What is Cash Flow Cycle in Medical Billing

Cash flow in medical billing refers to the amount of cash flowing in and out as a result of medical practice in a hospital at a given time. The cash flow allows the hospital to pay its staff including nurses and doctors, to pay bills for hospital infrastructure, medical equipment, emergency medicine, and in-patient and out-patient facilities. It also helps in regulating the revenue cycle by inviting true insurance claims leading to maximum reimbursement without any having any denied claims or insurance fraud. This helps the hospital to function more efficiently without losing any revenue.

However, boosting the revenue cycle is not easy for the cash flow may get affected by the following factors.

Fluctuating Patient Base: Patients are likely to change hospitals and consult other doctors for the second opinion. This happens because they want to get instant results and if they don’t see improvement in their health fast enough then they tend to switch hospitals for medical care. Even though this process of switching hospitals is not advisable due to its interference with the treatment no hospital can stop its patients from getting the second opinion. This shift from one hospital to another is likely to affect the cash flow. An increase in the patient base is profitable but a decrease in the patient base is not good for the revenue cycle.

Increase in Monthly Expenses: Hospitals are always aiming at improving the quality of medical care. This requires investment in various kinds of medical facilities from hiring a physician to getting new equipment. An increase in the bills of these investments may also hit the revenue cycle.

Increase in Taxes: Taxes tend to increase or decrease. However, paying a surplus amount of money due to an increase in tax is also likely to affect the cash flow.

So, the health care industry is dependent on medical billing to generate revenue for its uninterrupted functioning. Without finances, no hospital would be able to provide medical care and facilities to its patients. It is due to the continuous revenue generation cycle that hospitals are able to fund new medical equipment and projects for the betterment of the world. It is, therefore, hospitals outsource medical billing and collection services from a prominent medical billing company. Outsourcing medical billing service is one way to ensure an enhanced cash flow cycle.