Revenue Cycle Outsourcing: Intertwining Process with Technology to Improve Outcomes

Outsourced services, including medical billing, is expected to reach $29.3 billion by 2030. As digitization within #healthcare streamlines workflows, practices need to adopt advanced RCM tactics or risk falling behind. We’ve gathered the latest insights, along with tips to determine if a third party partnership is right for your organization.

Rising costs, staffing shortages and lack of data integrity can have major impact on a revenue cycle. When its functions are not running on all cylinders, inefficiencies, lapses in workflows and revenue leakage can occur. These problems lead to denials, which are costly to fix and usually result in lost revenue. Thankfully, the right partnership with a billing organization can effectively manage the revenue cycle to ensure it’s operating at full capacity.

Many may have the mentality that keeping resources in house is the most beneficial, but outsourcing has its benefits. The main benefits are often stated as potential improvement in gross collections and a decrease in growing A/R. Beyond these substantial items, more positives include:

  • Cost savings
  • Increased efficiency
  • Reduced billing errors
  • Confirmed compliance with regulations

Many options exist for companies from all sizes, from small practices to large health systems. Hiring an organization that is focused on billing specifically brings specialized experience. Even better, since the billing company executes services for various clients, the staff will bring an in-depth knowledge of billing needs and nuances to the table.

Amplifying success through digital means

The availability of technology and automation-forward solutions has skyrocketed in recent years. For example, advancements like telehealth are changing the industry. Telehealth claims grew 2800+ percent between December 2019 and December 2020, and the usage is expected to continue expanding. When it comes to billing, adding automation, AI and machine learning can result in better service delivery models. RCM optimization models that include automation and certain technology can address inefficiencies and challenges that exist in billing processes quickly and efficiently. Tools like Robotic Process Automation, coding editing software and digital dashboards make these audits possible. Eligibility “bots” can improve accuracy by processing up to 5,000 transactions per day. Claim validation tools are said to improve productivity and accuracy by up to 40 percent. This means less time on the phone and less time spent manually posting – allowing staff to focus on the rest of the practice’s to do list. Other examples of technology that can be implemented throughout revenue cycle management processes include workflow management, predictive analytics and smart audits, to name a few. When these digital capabilities come together, it results in better revenue performance for customers.

Advanced tools exist, yet practitioners and staff may lack the technical know-how to thrive in today’s environment. Staff needs to be well-versed in revenue cycle management. Additionally, strong IT capabilities are needed to successfully integrate EMR and RCM tools. More than 66 percent of provider organizations want to dedicate at least 10 percent of their IT budget to RCM analytics, but 77 percent of the providers say they lack the resources, staff and skills. These tools and resources cost money, and budgets are often a concern. With these challenges existing, plus stakeholder reluctance to shift from conventional methods, solutions are needed that can mitigate revenue loss.

Is outsourcing the answer?

Outsourced services (including medical billing) is expected to reach $29.3 billion by 2030. Sure, the benefits are aplenty, but is outsourcing the best option for your practice? When determining if outside help should be explored, it’s not a decision to take lightly. Working with third party partners no doubt has its challenges. There is implementation time, training that’s needed, and the potential inconvenience of not having co-workers under the same roof when questions arise. Bringing on an outside vendor can be intimidating, but the benefits far outweigh the risks.

So how can a practice know if outsourcing should be considered? Assessing your practice is the first step, and there are a few red flags to be on the lookout for. Issues like growing A/R, labor constraints or cash flow are a few of the most common challenges. While not all issues are universal, problems relating to the functioning of the revenue cycle affect practices of all walks of life. If these issues can be contained and remedied through a third party vendor, partnering sooner than later is the best option.

The RCM services outsourcing segment is expected to expand at an 11.2% growth rate

Picking a partner

With so many existing options, how can a medical practice determine which vendor will be the right fit for their organization? Is a small or large vendor the right answer? Perhaps looking for vendors that specialize in the same practice area makes the most sense. What technology is utilized, and how advanced is it? An outsourcing partner should understand how the current workflow is functioning. By assessing what’s working and what needs improvement, a plan can be devised to remedy inefficiencies and create growth. Understand the current A/R backlog is also a must. Outsourced leadership should be able to then pivot by reallocating their internal resources to focus on revenue-generating tasks. Lastly, it’s a good idea to request references.

What qualities should an outsourced partner have? While needs will vary, certain qualities should be universal. For example, regular communication – for account updates and the ability to ask questions – is critical. A dedicated associate or team will also come in handy. While many billing organizations may have multiple clients, a dedicated team of specialists can ensure that each account receives focused attention. This team should support open communication and make themselves available often, along with practicing complete transparency. It can be viewed as an interview – practice administrators need to “gel” with their account representatives for an optimal working relationship. Another important requirement: assigned representatives should know their platform inside and out. Similarly, the platform should illicit a variety of services that cover both the front and back office. And speaking of platforms, one of the most important factors involving software center around security. A partner should have established digital safety measures in place.

The following tips are best practices to incorporate into a vendor search: An ideal partner should:

  • Aim to submit claims on a daily basis
  • Run eligibility claims as soon as an appointment is scheduled
  • Collect as much as possible up front
  • Offer regular meetings and open communication

This is, of course, a sampling of tasks that an acceptable partner should incorporate. There are also red flags to look for. Lack of knowledge in a specialty is a major downside. If a billing organization has no experience managing claims from a dermatology office, for example, that may be a deal breaker.  Another hindrance that could affect the outcome of the work is a transparency into the system. Let’s say the system’s limitations mean that a full picture of the data is not available. That would be a negative that could have large implications to the success of the partnership.

To ensure needs are being met, both parties should adequately share expectations and goals beforehand. Before signing a contract, companies on the hunt for a partner should look for services that meet all the required business needs and goals.

Preparing for outsourced RCM

Before starting the implementation process, certain steps should be taken. Practices can prepare by sharing as much information as possible with the chosen partner. If a partner is not given insight into the condition of a client’s revenue, how can they adequately service it? Internal resources should be assigned to determine points of contact. Clear communication channels should also be established. Reiterating from above, goals and expectations should be in writing to ensure they are met. It’s best to ensure that all your ducks are in a row before implementation.

Gaining success through outsourcing

RCM services attained 17 percent market growth across the industry since 2019, and it’s only set to continue to grow. As digitization streamlines workflows, practices need to adopt revenue cycle optimization tactics or risk falling behind. Advanced technology can help practices thrive in today’s environment, yet cannot be utilized properly and to the full extent if users lack knowledge or budgets are too miniscule to bring the RCM technology in house. Thankfully, outsourcing is a viable option for many. Outsourcing is a comparatively low cost solution that can yield great outcomes. If third party resources are properly utilized, technology and process can seamlessly converge to optimize revenue cycles.

The RCM services outsourcing segment dominated the market in 2022, accounting for a revenue share of approximately 67 percent. This number is expected to continue to expand at an 11.2 percent growth rate. As we see the upward trajectory continue, the outsourcing of revenue cycle management will become more commonplace and be seen as a practical option for practices of all shapes and sizes.

*Stats courtesy of TriZetto Provider Solutions, a Cognizant Company. 2023.