427 CA3. Working Capital, Material Management, and Evaluating Financial Health

Working Capital, Material Management, & Evaluating Financial Health
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Working Capital, Material Management, and Evaluating Financial Health
The revenue cycle incorporates all clinical and administrative roles that directly contribute to collecting, managing, and capturing patient service revenue. The cycle starts when an appointment is initiated through the time of bill settlement by the patient. Traditionally, the cycle contained discrete areas that function distinctly from each other, and they include two main elements, back-end and front-end (Manley et al., 2009). The back-end deals with reimbursement and claims management. On the other hand, the front-end deals with patient-facing elements. Both elements contain separate staff, departments, and procedures and policies.
Distinct Steps of revenue management and how they support the organization
1 Policies and procedures
Setting policies and procedures is very important in managing the revenue cycle. These policies and procedures are meant to guide all patients' admission and registration processes in the facility. That is the first step. All patients whose conditions are not emergent should always be taken through the preadmission preregistration process to capture the necessary information and details. At this stage, copayments, deposits, and deductibles should be collected (Jewell, 2020). That will enable health care facilities to obtain payment details and other useful information before providing services. It may not be possible to hold patients against their will to compel them to provide payment details, mostly when services are provided before capturing payment details. That may amount to false imprisonment. This procedure can be completed online, in person, or over the telephone. This step is critical because it speeds up the operation of hence enhancing efficiency. It also minimizes delays by minimizing the waiting time, therefore enhancing convenience.
2 Accounting system
This step involves acquiring and implementing an accounting system to enhance accuracy and promptness when updating patients' bills. Without this system, healthcare facilities have been encountering enormous challenges and may continue if they cannot implement the system. An accounting system is crucial because it enhances accuracy, accountability, control, and efficiency. Therefore, it is necessary to implement an appropriate system because not all systems are appropriate for every organization(Jewell, 2020). When implementing the system, it is important to seek advice from the internal or external auditors because they play an essential role in determining the system's efficiency and effectiveness since they can verify the system's control environment and mechanisms. Errors usually arise in the system; hence, ensuring that the system is equipped with necessary internal controls will help identify and correct errors at an early stage.
According to Nowicki (2018), an effective and efficient accounting system plays the following tasks.
1 To value the accounting transactions appropriately.
2 To timely record and identify all effective accounting transactions.
3 To identify ...