsolutions.com/blog/author/flatworldsolutions) | Jul 2, 2024, 11:15:49 AM

Every medical establishment, such as clinics and physicians, has always had the prerogative of providing the best care to its patients. Yet, though inherently necessary for the profession, this selfless approach makes business realities complex. 

This intricacy has historically been an industry where the organization often bears the costs of providing care before they are ultimately paid for by either insurance companies or the patients themselves. Therefore, revenue cycle management (RCM), the process of charting the journey from patient scheduling to payment reconciliation, has always been essential in keeping the healthcare industry going regarding cash flows.

For a long time, RCM leaders were not considered part of the executive team—the entire team was seen as a tactical, back-office function. But now, it has become critical for the survival of institutions.

## Increasing Costs and Shrinking Margins

Two main factors are at play for this shift: rising costs. According to a recent [American Hospital Association (AHA)](https://www.aha.org/press-releases/2024-05-02-new-aha-report-hospitals-and-health-systems-continue-face-rising-costs-economic-pressures) report, industry-wide inflation grew 12.4% between 2021 and 2023. In the same period, labor costs increased by $42.5 billion, covering nearly 60% of a hospital’s budget. Drug prices rose, too - 2023 saw an increase of 35% in median annual list prices for new drugs compared to the previous year. All this means that running a care facility, especially in the post-pandemic era, is becoming increasingly expensive.

That’s why the second factor—dwindling cash reserves—becomes make or break for organizations. A report by Strata Decision Technology states that since the start of 2022, the number of days cash on hand for hospitals and health systems has declined by 28.3%. The harsh reality is this: a failing RCM function could quickly close a marginally performing hospital for good.

So, despite all these financial strains, transforming your RCM operations is becoming necessary. However, one must be aware of how the function has dramatically evolved for effective transformation. 

Today’s RCM is not just about collecting payments but rather juggling a bunch of essential roles:

- **Effective Patient Touchpoint**: Interactions with caregivers are not the only ones a patient has with your organization. Today’s healthcare seeker expects 24/7 assistance, making RCM a critical customer service component. One negative experience at any point, from scheduling to asking for payment, and they will be heading to your competitors.
- **Guardian of Data:** Throughout the entire RCM process, you deal with your customers' susceptible personal health information (PHI). Now, consider this: healthcare data breaches are the costliest compared to other sectors. Just this year, the [Kaiser Foundation](https://www.fiercehealthcare.com/providers/kaiser-permanente-says-134m-impacted-data-breach#:~:text=The%20Kaiser%20Foundation%20Health%20Plan,any%20misuse%20of%20those%20data.) saw a breach that affected 13.4 million people. Therefore, your RCM has to be fortified with the best security tools.
- **Compliance Monitor:** EHR, telehealth, and robotic process automation have become transformative for modern institutions, but they also come with many additional regulations. Not following them could be costly—HIPAA fines can reach $50,000 per case.
- **Process Optimizer:** Inefficient RCM usually involves coding errors, billing errors, and charge lags, all of which contribute to high denial rates. According to a 2023 study by Premier, hospitals spend just under $20 billion annually on denials, and most of that goes into claims that should ideally have been paid out at the time of submission.

## Leveraging technology to streamline RCM processes

RCM becomes a critical process to optimize, but hiring new employees or overhauling workflows could become highly cost-prohibitive. According to [Deloitte](https://www.youtube.com/watch?v=Gcm2KqT1OoU), a vast majority (85%) said staffing challenges would majorly impact strategy for 2023, and RCM has traditionally been a field with more turnover than most. Therefore, an effective solution could be outsourcing all your RCM operations to someone with natural prowess and experience in the field, like us at Flatworld Solutions.

This strategic decision will allow you to focus on growing your practice and providing the best care to your patients while we:

- Incorporate an effective denial management strategy
- Eradicate all the human errors in billing & coding through phased automation of rinse and repeat tasks
- Keep your data safe through best-in-class security tools
- Improve customer satisfaction through effective customer service at every step

The initial costs of outsourcing may be a temporary stumbling block, but think long-term. According to [Black Book Market Research](https://blackbookmarketresearch.com/uploads/pdf/2023-Black-Book-State-of-Healthcare-Industry-IT-Consulting-and-Management-Advisors-Report-1.pdf), hospitals that outsource RCM functions can achieve cost savings ranging from 15-30% through reduced staffing costs and operational efficiencies. 

So, if you want to transform this incredibly essential piece of the puzzle, outsource your RCM operations to industry experts for improved efficiency.

Choose Flatworld as your RCM partner today!

[View full post](https://pages.flatworldsolutions.com/blog/transforming-rcm-operations-solutions-for-healthcare)

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