A Practical Guide to Auditing Your Revenue Cycle: What to Look For and Why It Matters

In healthcare, it’s easy to get wrapped up in patient outcomes, staffing, and regulatory compliance—but there’s another critical part of the equation that often operates in the background: the revenue cycle. It’s the process that ensures healthcare organizations get paid for the services they provide. If this cycle isn’t working efficiently, even the most well-run clinic or hospital can face financial trouble. That’s why understanding how to audit your revenue cycle is more than just a best practice—it’s a necessity.

A thorough audit helps ensure the accuracy, integrity, and efficiency of the entire revenue process. Whether you’re running a small private practice or managing a multi-facility healthcare network, knowing how to conduct a smart audit can help prevent revenue leakage, ensure compliance, and drive better decision-making across the board.

Why You Should Audit Your Revenue Cycle

Before diving into how to audit your revenue cycle, it’s worth asking—why audit in the first place?

The revenue cycle includes everything from patient scheduling and registration to coding, billing, collections, and final payment posting. At any step along the way, errors can creep in: missed charges, incorrect codes, denied claims, or delayed follow-up. These seemingly small issues can add up to big financial losses.

Auditing allows you to:

• Uncover hidden inefficiencies
• Correct billing or coding errors
• Monitor staff performance and training needs
• Improve cash flow and reduce days in accounts receivable
• Stay compliant with payer and regulatory requirements
  

In short, it gives you insight. And with insight comes the ability to fix problems before they affect your bottom line.

Step 1: Define the Scope of Your Audit

The first step in learning how to audit your revenue cycle is to set clear objectives. Do you want to focus on the entire cycle or just one piece—like coding accuracy or claim denial rates?

Common audit areas include:

• Patient registration and insurance verification
• Documentation and medical coding
• Charge capture and entry
• Claims submission
• Denial management
• Payment posting
• Patient collections
• Reporting and financial reconciliation
  

You don’t have to audit everything at once. Focus on the areas that have the greatest impact or where you’ve noticed issues in the past.

Step 2: Gather the Right Data

An audit is only as good as the data you work with. You’ll need access to reports from your EHR (Electronic Health Records), billing systems, claims data, and payment records. It’s also helpful to pull data across multiple timeframes—weekly, monthly, or quarterly—to spot trends.

Examples of useful data points include:

• Total number of claims submitted
• Denial rate and reasons for denial
• Days in accounts receivable
• Clean claim rate
• Patient billing errors or complaints
• Adjustments and write-offs
• Lag time between service and billing
  

Once you gather the data, organize it in a way that makes patterns and outliers easy to identify.

Step 3: Analyze for Gaps and Red Flags

Now it’s time to look at what the data is telling you. Ask questions like:

• Are claims being submitted on time?
• Are you seeing repeat denials for the same reasons?
• Are charges being dropped or missed entirely?
• Are staff members coding accurately and consistently?
• Is the patient payment process leading to confusion or delays?

These questions help you uncover where things might be breaking down. Sometimes, the root cause is a process issue—other times, it may be a technology or training gap.

Step 4: Cross-Reference with Best Practices

After identifying issues, compare your current processes with industry best practices. For example:

• Claims should be submitted within 24–48 hours of service
• Denial rates should be below 5%
• Clean claim rates should exceed 90%
• AR days should ideally be under 40

If you’re falling short in any area, dig deeper to understand why. This is also the stage where internal policies should be reviewed—do they align with payer requirements and updated coding guidelines?

Step 5: Engage the Team and Share Findings

Revenue cycle management isn’t just the responsibility of one department—it’s a team effort. Once you’ve completed the audit, share the findings with all relevant stakeholders. That might include clinical staff, coders, billers, finance teams, and even front-desk staff.

Rather than assigning blame, use the findings as a roadmap for improvement. The most effective audits aren’t about punishment—they’re about partnership and progress.

Step 6: Develop and Implement an Action Plan

Identifying a problem isn’t the end goal—solving it is. Create an action plan that includes:

• What changes will be made
• Who is responsible for implementing them
• A timeline for completion
• How success will be measured

Make sure to prioritize changes that will have the biggest financial or operational impact. Whether it’s retraining staff, revising workflows, or upgrading software, each change should align with your overall revenue goals.

Step 7: Monitor, Repeat, and Improve

One audit isn’t enough. Revenue cycles are dynamic, and new issues can emerge over time. Build a routine audit schedule—quarterly, biannually, or annually—based on your organization’s size and complexity.

Also, keep track of how past improvements have performed. Are claim denials going down? Are collections improving? Use this information to refine future audits and continue evolving your approach.

Final Thoughts

Learning how to audit your revenue cycle is a powerful step toward financial resilience in healthcare. It’s not just about catching errors—it’s about building smarter systems, reducing waste, and improving the patient experience.

In a healthcare environment where margins are tight and expectations are high, regular audits give you the insight and control needed to thrive. By being proactive rather than reactive, your organization can turn its revenue cycle into a true asset—one that supports care delivery today and growth tomorrow.