The Future of RCM: Revenue Cycle Management Trends To Watch In 2024

As the name suggests, Revenue Cycle Management (RCM) encompasses a practice’s full Cycle of Revenue: it begins when a patient books an appointment, and ends when the patient’s payment is claimed. In briefest terms: RCM is the means by which healthcare organizations collect their revenue, and it employs all administrative functions necessary for accomplishing this vital objective.

As healthcare organizations consider rising costs, changing fee structures, new competitive/holistic technologies, and tremendous pressure from patients (including voluminous FOIA requests), the Revenue Cycle Management Trends to Watch in 2024 include: 

• New RCM efficiency strategies
• Ways of future-proofing healthcare revenue
• Patient-centric RCM strategies
• New RCM innovations and optimizations, including digital transformation in RCM 
• And overarching financial sustainability trends in healthcare

The importance of staying ahead with these RCM trends cannot be understated in 2024. 

In large part this is because, according to the Healthcare Financial Management Association, “patients [now] represent the fastest growing payment source for healthcare providers” (as opposed to insurers). 

Common sense tells us that patients A) require much more straightforward payment methods than insurers have enjoyed in the past, and B) patients are increasingly insisting on paying for “value” as opposed to paying for “service.” Therefore, the smart money in 2024 is placing focus on maximizing the ease of patient-payments + patient-satisfaction, in order to treat more happy returning (paying) patients in the future. 

This places RCM-related decisions more centrally in the patient journey than ever before. 

To cite the HFMA once more, “The opportunity cost of not adapting to a patient-centric model is far too great to ignore. However, by developing a patient payment engine focused on driving patient loyalty and generating more payments, healthcare executives can bring meaningful operating margin to their organizations.”

The development of a smooth-running ‘patient payment engine’ should be a primary objective for any successful RCM strategy today.

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The Evolution of RCM: A Quick Recap

The origins of RCM date back to the earliest days of healthcare administration when physicians relied on people with pens and papers to care for all their financial operations. 

The disadvantages of a fully manual financial system are obvious to us today. Pen-and-paper bills and payments could easily be inaccurate, delayed, misread, or lost. And, as the entire process was manual– and excruciatingly repetitive and detailed– it was commonly prone to error. 

And yet, as welcome as technological advancements have been, the evolution towards a more ideal (digitized) RCM system has not been an easy one. 

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1970s: Computer technology is brought into healthcare facilities. From an RCM perspective, computers were first used to process incoming claims more quickly and accurately. 

Apart from the inherently steep learning curve, medical billing experts quickly came to embrace the addition of computers to their work processes. (But note: throughout the 1980s-1990s, each healthcare facility had the opportunity of forming their own systems and ‘rules’ for how the new technology was used for medical billing and record-keeping). 

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1996: The Health Insurance Portability and Accountability Act (HIPAA) was introduced, which set standards for the electronic exchange of healthcare information.

Again, from an RCM perspective, the intent of HIPAA’s new regulations was a sweeping one– to standardize electronic medical billing practices across American healthcare providers. This had never been attempted before.

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At the same time, HIPAA introduced the concept of the “covered entity,” which refers to any healthcare entity that transmits electronic health records. The chief goal here was to ensure that any organization with access to sensitive (electronic) data would be responsible for maintaining that data’s security and privacy– not just healthcare providers. 

While a noble and necessary objective, this step naturally brought a monumental number of “covered entities” into the already epic task of standardizing and regulating new electronic practices. 

Also of note, it’s at this point in the 1990s that cybersecurity– a still burgeoning concept in practice– becomes a new and important piece of administrative responsibility and care. 

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Early 2000s: Electronic Medical Records (EMR) and Practice Management Software (PMS) systems are introduced and quickly adopted. 

EMR and practice management systems served an obvious need, given the massive volume of sensitive data to be organized and protected, and the nonstop nature of a practice’s activities. That said, these very needs made the integration of these new systems some of the most challenging transformative efforts in the healthcare industry– and in a way, they remain so to this day.

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Current State of RCM: Where We Stand

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1. Predictive Data and Analytics

Predictive data and analytics are proving to be healthcare’s ‘Cinderella Story’ from both patient and provider perspectives. Forward-thinking healthcare organizations have already been using the ‘big data’ at their disposal for several years to ‘model’ different scenarios and discover new ways to get to their desired outcomes.This ‘modeling’ can be applied to any number of ‘soft’ scenarios (example, improving the perception of quality of care), and to achieving ‘hard’ population health initiatives.From an RCM standpoint, this ‘big data modeling’ is proving to be extremely helpful and accurate when it comes to assessing a payer’s propensity to pay or deny claims. 

To quote the vice president of Accounts Receivable for a national health solutions group that has leveraged predictive analytics and AI to model health plan behavior for more than six years, “We apply what we’ve learned from the models to predict, with regular accuracy, whether a payer will dispute, deny or pay a claim and in what timeframe.”By segmenting patients by their propensity to pay, predictive analytics can also help RCM strategists: 

• Focus attention on the highest-yield accounts

• Reduce cost-to-collect
• Forecast major AR events, including possible fluctuations and anomalies
• Anticipate organizational cashflow over time
• Identify warning signs at the earliest stages as patterns (fiscal ‘snapshots’) break away from desired ‘norms’

Not least, predictive analytics are ‘learning’ what will improve the patient’s understanding of their responsibility to pay, for what, why, and by when. In turn, this patient-centric use of ‘big data’ helps to decrease the number of payer denials, and increase patient satisfaction. And both these factors contribute towards greater revenue gains, less money spent, and wider margins.

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2. Automation and Process Improvement

According to the 2022 CAQH Index, revenue cycle automation presented a $22.3B saving opportunity.And according to a newer 2023 report from McKinsey and Harvard researchers, Artificial Intelligence could save the healthcare industry an incredible $360B each year– if AI and automation are more widely adopted. 

Naturally, some of these savings are realized by physicians who apply automation to patient communications, including referral management programs, and enrolling patients in automated programs to ensure more regular continuity of care. But obvious savings can also be found among RCM strategists and administrators who use automation to streamline their claims management, including prior authorizations, and healthcare and provider relationships– including the prevention of readmissions, and provider directory management.

AI-based automated medical coding deserves special note, as manual coding necessitates ongoing attention to change (and hence, higher workloads and costs). Automated (and/or Autonomous) medical coding can clearly improve accuracy, efficiency, and consistency. Note: ‘automated’ in this sense commonly means that AI presents a human coder with a shortlist of codes based on the data it’s extrapolated; ‘autonomous’ technologies assign a code without human supervision. 

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3. Telehealth and Its Impact on RCM

The rise of telehealth offers several new opportunities to revenue cycle management including: 

• Increased patient volumes (breaks down geo-barriers)
• Greater billing efficiency (capture charges digitally in ‘real time’)
• Enhanced patient collections (seamless online payments for telehealth appointments align more closely with healthcare’s more traditional ‘fee for service’ model). 

With conveniently automated reminders for patient-provider treatment sessions (from scheduling to payment), telehealth can become a transformative tool for RCM, acting in best-case scenarios as a practically passive new revenue stream. 

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4. Integration of Blockchain Technology

Blockchain remains a double-edged sword in the minds of executives worldwide. On one hand, the main purpose of blockchain is establishing trust between parties who need to exchange sensitive information. Using blockchain, the information is shared as an encrypted list of ‘blocks’ that cannot be erased or changed once recorded– in other words, blockchain ensures that no one, not your partner-parties, not even you, can tamper with your records. 

On the other hand, blockchain technology is commonly misunderstood, or is just vaguely associated with cryptocurrencies, and as such, blockchain does not always enjoy the reputation for trust that it may deserve. In terms of enhancing security, and transparency, blockchain technologies are proving to be highly effective for organizations who must store and share large amounts of sensitive data (most notably banks, insurers, hospitals, and governments). 

In the world of healthcare, blockchain has been most often applied with an eye toward cost-savings in high-touch collaborative processes, including insurance claims management.

According to a major reinsurance company (whose stock and trade lies in risk-management), Munich Re states: 

“Blockchain has the ability to help automate claims functions by verifying coverage between companies and [re]insurers. It will also automate payments between parties for claims and thus lower administrative costs for insurance companies. An analysis by Gartner estimates blockchain will generate $3.1 trillion in new business value by 2030.4 We can also envision a future state where new life insurance applications are submitted using blockchain.Another potential use of blockchain would be the transmission of any type of digital evidence for underwriting, including the use of electronic health records (EHR). When digital evidence is easier to incorporate into underwriting, we can expect future changes into other areas of pricing and product development. The combination of the Internet of Things (IoT) and Artificial Intelligence (AI) will lead to automation of insurance processes that will make our industry look very different in the near future. However, these are still new technologies that require proper due diligence before being fully leveraged by the insurance industry.”

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5. The Rise of Patient-Centric Payment Models

A patient-centric payment model is one that gives the patient a crystal clear understanding of:

• The cost for the patient’s service (stated in a transparent and easily-understood manner)
• The patient’s responsibility to pay that amount
• And the flexible payment options (and/or payment plans) that are available to the patient to do so

Often modeled after eCommerce payment solutions, the specific forms of ‘patient-centered’ payments may vary– but ideally they can be accessed online, anytime, anywhere, and offer a range of convenient and trustworthy payment options (including credit card, ACH, digital wallet, and fixed installment payments). While there are many choices to make in establishing your organization’s patient-centered payments, the benefits are easily seen. Patients who fully understand their billing process: 

• Enjoy a refreshing sense of empowerment and engagement
• Are more likely to make payments on-time

And in turn, RCM strategists who employ patient-centered payment practices: 

• Streamline their collections overall (for a healthier revenue stream)
• Reduce Accounts Receivable days (accelerating incoming cash flow)
• Shift financial responsibility (away from costly collections and toward the patient’s credit report). 

When patient-centered payment methods seem to be widely preferred by both patients (for convenience and ownership) and by healthcare leaders (for both savings and revenue), there seems to be no downside to the fiscal side of patient-centricity. 

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6. Advanced Data Analytics for Financial Health

A sophisticated tool for deriving deep meaning from financial data, advanced data analytics continue to gain in popularity among the most forward-thinking healthcare CFOs. As with blockchain adoption, we must consider the fact that undertaking a major technological project, like the adoption of advanced data analytics, is not the first initiative most finance experts will rush to head-up, or embrace. That said, common sense dictates that a deeper understanding of your organization’s financials will only serve to drive more informed decision-making and strategy. And studies now show that companies leveraging advanced analytics achieve 5-10% higher returns on assets than industry peers.A low-friction, high-adoption way to get started using advanced analytics is with real-time reporting and insights. Get regular updates, like daily or weekly rolling forecasts, instead of annual/quarterly forecasts, to make more ‘light-footed’ adjustments. Deepen your insights ‘tuning into’ your aggregate finances, and then to your granular finances (look for trends across your different services, facilities, expenditures, etc). Over time, your continuous, analytics-driven study and planning can establish finance as the definitive source of truth for your organization’s overarching performance and positive trends.

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7. Regulatory Changes and Compliance

Changing regulations are an evergreen (and ever-complex) challenge for the healthcare industry at large. For revenue cycle management, one of the most sweeping changes was ushered in on January 1, 2022: the “No Surprises Act.” Under this new law, patients only have to pay what they were quoted by their healthcare provider, or the equivalent of what they would have paid for an in-network service. In order to ensure compliance with this law and ensure protection from the highest volumes of consumer freedom of information act (FOIA) requests and independent dispute resolutions (IDRs) over billing discrepancies, providers are making extensive changes to their reimbursement, billing, notification, and disclosure practices.To this end, technological advancements have become not only beneficial, but necessary. Automated solutions, applied to regulatory challenges, accomplish tasks that would require human beings to spend more time (than they objectively have) to maintain compliance. 

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8. Outsourcing vs. In-house RCM

Healthcare providers are recognizing the benefits of outsourcing their medical billing and RCM needs. Typically, the benefits include greater cost-efficiency, reduced administrative burden, and improved revenue collection. An outsourced service provider will also be expected to leverage technology and data analytics to offer more comprehensive and competitive solutions. There’s no “one size fits all” answer for whether or not you should keep your medical billing in-house, or outsourced. That said, the various pros and cons are fairly uniform. Outsourced Pros:

• Costs: outsourced billing is often less expensive, by a margin of difference.
• Timely: outsourced billing teams are “pre-ramped” on their own systems, meaning little time is needed to get them up and running; and, outsourced teams can be held accountable for meeting the deadlines you’ve agreed upon.
• Less expertise needed: no need to be an SME in medical billing when you have hired outsourced experts to be your partner.
• More expertise gained: outsourced billing can be a crowded space; your potential outsourced partners will always be looking out for the best practices and best technologies to get the job done to maximum effect. Relatively few (if any organizations) have someone on staff with this level of focus and expertise.
• Many options/choices: some outsourced billing companies will offer tiers of support, or various programs for you to choose from. 
• IT required: an outsourced billing company will maintain their own tech stack and IT department. 
• Compliance: not to be underestimated, in contracting an outsourced medical billing partner, you shift some of the burden of risk and compliance away from your organization and onto your dedicated experts.

Outsourced Cons:

• Contractual obligations: you can never fully outsource the decisions you need to make regarding contractual obligations. This will always need to be handled by the healthcare organization, and when relevant, communicated to the outsourced billing company.
• Too few claims: you will need to meet a predetermined minimum volume of claims for most outsourced billing companies to decide you have a genuine need for their services. Or, as with the concept of “wholesaling,” the price of outsourced billing services can go up (rather than down) to handle a very small number of claims. The more claims you handle, the most cost-effective outsourcing your billing becomes.
• Less control: outsourced billing companies will follow the directions given to them; meaning it’s important to be clear in your agreement before actual billing work is being done.

Ultimately, if you want a scalable RCM infrastructure that makes it much easier to handle increasing patient volumes + new regulatory challenges, all while lowering overhead costs, you most likely want to outsource; the challenges of scaling RCM (hires, training, etc.) are made much more difficult when keeping everyone “in-house.”

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9. Cybersecurity in the RCM World

Healthcare cyber breaches hit an all time high in 2023 with more than 132 million Americans (roughly 40% of the U.S. population) being affected. Because revenue cycle management teams rely on sensitive patient and payment data to make claims, RCM makes an ideal champion for maintaining a vigilant cybersecurity posture in the world of healthcare– not least because RCM teams have (hard-won) experience implementing new processes around ever-changing compliance requirements. So, without proscribing to those who are already well-aware, here are some best-practices for RCM teams to keep in mind: 

• Education and experience is the first line of defense– if you can’t recognize that something seems suspicious, you can’t stop it. In fact, training is a focus named in the U.S. Department of Health and Human Services’ Health Industry Cybersecurity Practices: Managing Threats and Protecting Patients (HICP) Guidance.
• It pays to reduce your network’s scope– if your network (your attack surface) is complex or segmented, it can be harder to identify threats. By reducing your network’s complexity and segmentation, it’s easier to achieve the highest-levels of security and pass the narrowest auditing-scope, and, you also get the biggest bang for your cybersecurity budget’s buck this way. 
• Remember, compliance doesn’t equal security– being HIPAA or PCI compliant doesn’t mean you’re risk-free, it just means you won’t be facing fines. Without vigilant cybersecurity measures in place, whenever and wherever financial data is touching your network, there is vulnerability and risk.

For as long as healthcare organizations hold PII (personal identifiable information) and private financial information, they will always be an attractive target to bad actors. So always remember, questions and concerns about cybersecurity cannot be handled by IT alone, or by any department alone: the healthcare world at large must be vigilant in protecting sensitive patient information (read: most of the world’s sensitive information). And RCM leaders, you are on the frontline.

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10. The Role of Interoperability in RCM

Interoperability: the exchange of information between the financial and clinical realms. In a sense, this is what every patient, and every healthcare administrator, and perhaps even every physician has wanted at some point– anyone who has ever thought to themselves “I just did this, I just told you this, I just told SOMEONE over there EXACTLY THIS before.

”From referrals to admissions to transfers, interoperability ensures that everyone has all the relevant information– not least the patient, who may be as concerned about the financial situation they’re entering into, as their physical and/or mental health.

When finance was only focused on finance, and clinicians were only focused on treatments– it never made sense to prioritize interoperability. The rise of patient-centric care has brought this concept into the foreground, and the benefits are being enjoyed by all. 

‍To cite a very recent interview from Healthcare IT Today with Juli Forde Smith, Director of Strategic Partnerships at ZOLL Data Systems and Erica Gregory, Senior Vice President at Netsmart: 

‍“A streamlined patient intake process is an opportunity to create transparency with patients. For example, prior authorization and patient eligibility are now key steps to ensuring price transparency and fewer financial surprises for patients.‍

‍“So much of the experience for patients is a financial one,” added Smith. “The earlier and more seamlessly we can engage, the better…” ‍

‍“Real-time interoperability of financial data has reduced our administrative burden by as much as thirty percent,” shared Smith. “It has also improved patient collections by fifty percent and improved patient satisfaction across the board.”

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Industry-Specific Trends

Some of the RCM challenges specific to hospitals include:

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• Staying up to date on new codes: The more specialties a hospital treats (like Cardiology, Neuropathy, etc.) the more changing codes they need to monitor– no matter how sophisticated a hospital’s administration is, many find it difficult to stay up to date. 
• Providing accurate and complete documentation: When documentation problems occur, which can often happen in traumatic circumstances, it slows down a hospital’s entire revenue cycle, leaves room for inconsistencies, and decreases the number of actionable billable events. 

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Oftentimes, the most efficient path forward for hospital-specific RCM is to partner with an outsourced expert who knows how to simplify staff touch-points to ensure smooth documentation processes, and how to wisely incorporate the right automation technologies for more flawless coding. The mantra for hospital RCM teams should be about achieving success, without stress.

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12. RCM in Small Practices

One of the most common challenges RCM faces in small practices is: collecting patient payments. While the number varies slightly across studies, it is safe to say that more than 50% of American adults are enrolled in a high-deductible health plan in 2024– meaning they are usually responsible for all, or most, of what they owe to a small practice. 

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Many of these patients are unable to pay the full amount of their bill upfront, and most small practices are too lightly staffed (or wearing too many hats) to have sufficient time to chase down the money still owed to them. 

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The most efficient path forward for small practice RCM may feel like a hurdle, initially, but investing in the right “patient payment portal” technology should pay for itself with a relatively short time-to-value. Couple this new patient-facing payment technology with a tight, tailored strategy for small scale operations (put a focus on your staffing and training plan), and there’s no reason why smaller practices can’t survive and thrive.

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13. Specialty-Specific RCM Considerations

Specialty-specific medical practices face a few niche RCM challenges. First, a persistent error in medical coding, or in documenting complex cases can be catastrophic to the practice’s billing and revenue. 

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Second, if the specialty can be regarded in any way as a “nice to have” procedure, the practice can be thrown into financial turmoil by economic events beyond its control. Third, they are often, but not always, relatively lightly staffed; or the medical practitioners may sometimes lend a hand in the practice’s administrative tasks. 

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For these reasons, specialty-specific practices should almost certainly partner with a specialty RCM or medical billing association that can keep up with every changing code, every updated insurance policy, and every incentive program. In unique cases like these, it is almost 100% certain that a dedicated RCM team will deliver more earned revenue back to the practice than a busy front-office staff. 

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Future Predictions

14. The Next Big Thing in RCM Technology

• RCM Innovations on the horizon

From the Healthcare Dive: “The buzz around AI has increased as the ChatGPT model takes the internet by storm. It’s no different in healthcare. The ChatGPT AI tool has passed the U.S. medical licensing exam, authored a number of scientific papers and is being used to appeal insurance denials, hinting at real-world applications for the algorithms…”

• Potential game-changers for the industry

From Healthcare IT Today: “The role of coders, clinical documentation improvement specialists, and RCM specialists is going to change between now and 2025.  We all know the revenue impacts of these professionals, but how often do we think of them as an important part of our care strategy?  The short answer is not enough and that could be a problem as we head towards 2025…”

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15. Global RCM Strategies

From McKinsey:

‍“The RCM function could lay the foundation to harness technology to contribute to better system performance. The function is manual, complex, and dependent on stakeholders throughout health systems. In other words, RCM performance hinges on effective and timely collaboration. The potential of recent advances in technology, particularly gen AI, have highlighted the need to consider—or reconsider—incorporating these advancements into administrative functions, and doing so effectively holds the promise of further separating the health systems that thrive and grow from those that do not.‍

‍Leaders of health systems have often been skeptical of opportunities for tech-enabled performance improvement after years of automation and analytics projects that have not generated expected value, both within and beyond administrative functions. In addition to perceived technology limitations, these outcomes often resulted from operational challenges, skills gaps, a failure to improve the foundational infrastructure upon which technology depends, and approaches to deployment and measurement that weigh on projects from the start.‍Overcoming these challenges and capitalizing on the next wave of technologic innovation entails investing in the right mindsets, infrastructure, and capabilities throughout the revenue cycle and beyond. Specifically, healthcare organizations would need the following:

• top-team commitment to technology efforts, backed by a long-term vision
• a holistic approach to investing in technology instead of one based on ad hoc funding of one-off experiments
• a clear path to move offerings from pilot to system wide adoption, with distinct deployments for pilots and full-scale implementation and tailored change management
• a talent strategy that ensures technology efforts are led and supported by teams with experience in business, technology, and healthcare
• holistic indicators of future value to measure success

Operating in these different ways necessarily requires a change in approach, but the outcome could help health systems access untapped potential and do so in time for exciting opportunities to come.”

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Conclusion

In conclusion, RCM-related decisions are more central to ‘the health of healthcare’ and to the patient journey than ever before. 

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We’ve looked at how these vital decisions can be informed and enhanced by the following RCM trends to look for in 2024: 

• Artificial Intelligence and Machine Learning (predictive analytics for better decision-making, AI-driven patient engagement and support)
• Automation and Process Improvement (Streamlining billing and coding processes, Automated patient communication tools)
• Telehealth and its Impact on RCM (Billing for virtual visits, Telehealth and patient access services)
• Integration of Blockchain Technology (Enhancing security and transparency, Blockchain for claims management)
• The Rise of Patient-Centric Payment Models (Flexible payment solutions, Improving patient financial experience)
• Advanced Data Analytics for Financial Health (Real-time reporting and insights, Custom analytics for performance improvement)
• Regulatory Changes and Compliance (Upcoming regulations affecting RCM, Strategies for ensuring compliance)
• Outsourcing vs. In-house RCM (Comparing benefits and challenges, Trends in RCM outsourcing)
• Cybersecurity in the RCM World (Protecting sensitive data, Cybersecurity best practices for RCM)
• The Role of Interoperability in RCM (Enhancing data exchange across systems, Impact on patient care coordination)

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We’ve considered unique challenges for RCM in Hospital settings, as well as RCM ‘best practices for small practices,’ and special RCM considerations for specialty-specific practices. 

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We’ve speculated on The Next Big Thing in RCM Technology (Innovations on the horizon, Potential game-changers for the industry, and Global RCM Takeaways). 

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As we look forward to the ongoing evolution of RCM in Healthcare Organizations, large and small, we invite YOU to get in touch with Pharmbills to discuss your specific RCM needs and goals with us today!

Pharmbills was founded in 2018 to serve the healthcare industry. We believe that exceptional people make the difference, and that’s why we want to hear from you. One exceptional person to another, let's get in touch.