Healthcare providers face unique challenges when it comes to managing their revenue cycle. From billing and claims processing to payment collection and patient communication, there are numerous stages to manage and keep track of. That’s why many providers are turning to outsourcing revenue cycle management (RCM) to medical billing outsourcing companies. In fact, a 2022 PatientPay study from CWH Advisors confirmed this trend. Up to 61% of providers plan to outsource RCM tasks in the future, according to the study which was conducted in November and December 2022 (revcycleintelligence.com). Before summarizing the study’s findings, let’s see why RCM is such a challenging process.
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Challenges of Revenue Cycle Management
RCM is the process of managing the financial aspects of patient care, from the initial appointment or encounter to the collection of the final payment for services rendered. It involves various administrative and financial tasks, including patient registration, insurance verification, coding and billing, claims submission, payment processing, and healthcare receivables management. The goal of RCM is to ensure that healthcare providers receive timely and appropriate payments for the services they provide.
The complexity of the healthcare system has made RCM more challenging for healthcare providers. With multiple payers, regulatory requirements, and payment models, providers struggle to track financial transactions and ensure timely payments. Additionally, administrative tasks like insurance verification, claim submission, and claim denials follow-up burden providers, taking away time from patient care and requiring substantial resources.
Finally, there is the increasing cost of healthcare, which puts pressure on providers to reduce their expenses while maintaining the quality of care. Healthcare organizations are also facing rising hiring costs, which make it difficult to hire and retain qualified staff such as certified coders, billing specialists, and insurance eligibility verification experts.
Outsourcing RCM: Enhancing Financial Stability and Patient Experience
The 2022 PatientPay study aimed to gather insights from providers on their patient payment needs, technology’s role in supporting payments, and the procurement of these services. The study involved 38 executives from health systems, hospitals, and medical groups. Providers are focused on accelerating cash flow, reducing debt, and delivering excellent service with flexible payment options. However, due to staffing shortages and financial challenges, providers are increasingly considering outsourcing revenue cycle management processes.
Here is a summary of the findings of the study:
- The persistent workforce challenges arising from the COVID-19 pandemic necessitated the implementation of abnormal patient collections protocols over the past two years.
- Nearly two-thirds of respondents (63%) said they were experiencing staffing shortages in their revenue cycle departments.
- Over 6 in 10 providers said they expect to increase their use of third-party patient financing over the next 24 months, with 31 percent of executives looking for additional financing options.
- In particular, providers are keen on enhancing the patient experience, as only 42 percent expressed satisfaction with their existing patient payment solutions.
- Survey participants indicated their intent to prioritize the enhancement of check-in and payment capabilities, often referred to as the digital front end. This implies that patients can anticipate a payment experience similar to a retail setting when engaging with healthcare providers.
- All respondents reported that patient payments are a high or moderate priority for their organization.
- 61% of providers plan to outsource patient collections and other revenue cycle management processes in the future.
- Nearly 70 percent of the respondents identified exceptional customer service as one of their top three priorities when considering outsourcing patient payment solutions.
- Despite investments in educational materials and additional front-line financial counselors, 59 percent of providers rated patient financial literacy as poor.
Revenue Intelligence also reported on two other studies which found that healthcare providers are inclined to outsourcing their medical billing and other RCM tasks. According to a study conducted by the Healthcare Financial Management Association (HFMA), 22 percent of revenue cycle leaders surveyed reported managing their inpatient revenue cycle management services in-house while outsourcing certain outpatient services. Among the outsourced outpatient revenue cycle management services, anesthesiology, gastroenterology, and urology were the most commonly mentioned specialties.
A survey by Tebra found that more medical billing companies hold a positive outlook on revenue cycle outsourcing. Compared to 27 percent in 2018, 43% of the surveyed companies identified the outsourcing medical billing as a significant opportunity to leverage technology for service optimization, revenue enhancement, and reduction of repetitive tasks.
The PatientPay study reported that when outsourcing RCM, providers are most focused on finding vendors that have proven their ability to accelerate cash flow and exhibit excellent customer service. When you partner with a trusted experienced company, the benefits of outsourcing RCM are numerous.
Benefits of Outsourcing Revenue Cycle Management
Here’s why healthcare practice should consider outsourcing revenue cycle management:
- Significant cost and time savings: Outsourcing RCM enables healthcare providers to save costs by avoiding expenses associated with hiring and training staff, as well as eliminating the need for expensive software and hardware investments. Partnering with a skilled medical billing company allows organizations to streamline their operations and allocate resources more efficiently.
- Access to expertise: Outsourcing RCM gives healthcare providers access to a specialized team of experts. These outsourced billing services offer certified coders, specialized software, insurance verification services, and comprehensive tools for effective management of patient receivables. By leveraging their expertise, healthcare organizations can enhance financial processes, optimize revenue generation, and receive valuable recommendations for improved performance.
- Improves compliance: Outsourcing medical billing provides access to a skilled pool of talent. Professional billing companies employ experts who stay compliant with the intricate regulatory landscape of healthcare billing and coding. They stay updated on industry regulations, coding system changes, and guidelines, ensuring accurate and compliant billing practices. Partnering with these experts minimizes the risk of costly non-compliance errors, such as incorrect coding or billing discrepancies. This proactive approach helps healthcare practitioners avoid financial penalties and legal consequences associated with compliance violations.
- Spend more time with patients: Outsourcing medical billing allows providers to focus on delivering quality patient care while ensuring adherence to compliance standards in the RCM process. With expert support, physicians and their staff can pay more attention to patient care, reduce billing errors, and spend less time on administration.
- Higher clean claims rate: Clean claims are accurate, “perfect” claims. While an outsourcing company cannot guarantee a 100% clean claims rate, they can significantly increase it. More clean claims will improve your practice’s revenue.
The decision to outsource key functions of your medical practice or organization is a big one as RCM significantly impacts your bottom line. Make sure to choose a medical billing company with a proven track record of success in revenue cycle management and can ensure transparency in all matters.
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