Blog Post

Is outsourced revenue cycle management right for your organization?

By Andrew Rebhan

January 4, 2017

    In the current health care environment, tightened margins, increased patient financial responsibility, the emergence of consumerism, and the introduction of risk-based contracts make new revenue cycle management (RCM) capabilities crucial to the financial health of provider organizations. Driven by these challenges and the need to upgrade inefficient legacy systems, health care providers are engaging in conversations about new IT strategies to optimize RCM.

    Although a majority of health care providers still purchase out-of-the-box solutions from vendors, many are starting to use an outsourced services vendor to either supplement part of the revenue cycle or handle the entire process (patient access, mid-cycle, and back-end functions). Outsourced RCM services allow health care organizations to focus on care delivery and delegate a vendor's skillset to areas that lack internal resources or expertise. Additional benefits of outsourced services may include reduced administrative overhead expenses, consistent billing practices, improved audit compliance, and optimized staff productivity.

    If your organization is considering an outsourced RCM service, here are some factors to include in your vendor assessment:

    • Cost. Price is typically one of the first considerations (particularly for smaller health care institutions) as it is difficult to assess whether it is most cost effective to handle RCM processes internally or through a third party. A vendor should be able to show how its experts can obtain higher overall collections in order to cover the cost of service.

    • Focus. Current revenue cycle IT solutions offer multiple core functionalities and "bolt-on" features, some of which also integrate with clinical platforms, such as electronic health records. Given this range of features and types of IT infrastructure, buyers need to identify the areas of their RCM platform that would benefit the most from outsourced services. Components of the revenue cycle that are typically outsourced include denials management, coding, patient collections, insurance follow-up, payer contract management, and authorizations.

    • Strategy. Establish clear goals and timeframes with your vendor partners. Many health care organizations are opting for outsourced services as a stop-gap measure until they figure out next steps or anticipate new regulatory changes. You should seek out vendors that will collaborate and train internal staff for long-term success, allowing the organization to potentially regain complete control of the revenue cycle in future years.

    • Experience.The health care revenue cycle is complex and labor-intensive. Hiring an inexperienced RCM vendor could result in increased bad debt or even regulatory violations. Seek out vendors that have demonstrated the ability to stay up-to-date with industry changes, such as by implementing RCM capabilities to address value-based and alternative payment models.

    Apart from the vendor assessment, there are some additional IT considerations you should be aware of:

    • Proprietary technology. Some vendors rely on proprietary IT for their RCM services and either sell their technology to customers for long-term use, or provide access to their solutions only for the length of the service contract. If your team purchases the technology, this often requires additional training to ensure internal staff can use the solution once the vendor finishes the implementation. You should clarify ownership rights to software and data prior to entering any service agreement.

    • Features. The traditional IT functions of RCM will change as alternative payment models become more common and reimbursements increasingly rely on clinical outcomes. Outsourced RCM solutions should accurately monitor risk-based contracts and include additional features that integrate financial and clinical data for quality reporting, such as contract modeling tools, population tracking, savings and penalty calculations, and prospective funds disbursements.

    • Performance transparency. In order to ensure a return on investment your team should be able to quickly assess the status of the outsourced revenue cycle, including claims, backlogs or accounts receivable balances. This transparency can be provided through real-time reports or dashboards to help monitor outsourced services at any time. Those organizations that outsource select parts of their revenue cycle should ensure proper interoperability between their internal systems and the functions handled by the vendor.
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