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What is Health Information Management & Why Is It Important?

what is medical health information management

Individuals involved in healthcare around the world acquire and generate a significant amount of personal health information about patients. The scope of health information includes not only personal information and private health data, but also associated payment forms and transactions. Clinical notes, pharmacy, and outpatient care records are also covered health information.

As technology has developed, it has greatly increased the potential for reliability, speed, efficiency, and usability of medical records. However, this also increased the ability for information to be misused, sold, and accessed without an individual’s consent.

As technological advancements outpaced ethical and legal policy, it became necessary to define medical/healthcare information management.

What is Health Information Management?

According to AHIMA; “Health Information Management (HIM) is the practice of acquiring, analyzing, and protecting digital and traditional medical information vital to providing quality patient care.”

The American Health Information Management Association (AHIMA) was formed to define and oversee the training and educating of Registered Health Information Technicians (RHIT) and Registered Health Information Administration (RHIA) certifications.

In tandem with this association, several laws were passed to support patient rights and the practices involving HIM. The Health Insurance Portability and Accountability Act (HIPAA) along with subsequent Privacy and Security Rules were designed to address many issues in this field. These were augmented by the Health Information Technology for Economic and Clinical Health Act (HITECH) which requires contingency plans for emergencies and for when PHI health information management technology systems are impacted.

Besides regulations and requirements for covered entities, these laws also moved to standardize many aspects relating to HIM. Recently healthcare has started transitioning to value-based therapy reflecting each organization’s role in overall healthcare management.

What is HIM in Healthcare?


Health Information Management is essential for healthcare providers and other HIPAA-covered entities to ensure patient information privacy and security. HIM involves medical coding and billing, ensuring compliance with government regulations, and handling customer requests for Personal Health Information (PHI).

This field also involves medical records retention and transition to electronic formats, as well as analysis of health care trends and the implementation of improvements. Because healthcare information overlaps many different areas in any healthcare cycle, it became necessary for many organizations to create HIM departments to oversee these important requirements are adhered to as well as managing training and education of staff.

Healthcare Information Managers would oversee all facets of an organization’s collection and retention of records as well as security, privacy, analysis, and implementations, coding, billing, and compliance.

Healthcare information managers work in healthcare organizations and associated businesses around the world. These include hospitals, dentists, pharmacies, chiropractors, and third-party healthcare services.

Security and HIM

Healthcare breaches have become a significant problem for healthcare providers today. In 2015 almost 100 million healthcare records were breached by cyber attacks. The impact from breaches has declined since then due to the implementation of privacy and security regulations for healthcare providers; however, the number of attempted breaches has increased over that same time.

As attackers become more organized or sophisticated the potential for successful breaches will increase unless organizations keep pace or excel with relevant health information management practices. Those interested in stealing health information may also gain access through the front door. In organizations that utilize unsecured wireless networks, or have lax regulations concerning secured network devices, someone could gain access from within and walk out with the data.

Role of a Health Information Manager

importance of health information management technology

What a healthcare information manager does will vary by organization. Many roles in this field require one to first pass an accredited academic program as well as a certification test. These roles include collecting and securely storing medical records and Protected Health Information (PHI).

Healthcare facilities often utilize coders and claims specialists, even third-party medical coding services, to handle medical records and healthcare revenue cycle management. HIPAA rules also impact what information you share with business associates. Your organization might be liable for damages even if a breach occurred due to a third-party business, which is why it is important to choose certified HIM companies.

In addition to the roles above, HIM staff would also implement and enforce security and privacy rule adherence on top of designing and improving network security.  At a minimum, this includes considering administrative, technical, and physical safeguards for traditional and electronic PHI.

Health information management duties can also include analysis and implementation of improvements. For example, an analyst might use the aggregate available information to determine patterns in various areas which can be used to devise improvements to an organization.

Importance of Health Information Management

HIM is vital for every healthcare organization and associated business. Not only are there legal requirements that must be adhered by to receive certain incentives and avoid penalties, but organizations have an ethical responsibility to protect PHI in their possession.

Breaches impact patient trust in a healthcare provider and may prohibit a patient from sharing vital information for fear of exposure. Hackers can also steal patient payment information causing residual harm such as identity theft and stolen money. Both of those factors can impact a patient’s willingness to seek care at certain providers.

A focus on HIM also allows an organization many positive benefits such as the potential for increased efficiency and optimization of healthcare information system access and other key aspects involved with revenue cycle management. A coordinated effort to standardize and efficiently operate tasks involving PHI will take a manager dedicated to the task, especially in larger organizations.

For healthcare management consulting, or for more information on HIM and how it may impact your organization, please contact Nearterm today.


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Top Revenue Cycle Key Performance Indicators

physician revenue cycle metrics

Healthcare organizations must manage their revenue cycle with an approach that balances patient care and quality. Due to increasing medical and drug costs paired with higher insurance premiums and deductibles, efficient revenue cycle management (RCM) is more important than ever.

There are many indicators one could use to gauge the effectiveness of various elements of the revenue cycle for their organization. However, these vary based on the type of organization doing the measuring. A pharmacy will value certain indicators more than a hospital might, and vice versa. Therefore, revenue cycle Key Performance Indicators (KPIs) will differ for each organization.

The Healthcare Financial Management Association (HFMA) approached this problem and determined 29 KPIs as a standard for healthcare revenue cycle excellence known as the MAP Keys. Regardless, some of these KPIs will not apply to certain organizations, and some will be valued more than others.

Revenue cycle performance benchmarks found in the MAP Keys can help determine where your company currently performs as well, as track improvements over time to desired levels.

To determine your organization’s best benchmarks and KPIs, you can reach out to one of our experts at Nearterm today.

Healthcare companies come in all sizes, from national pharmacy chains and large hospitals to small-town clinics and stand-alone providers. Some smaller organizations may need to hire additional staff to work on medical billing and revenue cycle management. These costs can add up, especially when considering training and education, turnover rates, and work limitations requiring multiple employees for each role.

Due to these factors, common financial tasks such as collections and medical accounts receivable services are often outsourced to third parties. You can also improve your RCM with the help of healthcare RCM companies. Modern technology allows for more efficient and seamless integration of third-party services (like healthcare clearinghouse services) than ever before.

5 Important Revenue Cycle KPIs

Here are some of the top KPIs to consider tracking now to measure important aspects of the revenue cycle:

  • Point-of-Sale Service (POS) Cash Collections
  • Clean Claim Rate
  • Days in Total Discharged Not Billed
  • Bad Debt
  • Days in Accounts Receivable

Point-of-Service (POS) Cash Collections

This KPI tracks POS collection and relates to payment received before services rendered and up to seven days after. This will help determine the effectiveness of your POS systems and those operating them.

This revenue cycle performance metric can be found using information from your POS system and your accounts receivable records. It can be calculated by taking the POS payments and dividing it by the total self-pay cash collected.

Tracking this and related revenue cycle metrics can identify problems in POS operations that are impacting RCM. Decreased efficiency in up-front payments may lead to increased collections and thus a loss of revenue. However, organizations with typically higher payments that require long-term payment options (greater than seven days average) may not benefit from this metric as much.

Clean Claim Rate

The clean claim rate corresponds to the claim denial rate in that it helps reveal problems and inefficiency in claims submitting and processing. Rejected claims require time to correct and may incur extra charges. The longer it takes to submit claims and resolve them, the longer it takes to determine eligibility and receive payments.

While there are many KPIs that relate to claims processing efficiency, the clean claim rate will show the average daily number of claims that pass without needing editing compared to the total number of claims accepted. This metric reveals the effectiveness of your claims processing and medical billing team. You can usually obtain this information from your claims management system or RCM Company.

Days in Total Discharged Not Final Billed (DNFB)

This healthcare key performance indicator helps determine revenue cycle performance by focusing on the claims-generation process. Variations of this metric will show the impact on cash flow due to claims inputting, and it can include issues related to delayed claims. A higher rate may reveal that claims are not be submitted promptly and warrants further investigating.

For example, if staffing issues are keeping claims from being submitted in a reasonable time-frame, it impacts your revenue cycle. You can calculate this metric by dividing the gross dollars in DNFB by the average daily gross patient service revenue, which is determined by the income statement and unbilled accounts receivable.

Bad Debt

Another useful KPI to consider is Bad Debt, which shows the effectiveness of collection efforts. It can also be used to determine the effectiveness of pre-service financial counseling or similar programs. It is important to note that this is not debt that has already been written off as lost.

Higher bad debt indicates inefficiency in previous areas of the revenue cycle including POS collections and financial counseling. It can be calculated by dividing bad debt from the income statement by gross patient service revenue over a set period.

Days in Accounts Receivable (A/R)

Finally, Days in A/R reveals how long it takes to get paid for services on average. This is useful in determining the effectiveness in obtaining payment for services, and how well the account receivables are being managed.

To find this KPI divide the total A/R by the average daily net patient service revenue using information from the balance sheet and income statement. To get the average daily net patient service revenue, you can also divide total annual sales by 365.

revenue cycle key performance indicators


There are many different performance indicators that healthcare businesses can use to benchmark and track various aspects of their revenue cycle. The key performance indicators to focus on will vary by organization type.

The Healthcare Financial Management Association developed 29 KPIs for healthcare companies and an additional six physician revenue cycle metrics. Of those, there are several that stand out as closely related to revenue cycle management. These are POS Cash Collections, Clean Claim Rates, Days in Total Discharged Not billed, Bad Debt, and Days in Accounts Receivable.

Calculating and tracking these revenue cycle KPIs will help identify problems or areas of improvement for your revenue cycle. However, it is not always practical or cost-efficient for a healthcare company to manage their revenue cycle in-house. Besides the various RCM metrics that could be tracked and identifying which are most important, there is also the need for quick and efficient medical billing, claims work, and financial management. On top of this is the need for constant training and education for staff working in these areas. Because of these factors, many healthcare organizations choose to outsource these important functions to qualified experts or healthcare management consulting firms like ours.

To find out more about how you can improve revenue cycle management efficiency and save on costs, contact our experts at Nearterm today.


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What is a Healthcare Clearinghouse & Why Use One?

Modern medicine in the United States includes a complex relationship between healthcare providers and insurance payers. Technology plays a critical role in electronic data interchange (EDI) between payers and providers, but the wide variety of software systems used can make seamless connection difficult.

The Health Insurance Portability and Accounting Act (HIPAA) addresses the importance of patient privacy regarding the protection of health information as well as the need for secure electronic data interchanges (EDI). Due to these factors, it is necessary for healthcare providers to consider their billing practices carefully.

Part of that billing process involves the option to submit claims to a healthcare clearinghouse rather than directly to insurance companies. Let’s break down the clearinghouse meaning in medical and hospital billing.

What is a Healthcare Clearinghouse?

A medical claims clearinghouse is a third-party system that interprets claim data between provider systems and insurance payers. According to the Department of Health & Human Services, a health care clearinghouse is a “public or private entity, including a billing service, repricing company, or community health information system, which processes non-standard data or transactions received from one entity into standard transactions or data elements, or vice versa.”

Typically, a healthcare claims clearinghouse will “scrub” or check a claim for errors before submitting. Once a response is received, the electronic claims submission clearinghouse transmits either a denial or acceptance back to the healthcare provider.

National health insurance clearinghouses allow providers to confidently outsource a vital function of the billing process whose difficulty is one of the current issues in healthcare administration.

Issues in Processing Healthcare Claims

Billing for hospital and provider services and supplies can be a challenging process in this complex environment. The International Classification of Diseases Tenth Revision Clinical Modification (ICD-10-CM) coding system includes over 68,000 diagnosis codes to identify procedures and treatments to be used in health care claims. Frequently, the use of medical coding services is required for the accurate coding of healthcare claims.

what is a healthcare clearinghouse?

In 2016, there were 5,977 insurance companies in the U.S. with “$507.7 billion, or 2.7 percent, of gross domestic product,“ (, 2018). Those thousands of insurance companies were exceeded by the number of healthcare providers such as hospitals, doctors, nurses, dentists, chiropractors, pharmacists, and durable medical suppliers across the country. Matters get more complicated when considering that many providers and insurance payers use incompatible software or systems of communicating protected health information (PHI). Also, different states have non-matching regulations regarding insurance and claims submission.

Problems in claim submissions can result from human error, mismatched diagnosis codes, improper calculations, coverage denials, or invalid EDI address and payer information to name a few. Issues can also arise over the mismatch between software used and establishing a secure connection between healthcare entities. Claims correction and denial management in medical billing adds to the workflow and can delay or negate payments.

Recent changes in U.S. healthcare laws and subsequent effect on insurance companies has resulted in tightening cash flows for many providers. Rising healthcare costs have greatly impacted provider profitability.

On the other hand, insurance company philosophy might consider the importance of encouraging patient responsibility for healthcare management by passing on a greater share of the medical cost as a co-pay or deductible. This has the possible negative effect of pushing patients away from costly but necessary procedures or medicine. The patient might instead follow through on treatment and slide into debt or possibly fail to pay the provider by way of personal bankruptcy. This could leave the provider eating the cost of care which impacts revenue.

Why Use a Medical Billing Clearinghouse?

Efficient claim submission involves many steps starting with the hospital that prepares a claim for services. In order to maximize revenue, it is necessary to optimize the claims process and the revenue cycle continuum. This involves analyzing the claims and billing process for possible improvements.

Contact Nearterm for more information on our healthcare revenue cycle management services today.

Error checking or claim “scrubbing” is one of the primary functions of an electronic claims clearinghouse. This allows a provider to quickly check if a claim will pass the basic requirements to be accepted by an insurance company. Insurance-specific error scrubbing decreases the time needed to successfully process a claim from days or weeks to seconds or minutes.

electronic claims submission clearinghouse

Providers, especially smaller ones, don’t have the knowledgeable staff or resources to match this third-party scrubbing efficiency for each insurance type. Larger electronic medical billing clearinghouses have established relationships with multiple insurance payers by ensuring software compatibility and learning their systems over long periods of time. This can help the medical clearinghouse companies explain rejections to providers and offer guidance to meet the insurance company claim expectations.

Medical clearinghouses can process single or multiple transactions and allow quick claim updates on client dashboards. There is also the added benefit of only needing one portal to manage claim information rather than a separate account for each insurance company for direct billing. Faster and more reliable healthcare coverage determination and claim submission allows providers shorter payment cycles, and as a byproduct, more accurate financial forecasts. Using an electronic healthcare clearinghouse also reduces the number of paper claims needed with subsequent positive effect on the environment.

Final thoughts on Clearinghouses and Health Insurance
While the healthcare industry is complex and has many issues, a health system or hospital can improve the efficiency and speed of electronic medical billing by using a healthcare clearinghouse. These HIPAA-covered entities can process multiple claims to a variety of insurance companies to overcome software incompatibility.

The main benefits offered by insurance billing clearinghouses are fast payment, error scrubbing and assistance, reductions in administrative costs, and finally a single source of handling claim submissions and status. The faster Medicare, Medicaid or a commercial payer are billed correctly, the faster they pay. The faster a patient is provided an accurate bill for an amount not covered by insurance, the quicker the money can be collected and utilized to improve another patient’s health.

Contact Nearterm Today for More Information

Contact the experts at Nearterm today for more information on how to optimize your billing process and medical accounts receivable.


References (n.d.) How to Select a Good Clearinghouse – 7 Things You Must Know. Retrieved from: (2015) Healthcare Common Procedure Coding System (HCPCS) Level II Coding Procedures. Center for Medicare & Medicaid Services. Retrieved from: (2017) Disclosures for Emergency Preparedness – A Decision Tool: Is the Source a Covered Entity? U.S. Department of Health & Human Services. Retrieved from: (2018) Facts + Statistics: Industry overview. Insurance Information Institute. Retrieved from:

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Current Issues in Healthcare Administration and Management

There are many healthcare management challenges in the U.S. today. Some of these problems have evolved slowly overtime as a result of growing, complex, and diverse healthcare offerings. Rising costs in almost every area have been impacting hospitals and other healthcare providers as well as patient willingness to seek care.

Regulatory changes have also introduced issues for providers. Other economic challenges in the healthcare industry have appeared more recently as a result of political fighting, economic changes, and technology innovation. Cybersecurity and the protection of patient records are also growing concerns.

The following section will focus on three impacted areas starting with general healthcare issues followed by financial and economic problems.

current healthcare management issues

General Healthcare Management Problems

It is important to note the impact of fraud, waste, and abuse created by providers. The Washington Health Alliance found that 46% of low-cost services in the state were considered unnecessary (Luthi, 2018). This can be compounded by the problem of providers ordering extra tests and procedures to avoid liability issues.

Patients are also a part of the issue, according to the American Institute for Preventive Medicine,”25% of physician visits and 55% of emergency room visits are unnecessary,” (NAHU, 2015).  Filtering out these unnecessary visits and waste will help control costs and better manage valuable outcomes.

IT Management Problems in Healthcare Organizations

While information technology (IT) opens the doors for resolving some healthcare management issues, it also raises issues of security and regulatory compliance to patient protection laws such as the Health Insurance Portability and Accountability Act (HIPAA). The past years have seen an increase in cyber attacks on IT systems and the “largest number of data breaches in 2015 took place within health services, comprising 39 percent of all breaches,” (Gomes, 2016). From 2009 to 2015, 135 million compromised health records led to an estimate cost of $50.6 billion (Hayes, 2015).

A healthcare issue of growing concern is the focus on behavioral and lifestyle choices of patients to better manage their health. Adherence to treatment plans and prescription usage are helpful but patient choices such as diet and exercise also play a large role in their health. “Mental health conditions cost U.S. businesses more than $440 billion annually,” (Cocchi,2016). Preventive methods and medicine are much more affordable than managing chronic problems resulting from poor health habits.

Another health management issue is the change to value-based care in an attempt to incentivize lower cost improved care for patients. Quality over quantity is the goal and providers that can resolve this issue stand to receive increased funding over competitors. Such an organizational problem will require providers to rethink standard practices and billing.

Financial Issues in Healthcare Organizations

A key financial issue facing Healthcare managers is offering affordable healthcare rates despite rising costs. Parts of these rising costs are due to increased costs in pharmaceuticals, insurance premiums, and healthcare spending.

Pharmaceuticals have been under public scrutiny following repeatedly large price hikes for vital drugs. The Centers for Medicare & Medicaid Services have noted an increase in prescription drug spending to $328.6 billion in 2016.

Improvements in healthcare also allow for a larger aging population and the “number of people over the age of 60 is projected to grow to as many as 110 million, or 27.4 % of its total population by 2025,” (NAHU, 2015).

Those over 60 require increased use of healthcare under tighter budget restrictions. In addition, healthcare spending is projected to “grow 1.0 percentage point faster than the gross domestic product (GDP) per year over the 2017-2026 period,” (Centers for Medicare, 2016). Financial Healthcare management issues can also include components such as handling payroll, patient data entry, processing insurance claims or leveraging medical coding services, medical billing and denial management, and negotiating repayment.

For some providers the payment for services rendered can be delayed over long periods. Dealing with these internal cost considerations for healthcare revenue cycle management and healthcare accounts reveivable can detract from a focus on value centered patient care. Part of the problem is the complexity of patient billing which is something that many patients cannot easily understand.

Regulatory issues in healthcare also impact financials in several ways. The introduction of the Affordable Care Act (ACA) and subsequent upcoming repeal will impact providers as they pay to adapt to these changes each time. In another example, providers were required to upgrade to a uniform coding system referred to as ICD10. This coding change introduced complex issues that required extensive and possible costly training to update providers to the new system.

Economic Challenges in the Healthcare Industry

Healthcare management issues are also being mitigated by mergers between providers of all levels. These merged organizations can benefit from economies of scale and other cost benefits such as interoperability and consolidated healthcare leadership. “Success will come through tactical growth delivering what consumers value – greater access, improved outcomes and lower costs,” (Health Research Institute, 2015). One issue with these mergers is that is that larger corporations become more resistant to change in an industry marked by constant change and innovation.

current issues in healthcare administration

Disruptive technology is promising the potential for amazing advances in healthcare administration. First is the use of medical devices to gather health information directly from patients such as pulse, blood pressure, and blood sugar monitors. These “connected devices” are part of the growing Internet of Things (IoT) and “Internet-connected healthcare products are estimated to be worth $285 billion by 2020,” (Cocchie, 2016).

The prevalent use of smartphones by patients offers a unique opportunity to manage healthcare problems with mobile applications. Providers can offer services like appointment scheduling, billing, as well as records and test result communication. In tandem with increased communication with patients, telemedicine offers the benefit of long-range communication between patients and doctors and appears to be well received by both healthcare organizations and millennial patients.

Technology innovations also allow providers to set up cloud storage for medical files allowing quick and convenient access from any location. Providers must address the security concerns here including those created by organizational problems such as improper employee training. While some health records were compromised due to malicious activity, a large portion was due to unintentional disclosures by staff.

Finally, providers have the option to use big data and artificial intelligence analytics in many areas to improve efficiency and identify problem areas.

Staffing is expected to become problematic in future years with a “deficit of 3.5 million health care providers by 2030 as current providers retire, with a projected shortage of 91,500 doctors by 2020,” (NAHU, 2015).

While it is possible to do more with less and leverage solutions to these problems in order to efficiently utilize a decreased provider pool, too much of a deficit will impact the cost of receiving care. This is especially true considering the length and cost of educating and training medical providers. Healthcare staffing services are available to mitigate the effects of project needs.

Final Note on Management Problems in Healthcare Organizations

There are many issues arising within this complex healthcare system. Providers are facing increased costs, regulatory changes, coding updates, inefficiencies, security issues, and disruptive technology.

A key challenge is increasing interoperability between disconnected providers and leveraging technology to make up for decreasing staff and an improved focus on value-based care over quantity treated. This includes improving preventative approaches to managing population health.

One interesting option to reduce costs is to outsource vital tasks to a trusted third-party healthcare service organization. While there are many problems facing the healthcare industry, the future is bright and improving daily.

Contact Nearterm today for more information about our services.



ReferencesAbelson, R. (2016) Health Care Issues Loom in Politics, Payments and Quality. The New York Times. Retrieved from:

Centers for Medicare & Medicaid Services (CMS) (2018) National Health Expenditure Fact Sheet 2016. Centers for Medicare & Medicaid Services. Retrieved from:

Cocchi, R (2016) Top 10 issues impacting healthcare industry in 2016. Healthcare Business & Technology. Retrieved from:

Gomes, N. (2016) 8 Health Tech Challenges and Opportunities in 2017. Physicians Practice. Retrieved from:

Hayes, T. (2015) Are Electronic Medical Records Worth the Costs of Implementation? American Action Forum. Retrieved from:

Health Research Institute (2015) Top Health Industry Issues of 2016: Thriving in the New Health Economy. Health Research Institute. Retrieved from:

Luthi, S. (2018)  4 takeaway questions as the Senate looks at healthcare costs. Modern Healthcare. Retrieved from:

National Association of Health Underwriters (2015) Healthcare Cost Drivers White Paper. National Association of Health Underwriters. Retrieved from:

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