Managing working capital discussion

Much is involved with managing working capital or short-term assets in a health organization. The text describes important variables such as managing cash and marketable securities, use of cash budgets, revenue cycle management, receivables, and supply chain. My current position in financial services and patient registration leads be to discuss the revenue cycle portion of managing working capital and its challenges.

Gapenski and Reiter (2016) explains that Revenue cycle can be viewed in phases. Before the services are rendered, simultaneously with the service, after the services and continuous.  I manage the patient registration team which involves setting up the hospital account including insurance verification. This is all done prior to the services.

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I also manage the financial services team which handles the precertification, authorization, and financial counseling of what is expected to pay. These are typically done prior to appointment or during the time of admission for inpatient stay.  The financial services team will also reverify insurances while patient is in house (Medicaid is month to month) to ensure no changes have occurred since pre-verification. The team also works with case management to ensure the insurance company is updated with the level of care changes and obtain continuous authorizations through the hospital stay.

If all goes well with the preservice and at-service activities, after service and continuous services will proceed with the claim. The billers will submit the claim, follow-up team will review the denials, and collections will try to recover self-pay balances. One of the major challenges with this system is that there is so many working pieces for the claim to be paid timely.  Any error in the system can delay payment or can even terminate the entire claim with a denial. For an example, insurance companies need to be notified of an admission within 24-48 hours. If the registration staff fails to input the correct insurance at time of admission, the payer will not receive the notification and therefore will deny the claim. This is where management, policies, continuous training, and communication is key. This was an example of how our line personnel greatly influences the working capital.


Gapenski, L. C., & Reiter, K.L. (2016). Healthcare Finance: An Introduction to Accounting & Financial Management (6th ed.). Chicago, IL: Healthcare Administration Press.

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