What Is a Revenue Cycle Assessment + Why Is It Important to Healthcare Providers?

For healthcare organizations, ensuring financial stability is crucial to providing high-quality care to patients. One key aspect of financial management in healthcare is the revenue cycle, which encompasses all aspects of the patient billing process, from insurance verification and pre-authorization to claims submission and payment posting. Effective revenue cycle management is essential to ensure accurate and timely reimbursement for services rendered.

However, the healthcare revenue cycle process is complex and can be impacted by a range of factors. These include changes in regulations, complex reimbursement requirements, rapid shifts in payor policies, and evolving revenue cycle management and payment integrity technology. As a result, healthcare providers may face revenue cycle challenges that diminish their financial health and put their operations at risk.

Conducting a revenue cycle assessment can help healthcare organizations identify these challenges and develop a plan to address them. By improving the revenue cycle process, healthcare providers can optimize revenue and reduce costs to improve their financial health as well as their ability to deliver high-quality care to their communities.

What Is a Revenue Cycle Assessment?

A revenue cycle assessment is a comprehensive review of a healthcare organization’s revenue cycle process, from patient registration to billing and collections. Revenue cycle assessments are relatively popular with healthcare organizations, particularly those that are looking to improve their financial performance and streamline their revenue management processes. These assessments are designed to evaluate the effectiveness of an organization’s revenue cycle, identify areas for improvement and develop strategies for optimizing revenue collection and management.

The goal of a revenue cycle assessment is to identify strengths and weaknesses in the revenue cycle process and recommend improvements that can optimize revenue, reduce costs and improve the overall financial health of the hospital or health system. The assessment typically includes a review of policies and procedures, technology systems, staffing and training.

Assessments can be conducted internally by a healthcare organization’s finance or revenue cycle team, or they can be outsourced to a third-party firm that specializes in revenue cycle management. Teams should consist of experts with specialized knowledge of healthcare finance, revenue cycle management and regulatory compliance.

Benefits of a Revenue Cycle Assessment

  • Increased Revenue: A revenue cycle assessment can identify opportunities to improve revenue by streamlining processes and reducing errors. This can lead to increased cash flow, improved collections and a reduction in accounts receivable.
  • Improved Efficiency: An assessment can also identify opportunities to improve efficiency by streamlining processes and reducing waste. This can result in a more effective use of resources, reduced costs and improved overall financial health.
  • Enhanced Compliance: An assessment can help ensure hospitals and health systems are in compliance with regulatory requirements, such as HIPAA and Medicare billing rules. This can reduce the risk of audits, fines and penalties, which can have a significant impact on financial health.
  • Better Patient Experience: An efficient revenue cycle process can also improve the patient experience by reducing wait times, improving communication and ensuring accurate billing.

Key Components of a Revenue Cycle Assessment

A revenue cycle assessment typically includes the following components:

  • Patient Access: The assessment will review the patient registration process to ensure patient data is accurate and complete, and insurance information is verified and entered correctly.
  • Coding + Clinical Documentation: The assessment will review the coding and clinical documentation processes to ensure the medical claim accurately reflects the care delivered. This includes ensuring all necessary codes are included on claims and all required documentation is present to prevent claims rejections and denials.
  • Billing + Collections: The assessment will review the billing process to ensure claims are submitted accurately and in a timely manner. It will also examine the accounts receivable process to ensure payments are received on time and posted accurately. This includes identifying any outstanding balances, denials or underpayments and effectively addressing them.
  • Technology: The assessment will review the technology systems used in the revenue cycle process to ensure they are up to date and functioning properly. This includes reviewing electronic health record systems, billing software and other technology used throughout the claim life cycle.
  • Staffing + Training: The assessment will review staffing levels and training programs to ensure departments are appropriately staffed and staff members have the necessary skills and knowledge to perform their jobs effectively. This includes identifying areas where additional training may be needed.

Signs a Healthcare Organization Needs a Revenue Cycle Assessment

There are several signs a hospital may need a revenue cycle assessment, including:

  • Decreased Revenue: If a hospital’s revenue has decreased over time, despite maintaining the same level of patient volume, it may be a sign there are issues with the revenue cycle management process.
  • High Volume of Claim Denials: If a hospital is experiencing a high volume of insurance claim denials, it may be an indication there are issues with coding accuracy or other billing processes.
  • Billing + Coding Errors: If there are frequent billing and coding errors, it may be a sign the revenue cycle management process isn’t functioning optimally.
  • Long Accounts Receivable Cycle: If a hospital has a long accounts receivable cycle, it may be an indication there are issues with the revenue cycle management process, such as inefficient billing processes or poor collections practices.
  • Inefficient Processes: If the revenue cycle management process is inefficient and requires a lot of manual intervention, it may be a sign there is room for improvement. This can result in higher costs and decreased revenue.
  • Lack of Compliance: If a hospital isn’t in compliance with industry standards or regulations related to revenue cycle management, it may be at risk of incurring penalties or fines.

How Often Should Healthcare Organizations Consider a Revenue Cycle Assessment?

In general, it is recommended healthcare providers perform a revenue cycle assessment at least once every three to five years to ensure their revenue cycle processes are up to date and functioning effectively. However, some providers may choose to perform assessments more frequently, particularly if they have experienced significant changes in their revenue cycle processes or have identified specific areas of concern that require further analysis.

Additionally, it is important for healthcare providers to continually monitor and evaluate their revenue cycle processes on an ongoing basis, through routine reporting and analysis of key performance indicators (KPIs) such as point-of-service collections, denial rates and days in accounts receivable. By regularly tracking these metrics, providers can identify potential issues early on and take proactive steps to address them, which can help to minimize revenue loss and improve financial performance over time.

Key Considerations Before Committing to an Assessment

Before committing to a revenue cycle assessment, healthcare leaders should consider several factors to ensure the assessment is successful and provides value to their organization. Some of the key factors to consider include:

  • Objectives + Scope: Healthcare leaders should clearly define the objectives of the revenue cycle assessment, including the specific departments, processes and systems they want to evaluate and the outcomes they hope to achieve. This will help guide the assessment process and ensure it is aligned with the organization’s overall goals and strategic plan.
  • Budget: Healthcare leaders should also determine the budget for the assessment, including any consulting or technology costs. The budget should be realistic and aligned with the organization’s overall financial resources and goals. The cost of implementing any recommended changes identified during the assessment should also be considered.
  • Resources: Understand the resources that will be required to conduct the assessment, including personnel, data and technology. They should ensure they have the necessary resources in place to support the assessment and they will be available when needed.
  • Assessment Approach: Consider the approach that will be used to conduct the assessment, whether it will be done in-house or with the help of a third-party. The assessment approach should be aligned with the organizations’ goals, budget and available resources.
  • Communication: Healthcare leaders should ensure they have a plan in place for communicating with staff about the assessment goals, process and timeline. Results of the assessment should be clearly communicated to stakeholders, including staff, patients and board members. Consider how assessment results will be used to drive improvements and achieve revenue cycle goals.

In Summary

Revenue cycle assessments are an important tool for healthcare organizations that are looking to optimize their revenue cycle management processes and improve their financial performance so they can deliver exceptional care to people in their communities. By addressing these opportunities, healthcare providers can improve cash flow, increase efficiency, ensure compliance and enhance the patient experience.


Learn more about how a revenue cycle assessment could impact your organization and your financial health.



Ensemble Health Partners is a full-service revenue cycle management company, delivering holistic financial health for more than 250 healthcare providers across the country. Our partnerships begin with an operator-led assessment of end-to-end revenue operations, which typically uncovers 5% or more in net revenue improvement opportunity. Engage our RCM experts today to build your revenue optimization playbook.