The future of healthcare payments: embracing automation

Despite some challenging barriers, hospital systems continue to automate their revenue cycle operations, transforming previously manual workflows to cut costs and improve the payment experience for patients and employees. Artificial intelligence (AI) has an expanding role and is providing a big assist.

At a time when margins are tight at healthcare companies, revenue cycle management (RCM) automation, supercharged by AI, is helping them reduce manual work, speed up payment cycles and boost financial performance. With the cost to collect from payers and patients continuing to rise, revenue cycle optimization is enabling healthcare firms to run more efficiently and profitably.

The revenue cycle opportunity

Hospital CFOs are facing a combination of pressures — including reimbursement challenges, payer rate negotiations, labor costs and inflation. One way to relieve some of these pressures is to make traditionally manual healthcare revenue cycle operations more efficient.

Manual processes, legacy systems and denial management can be enormous time drains, and they increase the costs for healthcare companies to collect payments. Hospital systems see the effort to advance RCM automation as a major opportunity to increase efficiency and lower costs, reports Tom Priedeman, division manager for middle market healthcare at U.S. Bank.

In fact, nearly three-quarters of hospitals are implementing some form of revenue cycle management automation, which includes AI and robotic process automation, according to the American Hospital Association. What’s more, in a 2024 U.S. Bank industry report, 81% of healthcare finance professionals identified automating payments as one of their most important payment transformation initiatives.

“Hospitals have limited levers to protect margins,” Priedeman says. “That’s why we often say, ‘control the controllables.’ And revenue cycle is a big part of that.”

Targeting an array of benefits

Priedeman points to three areas where revenue cycle management automation can support hospitals’ strategic goals:

▪ Automating low-value, repetitive tasks. The claims payment process challenges providers with managing receipt of payment in different formats from different payers. Providers also need to download correspondence from payers or third parties and process various types of correspondence to post payments. Slow cash application often results due to these cumbersome manual tasks, which also make reconciliation very taxing. By automating these processes, hospitals are cutting costs.

“Operationally, automation also reduces errors, resulting in greater efficiency across departments,” Priedeman notes. “It’s not just about cutting costs; it’s about tightening the process from end to end.”

▪ Improving the patient payment experience. Nearly a third of patients continue to pay by check, which slows collections and adds unnecessary administrative burden, our research shows. In addition, fewer than 1 in 10 patients believe healthcare makes the payment process easy, and some are willing to switch providers due to dissatisfaction with their payment experiences.

Payment digitization efforts in healthcare — including offering mobile apps and patient-friendly payment options like text-to-pay — are aiming to both reduce check volume and increase patient satisfaction.

“Offering omnichannel payments options that align with patient expectations can significantly improve their overall experience,” Priedeman says, adding that “improving the patient payment experience presents a clear opportunity to support healthier cash flow.”

▪ Reducing staff burnout and turnover. RCM automation also allows hospitals to reallocate financial staff to more strategic, rewarding and less tedious work. “Automating low-value, repetitive tasks is crucial, especially since those manual processes, while often necessary, are rarely enjoyable,” he says.

AI’s expanding role

AI is providing a big boost to healthcare revenue cycle management automation. Beyond the use of robotic process automation to automate repetitive tasks, the American Hospital Association reports that hospitals are using the following AI applications to further automate the revenue cycle:

• Automated coding and billing
• Predictive analytics for denial management
• Revenue forecasting and financial planning
• Patient payment optimization
• Enhancing data security and compliance

“AI is bringing real value by automating tasks such as converting ERAs [electronic remittance advices] and electronically posting those payments,” Priedeman says. “As these tools become more advanced, with more logic and reasoning, they’ll continue to improve payment processes.”

Barriers to speedy adoption

Priedeman says a significant barrier to the adoption of RCM automation is system integration.

“A key component of RCM automation is having fully integrated systems working behind the scenes,” he says. “The challenge for hospitals is they face the complex task of integrating multiple electronic health records [EHR] systems.”

Another barrier is that providers want to innovate when it comes to payment transformation, but their teams are stretched. “There are competing priorities, and they often lack the time and resources to implement new initiatives,” Priedeman says.

A third obstacle, he says, is a lack of knowledge about payment technologies. “Finance leaders aren’t always aware of the full range of solutions available across the healthcare payment ecosystem, or which vendors are best positioned to help.”

Time is right to re-evaluate and automate

Automation and advanced solutions are providing hospitals with a smarter path forward. However, EHR migrations continue to demand attention and capital at hospital systems, often pulling the focus away from payment transformation efforts.

The opposite should be the case, Priedeman says. “With these technology upgrades, it’s critical to have strong core systems in place. That’s why we often recommend using the time during these upgrades to reassess payment rails and revenue cycle components across the organization.”

Automating the healthcare revenue cycle can go hand in hand with major healthcare system upgrades. The opportunity is enormous, Priedeman says, and a key to success is working with a bank that can advise you on payment technologies and help you overcome system integration and resource challenges. “It’s exciting to see how much smarter payment tools are getting — and how quickly hospitals can benefit.”

No matter where you are on your journey to digitize the revenue cycle, we can help. Our industry experts help healthcare organizations navigate challenges and make changes to refine processes. Request a call to learn how we can help you transform payments to achieve business goals and create a better patient experience.