Providers embracing RCM outsourcing

'Overwhelmed hospital leaders have realized that RCM isn’t their organization’s core competency'
By Henry Powderly
09:10 AM

More and more hospitals are turning to outsourced revenue cycle management services, especially as the challenging shift to value-based payment models leaves them realizing their own legacy systems are inadequate to the job. The market for end-to-end RCM outsourcing could reach $10 billion by 2016.

According to industry watchdog Black Book, hundreds of healthcare providers have contracted companies in the past 2 years that handle all aspects of RCM.

[See also: RCM tools ill-suited for payment reform]

"It has been no surprise that many overwhelmed hospital leaders have realized that RCM isn’t their organization’s core competency, and have turned to large end-to-end outsourcing firms for RCM to refocus on patient care and clinical service delivery, ” said Doug Brown, managing partner of Black Book Market Research.

"Without end-to-end RCM, average processing costs for claims reimbursements run from $30 to $90 per transaction, Black Book said, totaling $252 billion for providers in 2014. Outsourced RCM knocks down the cost, Brown said. The healthcare industry also has the opportunity to leverage the economies of scale offered by RCM outsourcers, which successfully handle high volumes of encounters," he said.

"RCM outsourcers also have the staff and technology expertise to integrate patient billing, collections, accounts receivables, and grievances as ICD-10, and value-based payment models present even more potential for internal inefficiencies ... without capital investment for state of the art technology and staff."

[See also: Revenue cycle poised for big rethinking]

The move towards outsourced RCM has been a boon for providers' bottom lines. According to the survey, more than 80 percent of hospitals with more than 200 beds saw revenue gains of about 5 percent tied to end-to-end RCM. Meanwhile, 78 percent of hospitals with fewer than 200 beds saw revenue climb nearly 7 percent. The survey polled 2,250 CFOs, CIOs, business office managers, technology, and financial services staffers across 445 hospitals in 40 states.

Participants also ranked top RCM providers, including Parallon, Conifer, Optum, MedAssets, McKesson RelayHealth, Convergent, Xtend, HBCS, MedAssist, Firstsource, Emdeon and Citadel.

According to financial executives surveyed by Black Book, a major driver in switching to an end-to-end RCM outsourcing provider was worry that niche vendors would not be able to deliver analytics outside of a fee-for-service payment system, an especially timely concern as many providers are embracing value-based reimbursement models.

Also, 90 percent worried that their organizations did not have the money needed to upgrade in-house RCM systems to deliver new analytics.

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