Not a Cycle
More than a misnomer
1.3k words, 6 min read
I don’t know whose MBA-wet-dream coined the term “revenue cycle”1. It’s a jargonist term that’s not a cycle at all! The name is so disorienting that it obfuscates almost all semantic meaning - no hint of what it does, no reference to healthcare, no indication that a human being is involved anywhere in the process. If someone tried to impress you with “revenue cycle management” at a cocktail party, you’d politely sip your drink and walk away, thinking how full of shit they were.
First, it’s not a “cycle” in any operational sense. It has a start (scheduling) and an end (bad debt write-offs). But it is a “cycle” in the way that life and death and rebirth are a “cycle”: something from which we can’t escape. From the moment you’re born in an American hospital, your first breath creates a billable event. And long after you’re put in the ground, some poor soul will be writing off the insurance balance that goes uncollected.
American healthcare sits in an absurd position: the most advanced medical science funded by an enormous economic engine - paired with the worst consumer healthcare experience in the developed world. We are caught in the cycle without even knowing it. And despite the good intentions of healthcare providers striving to deliver patient care, the revenue cycle is largely seen as an administrative burden, with an estimated $350 Billion cottage industry2 built on extending the reach of the healthcare industrial complex. The common refrain is to cut the administrative waste - automate the tasks, remove the labor costs, shrink the bureaucracy that perpetuates this behemoth - and in doing so, fix American healthcare.
But that’s the wrong diagnosis.
The entire revenue cycle - the scheduling, the eligibility, the coding, the billing, the appealing, the collecting, every financial and administrative interaction that wraps around clinical care - is not some tumor to be excised from an otherwise healthy body. The clinical encounter (the part everyone thinks of as “healthcare”) is the briefest part of the whole experience. The average doctor’s visit is eighteen minutes of face time. And if you’ve ever been on hold with a hospital billing department long enough to hear the hold music loop three times, congratulations - you’ve spent more time in revenue cycle than your last doctor’s visit.
Revenue cycle pervades all parts of the healthcare experience. Patients spend hours nervously researching how to access care. They stew with anxiety hoping that their insurance coverage will take care of the labyrinthian accounting rules required to pay for it. They spend more time filling out forms in waiting rooms, more time opening mail explaining their financial burden, more time on hold and on the phone - than they ever spend with a physician. Seventy-three percent of insured Americans dealt with at least one administrative task last year - scheduling, prior auth, billing disputes, insurance questions - and one in four delayed or skipped care entirely because the paperwork was too much. Yet behind the scenes, someone is feeding pages through a fax machine that whirs and jams, sending the same prior auth form for the third time this week, for a single patient.
The industry sees revenue cycle as a back-office function. Patients experience it as the front door.
And the industry’s response to this - the most patient-facing part of the entire system - is to automate it. Some of that automation genuinely helps. Auto-posting payments, eligibility verification, claim status checks - these are tasks that don’t need a human, and removing them frees up the people who do the work that does. Nobody mourns the loss of mind-numbingly manual claim status checks. Work like that makes people update their LinkedIn. But that’s not where the industry is stopping.
Automation is only helpful if it's not adversarial. Payers deploy AI to deny claims more efficiently, and providers respond by deploying AI to catch those denials and appeal them. The HFMA calls it "the battle of the bots" - an arms race where both sides spend more to maintain the same stalemate, and the patient's claim is the territory being fought over.
All the meanwhile, healthcare industry spending grows unabated. The RCM market is projected to grow 10-13% annually through 2030. The industry that wants to shrink the revenue cycle is pouring money into it - just not into the people who do the work. The investment goes to software that replaces the human, not software that helps them. The humans are being taken out of the loop at exactly the moments a human matters most - when a patient is scared, confused, broke, or staring at a bill they can’t read.
And ultimately, who is this for? It’s delusional to think that AI agent robodialers interrupting patients at suppertime is progress.
The assumption underneath all of it - the automation, the data exchanges, the interoperability initiatives - is that the patient experience is a friction problem. That if you make the process fast enough, smooth enough, invisible enough, it stops being painful. But the pain isn’t friction. The pain is opacity, contempt, and the feeling that the system wasn’t built for you.
All of it gets built while the deeper existential question goes unanswered: why do we have to do this at all?
Not why do we need the revenue cycle - in the system we’ve built, it’s load-bearing. But why have we built a system where the thing patients experience most is the thing the industry is most embarrassed by? Where the primary interface between healthcare and the human being it’s supposed to serve is a process so opaque, so adversarial, and so poorly resourced that a hundred million Americans carry medical debt.
Nearly every health system in America has a mission statement about “patient-centered care” (if you’ve read one, you’ve read them all - something about compassion, innovation, and a stock photo of a diverse group of concerned clinicians). The healthcare industry focuses on the Triple Aim - access, quality, cost - as though these are aspirations. The revenue cycle is where those aspirations get tested - and mostly fail. Access becomes a prior auth fax sent to an unchecked machine. Quality becomes a code selection that determines payment, not outcomes. Cost becomes a cruel billing call, striking fear in the hearts of family members who have already jumped through enough hoops as it is. What healthcare says it is and what the revenue cycle actually does is the gap between the brochure and the building.
The people who work inside revenue cycle see more of this than anyone. The scheduler helping the daughter of the Vietnamese-speaking patient find the right appointment. The coder making sure the documentation captures the full complexity of a patient’s condition, because the difference between two codes is thousands of dollars in reimbursement for the same care. The biller whose follow-up call becomes a counseling session, easing the fear of a dad recovering from a surgery, staring at a number he can’t pay. These are the people with the most comprehensive view of what’s broken in American healthcare - where documentation fails, where payer rules punish the wrong people, where patients fall through gaps. And the industry’s plan for them is to spend less.
The revenue cycle isn’t a cycle. It’s not a department, or a cost center, or a line item buried in the back pages of a hospital’s annual report. It’s the chassis American healthcare is built on, whether the industry wants to admit it or not. And right now, the plan is to run it with fewer people, less money, and more machines, without ever asking the people on the other end of the phone whether they wanted to talk to a machine in the first place.
Seriously, I would pay good money to find out who coined this term. The function has been renamed five times in fifty years: Admitting, Patient Accounting, Patient Access, Patient Financial Services, and finally Revenue Cycle. HFMA started using "revenue cycle" in the late 1990s as the old departmental names stopped making sense, but nobody seems to have claimed credit for coining it. The work outgrew every label, and the latest one tells you the least about what it actually is.
There is little definitive agreement on how big revenue cycle is: estimates range from $60B (outsourced services and technology) to over $350B (total billing and insurance-related costs). Whether eight or nine figures, it's mind-bogglingly large. Definitions vary because of unclear agreement on where revenue cycle ends and the rest of healthcare begins.
Really great work, Andrew!