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Volume-to-value shift drives surge in demand for revenue cycle management outsourcing

By Dan Schulte, Senior Vice President, Sagility

Today’s providers are walking a fine balance between the push for healthier patient outcomes and unsustainable cost structure. The hospital revenue cycle, in particular, has become complicated in recent years due to several factors, including the adoption of alternative payment models and greater regulatory demand. Macroeconomic headwinds continue to affect the U.S. healthcare market, with higher shifts to patient-responsible co-payments and deductibles.  .

According to a recent Black Book survey, the average hospital costs must fall by 24 percent by 2022 for organizations to break even. As a result, 80 percent of hospital leaders are vetting or considering outsourcing full revenue cycle management by 2019. The survey also highlighted the increasing demand for revenue cycle outsourcing — 18 percent of hospitals implemented a full RCM outsourcing project in 2018, compared to 11 percent three years prior.

It’s the “stick to your knitting” philosophy, especially in light of RCM’s complex and fast-changing regulatory and market environment. Business process outsourcers (BPOs) have the requisite RCM expertise and innovation and are more effective than typical hospital revenue cycle departments due to the inherent lack of scale and standardized processes as well as limitations of legacy technology; complex and ever-changing payer rules.  Providers endure high claims denials,  resulting from outdated charge master dictionaries and the complexities of coding under both expanded HCPCS and ICD-10-CM/PCS code structures.  Fail points exist in both the business office and in the health information management (HIM) arena. National healthcare reform efforts, both through the broader legislation or simple progression of long-forming themes, will continue to stimulate additional demand.  Two kinds of engagement can occur between a trusted outsourcing partner and a healthcare provider.

  • A “safety valve” relationship can exist between a trusted partner and a healthcare provider, allowing the latter to monitor its cash flows, Days in A/R KPI, etc., to make regular changes in the volume, age, average balance and patient/service type of its outplaced accounts.  The trusted partner will have a flexible contingency arrangement to allow for economical outsourcing decisions based on the client’s needs.  The outsourcer will have the capacity to expand to meet any needs (adding 300+ account reps in a quarter, if needed), which is beyond the capacity of most provider business offices to cope with such changes in staffing.
  • On the other hand, a healthcare provider may recognize the need to outsource the entire revenue cycle process, either starting at the admissions office, or at the coding stage, or post-billing, in whatever relationship suits the organization’s needs.  A trusted outsourcing partner should be able to flex its abilities to step in to support pre-admissions, insurance verification and benefits, patient balance estimation services as well as the back office services mentioned above.  The outsourcing partner should not be just provide clerical/administrative outsourcing service, but rather should be able to bring strong analytical reporting, such as root cause analytics for denials.  In addition, the outsourcing company should have a robust set of tools to bring about robotic process automation where needed, cognitive robotics, and so on, to enhance the quality and turnaround time of key processes within the revenue cycle.

Today providers and patient-consumers alike face more complex reimbursement schemes, including risk-based models.  Either one of these approaches—either a piecemeal or holistic approach—can provide the scalability, process optimization, and capability enhancement to help providers achieve the objectives, to enhance quality and data reporting to payers and regulators, and navigate the reimbursement structure of covered charges, provider liabilities, and growing out-of-pocket expenses for their patient-consumers.

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