A Financial Tool That Protects Your Business From Fluctuations in Revenue Cycle

Fluctuations in revenue cycle is a common dilemma for healthcare providers as they strive to maintain inventory, pay overhead, expand, and even make a profit.

To address this issue of "fluctuations in revenue cycle", you must ascertain whether the financing tools available move concurrently with your revenue stream, since cash flow is determined by your revenue cycle, not your billing cycle.

Loans, including lines of credit and asset based lines, have a common limitation to solving the dilemma. Dollar availability is fixed and cannot be reused until some portion (or all) is paid back.

Selling stock is another financing tool. However equity financing addresses long term financial questions and is not typically used as a solution for short-term cash flow problems resulting from revenue cycle fluctuations.

A financial tool that directly follows the revenue cycle is Medical Accounts Receivable (MAR) Funding. It provides a cash-flow solution to your working capital needs. Simply put, you deliver your product or service and get paid within 24-48 hours. There are virtually no limits on the amount of funding available and no requirements before you can receive additional funding.

Hospital CFO's Should Seek Nurses' Input

According to healthcare experts at the recent HFMA annual conference, nurses are a key part of a hospital's revenue cycle and their input should be sought after from hospital CFO's.

Nurse input is especially beneficial during the development of organizational business plans experts say. "You have to involve all parties in strategic financial planning," said Susan Sanders, associate vice president for patient services at QHR Consulting. "Sharing information between the nursing staff and finance can be a big improvement in the creation of annual budgets and business plans."

Nurses are also great resources for market research. They can be a great help in developing new product lines or offering new services as they often know vendors as well as clinical colleagues in other hospitals.

Hospital CFO's should be sure that nursing managers understand the impact of overall hospital profitability. They should be aware of the importance of a hospital's liquidity position.

The experts say that the nursing and finance departments need to work together on nurse retention as well.