Revenue Cycle
Front end, mid cycle, back end
The revenue cycle is the financial supply chain from scheduling to cash. Front end: scheduling, preregistration, insurance eligibility and benefit verification, prior authorization, financial counseling, and point-of-service collection. Mid cycle: charge capture, charge description master maintenance, clinical documentation integrity, coding, charge reconciliation, and claim edits. Back end: claim submission through the clearinghouse, denial management and appeals, accounts receivable follow-up, cash posting, refunds, bad debt, and collections.
Know the metrics and their formulas. Clean claim rate is first-pass accepted claims divided by total claims submitted. Days in accounts receivable equals net AR divided by average daily net revenue. Net collection rate equals payments divided by net revenue, where net revenue is gross charges less contractual adjustments. Denial rate splits into initial and final denials. Charge lag measures days from service to charge posting; cost to collect compares collection expense to cash collected.
Common traps: computing days in AR with gross charges instead of net revenue; including contractual adjustments in the numerator of the net collection rate; treating a first-pass denial as a final denial; and blaming coding for denials that actually originate at registration or authorization.
Worked example: a hospital has 2.4 million dollars in net AR and 40,000 dollars in average daily net revenue. Days in AR equals 60. If the target is 45, leadership should examine authorization denials and unbilled accounts, not just push collectors to call payers faster. Rule of thumb: follow the denial upstream; most avoidable denials are created before the claim exists.