The concept of a revenue cycle exists in every business that delivers goods and services in exchange for value. However the term Revenue Cycle is most commonly associated with Healthcare Finance. 

In this second blog post I wanted to highlight more of the similar Data Preparation challenges that both Financial Services organizations and Healthcare Providers face in their respective revenue cycles.

• Data Preparation Challenges: The common traits of the Data Preparation challenges in Healthcare Finance and Retail Banking are these: 

• Self-Service: Business User desire the ability to Do-It-Themselves, and not rely on IT.

• Domain Expertise: The work needs to be accomplished within appropriate business context to drive results.

• Technology: The right technology, or set of technologies, that will enable the work to be done efficiently and with ease.

Having said that, let’s walkthrough 3 challenges here that have striking similarities between Healthcare Finance & Retail Banking: Cash Posting, Collections, and Cost Reporting.

Cash Posting Reconciliation

Providers of Healthcare Services (Hospitals, Health Systems, Clinics etc) are compensated for healthcare services rendered by Payers, which includes Insurance providers, and Self-Paying Patients if the services were not covered by insurance. As Providers receive these cash payments they have to post them to patient accounts with a goal of paying any outstanding balances due, ultimately down to zero. Accomplishing the process is a real data preparation challenge. It requires comparing and reconciling the “Bank File” all the cash payments that came in, against “Cash Posting Reports” which consists of payments that have been posted to patient accounts. In other words it’s a constant process of monitoring cash payments that come in and validating they are posted to patient accounts, as well as accounting for the differences. Some of the data preparation challenges include the variety of file formats for the bank file and cash posting reports (BAI, Text, Excel, CSV, etc), inconsistently formatted Check/EFT numbers (a unique identifier), and time variance considerations between payment and posting. 

Similarly in Retail Banking there are many examples of this exact use case. Let’s take ATM activity as an example. Believe it or not ATMs are still heavily used today in 2023. The same challenges apply to Zelle and other means of Electronic Funds Transfer (EFT). Retail Banks and Credit Unions need to reconcile daily all ATM activity (withdrawals, deposits) to customer accounts. This is particularly challenging with deposit activity which could be checks or cash. Constantly monitoring this activity at the ATM and reconciling it against Customer accounts within the Core Banking System is not easy. A classic example is to identify (quickly) those deposits that did not get posted to customer accounts, figuring out why, and resolving the issue as quickly as possible. This is a data preparation challenge because it requires comparing data between the ATM (Switch) system and the Core Banking System, and those files could be in different formats, lack unique identifying keys to join and compare them, and also have time variances between the two systems. There is also an important fraud mitigation perspective related to this activity as fraudsters try to look for loopholes in the process.

AR Aging & Collections

Retail Banks & Healthcare Organizations that have outstanding balances due from customers/patients understand the importance of Collections and abiding by strict guidelines related to Collections, such as Fair Lending. From a data preparation perspective one of the common challenges is reporting and analyzing the Accounts Receivable data by Aging Bucket (0-30 days, 31-60 days, 61-90 days etc), by Payer, by Service, by Patient. This can be a very challenging exercise if the data resides in difficult reports and/or needs to be gathered from multiple business units and systems. Banks and Credit Unions need to perform the same exercise to understand what’s outstanding by product (credit card, consumer loans, mortgages), and they face the same data challenges as the data for such products is often in different systems, different formats, yet needs to be combined and aggregated for reporting purposes.

Cost Reports & Call Reports

Last but not least are the complex and complicated Cost Reports in Healthcare Finance and Call Reports in Retail Banking. 

Healthcare providers that are Medicare-Certified must complete and submit a Cost report to CMS (Center for Medicare and  Medicaid) and the end of each fiscal year. The Cost Report is a summary of detailed expenses by cost center, service type, facility, etc. CMS uses this information to determine which Healthcare Providers are need to be reimbursed and those that owe reimbursement. Compiling all the detailed information for Cost Reports is not easy. Examples of important data sources include: Patient Accounting Transaction Detail, Claim Submission Data (837s), Remittance Data (835s), Aged Trial Balance (ATB), Detailed Charges, Charge Detail, Patient Demographics, et Al.

Similarly, Banks and Credit Unions must complete a quarterly Call Report at the end of each calendar quarter. Call Reports represent the “Consolidated Condition and Income” of a regulated financial institution. Accounting and Finance teams must gather detailed information on Balance Sheet and Income Statement Lin items which are then summarized for reporting purposes. This can be a challenging exercise even for small to mid size financial institutions with many products. Larger institutions, especially those that were created from mergers have to acquire and cleanse the data from multiple systems.

Summary

Banks, Credit Unions and Healthcare Providers may different purposes, but they definitely have similar data challenges related to business operations and complicated technology infrastructures. With the right data preparation strategy (people, process, technology) they can overcome these challenges.