Revenue Cycle Management: Should You Outsource for Better Profits and Care?

Introduction

Imagine running a healthcare practice where you’re juggling patient care while trying to keep up with billing, claims, and collections — only to see revenue leak due to denied claims or missed charges. Revenue cycle management (RCM) is at the heart of a healthcare organization's financial health, but handling it in-house isn't always the best strategy. 

With growing complexities in billing regulations and increasing administrative demands, more providers are asking: "Should we outsource revenue cycle management?"

 The answer depends on your organization’s needs, but for many, outsourcing RCM brings efficiency, cost savings, and freedom to focus on patient care. In this blog, we explore the pros and key considerations of RCM outsourcing, helping you decide if it's the right path for your practice.

A Growing Healthcare Outsourcing Market‍

According to reports, the healthcare outsourcing market is forecast to reach $626 billion by 2029. 

‍Furthermore, a recent survey of more than 500 hospitals and inpatient organizations found that 90% of healthcare executives are exploring cost savings through relationships with third-party vendors. 

‍This does not come as a surprise, considering affordability is becoming a growing concern, and cost optimization has become a high priority in the industry. Revenue cycle management is a critical business process often outsourced and vital to the business. 

‍It covers all the complex processes of billing, coding, claim processing, and getting paid, directly impacting how much money an organization brings in. If there is scope for improving costs by outsourcing, such an opportunity should not go unconsidered.
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Why Revenue Cycle Management Is Too Important to Be Handled Inefficiently

‍Outsourcing Revenue Cycle Management is not a new practice among healthcare organizations; it has been practiced for many years. In the past, they have turned to outsourcing this process primarily to improve organizational efficiency and costs.

‍It is important to note that RCM processes require specialized expertise and experience. If the engaged staff lacks these skills and knowledge, it can lead to heavy losses in denied claims. Experienced healthcare providers understand this need and ensure they have the right people on the job. 

‍Many RCM tasks are also labor intensive, which can lead to high costs. To add to it, there is a shortage of skilled professionals, making hiring, maintaining, and working with them costly and inefficient, especially when compared with the costs of outsourcing.

‍Given these challenges, healthcare providers often rely on outsourcing agencies or technology solutions to address these gaps.

Benefits of Revenue Cycle Management Outsourcing: What You Gain

There is a reason healthcare providers have moved to the option of outsourcing and have continued to stick to that choice, primarily due to the following reasons:

1. Improved Efficiency Leading to Better Profitability and Cash Flow: Outsourcing revenue cycle management (RCM) is more cost-effective than handling it in-house. This is due to economies of scale, where outsourcing firms leverage skilled staff, efficient processes, and advanced technology to serve multiple healthcare providers.
   As a result, the cost per provider is significantly lower than that of an internal team. This approach not only boosts efficiency in administrative and financial operations, leading to higher profitability but also ensures accuracy and reduces errors. With dedicated, well-trained staff managing RCM, healthcare providers can achieve timely payments and improved cash flow.
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2. ‍Access to Skilled and Experienced RCM Team: Outsourcing companies that handle RCM are experts in managing revenue cycles. They have skilled professionals who know billing, coding, and the complicated rules and regulations of insurance. When healthcare providers let these companies handle these tasks, they can use their expertise.
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3. Focus on Patient Care: Providers can save time and resources by dedicating more and undivided attention to delivering excellent patient care. Instead of getting bogged down by administrative tasks and paperwork, they can focus on what they do best: diagnosing and treating patients.
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4. Scalability and Flexibility: Providers gain the ability to adjust the scale of their operations to match their needs. Whether patient numbers increase or decrease or new services are introduced, outsourcing companies can modify their scale and nature of services accordingly.
   Healthcare providers don't need to manage every member of the team—which includes hiring, firing, training, and incurring costs like office space, working infrastructure, equipment, etc. Also, every time standards/regulations change, the cost of training and execution of the changes in operational processes is not borne by the healthcare provider but by the outsourcing company.
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Factors to Keep in Mind When Outsourcing Revenue Cycle Management

‍For an organization to implement it for the first time, some aspects should not be overlooked, especially during the transition phase from managing it in-house to getting it managed by a partner vendor.

1. Choose a Partner with Strong Data Security and Compliance Practices: Providers give access to sensitive patient and financial data to a third party. They must make sure that the outsourcing company has strong security measures to safeguard this information.
   
   
2. Let Go of Control: When outsourcing RCM, providers relinquish some degree of control over their revenue cycle processes. They must rely on the outsourcing company to do tasks correctly and on time. Providers need to carefully check out possible outsourcing partners and set up clear lines of communication to keep an eye on things. At the same time, a strong cadence of audit and reporting practices should be established to ensure transparency between the provider and outsourced partner.‍
   
   
3. Evaluation of Partner’s Quality of Service: The quality of service offered by potential outsourcing partners should be carefully evaluated. This includes assessing their track record, reputation, and client testimonials. To meet expectations, they should also define clear service level agreements (SLAs) with the outsourcing company.‍
   
   
4. Cultural Fit: The RCM partners will represent the provider to patients, insurers, and other stakeholders. Choosing a partner that aligns with the provider's values, culture, and mission is essential. A strong cultural fit can foster collaboration and mutual trust between the provider and the RCM partner, the outsourcing company.‍
   
   
5. Transition and Training: Outsourcing to revenue cycle management requires careful planning and coordination. Ensuring staff members are adequately trained on new processes and technologies is essential. Clear communication and support from the outsourcing company can help smooth the transition and minimize disruptions to operations. 

Also, all practices and organizations have their own nuances, and what works for one healthcare provider may not work for another, thus making training and timely refreshment of knowledge even more important.

Is Outsourcing RCM Right for You?

Outsourcing revenue cycle management can be a game-changer for healthcare organizations aiming to streamline billing, reduce costs, and focus on patient care. 

‍By partnering with expert RCM providers, healthcare teams can avoid costly errors, improve cash flow, and navigate ever-changing regulations with ease. Still, choosing the right partner and maintaining transparency is key to success.

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If you are a healthcare professional and wish to discuss how to effectively outsource revenue cycle management for your organization, feel free to write to us at partnerships@homrcm.com.
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[1]US Healthcare Outsourcing Market Forecast

[2]Hospital Outsourcing - The Opportunities and Challenges

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