Impact of Financial Management In Medical Billing: 6 Common Issues in the Revenue Cycle

Impact of Financial Management In Medical Billing: 6 Common Issues in the Revenue Cycle


Financial management has a pivotal role in medical billing and revenue cycle management. However, it is inevitable for contemporary healthcare organizations to adopt the emerging trends of financial management practices. These practices should be incorporated into the organization’s strategy to gain the best revenue management results through business growth and revenue generation in the highly competitive healthcare industry. Especially the understanding of the cyclical healthcare industry has been drastically controlled by the changes in the market share. The most probable reason is the slow financial growth rate in the cyclical healthcare industry. The article will discuss the common issues in the revenue cycle.

Claim Denials And Rejections

Billing and coding errors in claims contribute to an increase in the risk of claim denials or rejections. Claim denials could cause high administrative costs and delays in reimbursement. Claim denial has a chance to re-appeal, and delayed reimbursement could compensate for the expenses. However, claim rejection is the biggest issue in managing the revenue cycle. It is irreversible and can never be reimbursed.

Impact On Revenue Cycle

The high volume of claim rejections could harm the organization’s financial growth and reduce its market share. However, despite other factors, the most effective things in such a situation are their margins and the healthcare provider’s performance. For the market share, fierce competition exists in the healthcare industry. The variance in healthcare providers’ income due to claim denials or rejection is under the strict control of the economic factor as compared to other factors.


That is why, under such circumstances, it is also better to collect necessary documents that help to support the claim and for the review of a third party. The insurance company can also request that you review your request. In addition, you have the right to ask the insurance company to share the reasons behind claim denial or rejection.

Billing Errors

Another common revenue cycle issue is billing errors. It might be due to using the wrong code, delayed submission, or needing help to follow the regulatory compliance of the regulatory authority. Furthermore, the most important reasons for billing errors are incomplete patient information, no coverage under the health policy, billing duplication, mismatch codes, and lack of supporting documents. It was sometimes billing high than normal against the services provided to patients. Sometimes, billing multiple times for the services that should be billed at once could contribute to the billing error.

Impact On Financial Management

The goal of the private sector is to make a maximum profit, while the purpose of govt. It is to work for the welfare of the general public. In the private sector, budget decisions are made by top management, while in the public sector, the public participates. That is why billing errors could lead to a place strong effect on the revenue management of the organization.


For the financial management process, the legislative role is vital for transparency and accountability for every medical billing and coding step. The main role of the legislation in billing errors is to determine the common problem of whether has regulatory compliance or not. The legal role is also to create harmony in reducing billing errors and reducing the risk of billing denial or rejections. To end the problem, clean claims should be the utmost priority of billing and clearinghouses.

Late And Inaccurate Submission Of Claim

The other common issue in financial management is the delay or inaccurate submission of claims. Every claim has some specified period with which claim submission is necessary. For instance, medical necessity and old age claims have specific set periods. The submission of these claims should be on time to avoid claim denial.

Impact On Financial Management

It has a profound impact on the financial management. When many claims get delayed, the chances of delayed reimbursement will go higher and higher. It breaks the financial process and drastically influences the healthcare provider’s wages and infrastructural expenses. It could contribute to business economic loss and even turns out in bankruptcy.


Always ensure to make a claim submission within the specified period. For medical necessity, the claim should be submitted within 15 to 30 days.

Lack Of Clear Patient Financial Responsibility

Sometimes medical practitioners need to communicate with the patient about their financial burden. Co-payments, policy roles, and self-payments are other valid options for paying medical bills. Sometimes lack of clearance about these options could confuse healthcare providers and patients.

Impact On Revenue Cycle

It could lead to influence the financial well-being of the organization. The expenses will exceed the total profit, leading the organization toward a financial loss.


Please communicate with the patient about their financial responsibility. Share the knowledge of co-insurance and self-payment with them.

Inefficient Collection Process

The management of funds efficiently and effectively to achieve the long and short-term objectives of the organization. Efficient collection of funds helps create harmony between the motives of the organization’s employees and the business’s goals. It also includes making the right decisions to maximize profit and where to invest capital of the organization to compete in the market. This is the responsibility of top management.

Impact On Financial Management

The aforementioned issue has the potential to cause a major disturbance in the process of generating revenue, which can have a significant impact on the financial stability of a company.


Always remain diligent, communicate with healthcare providers, and remain updated with the latest development in legislative changes.

Lack Of Staff Training And Education Facility

Staff training and education is also a significant issue that could impact the financial management. Staff should be well-versed in the latest codes, legislative changes, and coding updates. Otherwise, claim submission is delayed, and claim denials and rejections could harm the progress of the healthcare organization.

Impact On Financial Management

It is possible that there may be instances where reimbursement may be delayed or there could be a breakdown in the financial management. These types of situations can cause potential setbacks and challenges. It is important to be aware of these possibilities and take proactive measures to mitigate any potential negative impacts.


Arrange in-house training sessions for employees, and attend webinars, seminars, or workshops to remain updated with the latest development in the healthcare industry. You can also hire best outsource medical billing company like Ensure MBS. If you do outsource your medical billing, you can give all the attention to your patient care and let the outsourced medical billing company handle all the issues of your medical billing.


Due to the high competition in the market, operations run at maximum efficiency, and margins stay at a low rate. Other companies offer more services to patients in the healthcare industry, investing more in billing and coding jobs to attract more profit than others. In these industries, companies willingly temporarily lose their investment to allure competitors to give up or declare bankruptcy. Once the competitors ejected, they raised their prices and eventually gained a high market share. Sometimes, such strategy correctly works, or sometimes it backfires, adds insult to injury in the form of higher losses.


What is the purpose of financial management in medical billing?

The purposes of financial management are as follows:

  • Depending upon the resources, whether the business will make a profit or not.
  • In which area of the business funds are utilized to make more profit in the future?
  • Measure the actual business performance against available revenues.
  • Depending upon variance, management can relocate funds from one area to another.
  • Using the available resources effectively and efficiently.

What are the considerations we should keep in mind for financial management?

Financial management is required to ensure the following:

    • To ensure that resources are well utilized to achieve business goals.
    • To manage the affairs of the business effectively and efficiently.
    • To improve future profitability and how to cater to financial problems.
    • To meet the objectives of the company.
    • To monitor performance department-wise and area-wise.

Why financial management is important?

Financial management enables the healthcare organization to nourish the workers that add value and help attain a competitive advantage in the healthcare market. Depending upon the market condition, the healthcare organization’s performance and medical billing submission rate are significantly influenced by the fluctuations in the market share.

How can you access the delay claim?

During the cause and effect analysis, delay claims should be determined. Also, find the valid delay that impacts the critical activity; otherwise, complete the date.

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