The Role of Hospital Revenue Cycle Management Systems in Mitigating Personal Bankruptcy Filings

In the US, nearly 41% of adults currently owe medical debts, which is the leading cause of bankruptcy filings. Hospital revenue cycle management (RCM) systems may decrease bankruptcies by improving billing accuracy and finding alternative financial protection, yet could also increase filings by enhancing collection efficiency. This study aims to resolve this puzzle by examining how RCM systems adopted by hospitals in the presence of Medicaid expansion affect personal bankruptcy filings. We constructed a panel dataset from multiple sources and employed two-way fixed effects models, coupled with instrument variables and matching strategies, to answer our research questions. Our analysis shows that the average RCM system adoption rate at regional (county) hospitals is negatively associated with bankruptcy filings, especially when hospitals’ states have Medicaid expansion. This study contributes to the literature on healthcare digital transformation and has practical implications for practitioners and policymakers.