Academic Master

Business and Finance

Functions of the Revenue Cycle

Revenue cycle entails the whole process of financial expenditure and profit generation through monetary exchange and trade. Revenue for hospitals is through the provision of medical services, admission into hospital wards, sales of medicines and pills as well as other ambulance provision services. Some hospitals provide free medical services thus considered not-for-profit while the others are for-profit (Rauscher & Wheeler 2010).

A function is the relative responsibility or purpose of an activity, product or service. The goal gives it the obligation to deliver resultant expectations appropriately at the stipulated time and position. Thus the function of a finance department in a hospital is to control revenue and ensure an increase in profits (Casto & Forrestal 2013).

Revenue in first generated through patient admission to the hospital through payment of admission fee. The process goes through the payment made during the patients stay in the wards as well as payment for the equipment used for treatment in addition to the actual pills the patients consume. All the amounts increase the revenue generation of the hospitals hence increase profits. Moreover, a hospital with a high capacity accommodates more patients thus an increase in revenue generation and profit (Rauscher & Wheeler 2010).

Revenue cycle is essential in ensuring keeping track of all financial activities that undertaken within the organization. Keeping track would mean having records of all finances that leave and come in therefore enabling the management to know if they are making profits or incurring losses. The whole process helps in preventing embezzlement of funds due to the availability of records for every financial activity that the organization undertakes (Casto & Forrestal 2013).

Errors are inevitable, therefore in this process, there may be errors in the financial audit resulting from expenditure that may not be in record or services offered but not receipted. Files are the stamping permanency depiction of sales or services provided and are used as a reference for the activity, therefore, without proper records, an organization may end up incurring losses that it may not notice in prior time hence promoting bankruptcy or even arrest. The significant impact of errors in an organization is suffering from loses thus reducing proper development (Casto & Forrestal 2013).

In conclusion, revenue cycle is more important in ensuring tracking of the progress of business organization financially. It helps the organization identify areas that need more attention as well as those that need more financial support.


Casto, A. B., & Forrestal, E. (2013). Principles of healthcare reimbursement. American Health Information Management Association.

Rauscher, S., & Wheeler, J. R. (2010). Hospital revenue cycle management and payer mix: Do Medicare and Medicaid undermine hospitals’ ability to generate and collect patient care revenue. Editorial Board, 37(2), 90-104.



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