10 Signs It’s Time for Revenue Cycle Management Support
Written by: Janet Boos, VP and General Manager, Veradigm Revenue Cycle Services and Cheryl Reifsnyder, PhD
Revenue Cycle Management (RCM) is the process medical practices use to track and manage patient care episodes, from patient registration and appointment scheduling through coding and claim submission until final payment is received. Its goal is to help practices collect payments, whether from payers or patients, as quickly as possible.
Effective RCM is essential to help practices maintain their financial health. However, RCM has always been a complicated process—and it is now growing more challenging. Reasons include staffing shortages and ongoing changes in payer rules and regulations, as well as nonstop back-and-forth with payers to cover appropriate charges.
Many healthcare practices are dissatisfied with their current RCM process and its efficiency. In a recent survey of cardiology physicians, 54% said they currently handle their billing and coding tasks in-house, but 43% indicated they are likely to consider working with an external revenue cycle services provider within the next 12 months. In addition:
- 69% indicated that claim denials are a challenge for their practice.
- 80% rated the overall effectiveness of their current RCM processes as something less than “very effective” (62% said “somewhat effective,” 4% said “somewhat ineffective,” and 15% were neutral).
As your practice expands, growth inevitably leads to the dilemma of whether to continue handling RCM in-house or outsource it to professionals. This decision is critical because RCM significantly impacts your business’s cash flow. That’s why it is vital to carefully consider the pros and cons of outsourcing to assist your decision-making process.
In-house vs. outsourced RCM
Most healthcare organizations share the goal of providing high-quality, patient-centered care that improves patient health outcomes. However, reaching this goal has been made more challenging by the increasing complexities of RCM. Respondents to a recent KLAS report said that recent changes to payers’ processes and requirements have resulted in confusion and additional work, leading to increases in denials, in the amount of time required to process appeals, and in the number of days claims spend in accounts receivable (A/R).
For many practices, RCM is riddled with inefficiencies. The difference between efficient and inefficient RCM can translate into the difference between a practice’s financial success or failure.
Practices face numerous factors that can exacerbate revenue cycle challenges. Many practices struggle to recruit and retain sufficient staff, leading to high employee turnover and staff with limited experience. If a long-term biller departs, the practice is left without the years of experience and expertise they provided. Sometimes smaller practices expand more quickly than their existing internal billing staff can handle; other practices lack the time or resources to improve RCM internally.
RCM outsourcing can be a potential solution to these and other potential problems. In fact, nearly 2/3 of providers who reported outsourcing said that workforce challenges influenced their decision because outsourcing, while perceived to be expensive, is more cost-effective than paying for the recruitment, training, and employee benefits required for new hires.
Outsourcing: an increasingly common solution
According to a report from KLAS, more and more ambulatory providers are outsourcing their RCM services due to challenges with changing payer requirements and ongoing workforce shortages. An increasing number of providers view outsourcing as a “reasonable solution” for the rising costs and increased administrative burden associated with RCM.
As changes in the healthcare financial landscape continue, creating additional pressure on provider organizations to manage claims cycles, it results in more outsourcing of more tasks to RCM vendors.
Not only has outsourcing RCM services become more common in recent years, an April 2023 study from CSH Advisors found that 61% of providers surveyed planned to outsource revenue cycle tasks in the next 24 months.
Advantages and disadvantages of outsourcing
Outsourcing RCM and the billing process is a popular means of helping practices manage RCM challenges. Hiring external RCM support can help your practice streamline operations, reduce costs, and increase revenue. Revenue cycle outsourcing enables providers to access RCM expertise and technologies they could not access on their own. Outsourcing can solve a practice’s staffing challenges in the medical billing department. It can also help practices deal with changing payer processes and requirements.
However, outsourcing is not the right choice for every practice. According to a recent KLAS report, about 1/3 of providers that have outsourced RCM tasks say they regret the decision, primarily due to dissatisfaction with their RCM vendors. Successful RCM outsourcing requires a practice to find the right fit and to actively engage in vendor management. It’s critical for the practice:
- To understand the capabilities of the outsourcing vendor
- To understand the vendor’s ability to appropriately address their business needs
- To actively communicate with the vendor.
It’s critical to consider the pros and cons of outsourcing before making any decisions regarding employing external RCM support.
How to know when it’s time for RCM support
Outsourcing all or some of your practice’s RCM tasks can be a strategic decision that improves efficiency, reduces costs, and enhances revenue capture. Here are some indicators to watch for—signs that it might be time to consider outsourcing RCM at your practice.
Declining revenue performance
If your organization’s revenue performance is declining or stagnating despite efforts to improve internal processes, it could be a sign that your in-house RCM efforts are ineffective.
High rate of claim denials
An increasing rate of claim denials can indicate inefficiencies or errors in the revenue cycle process. Outsourcing to a specialized RCM provider with expertise in claims management can help reduce denial rates and improve revenue capture.
Complex billing and coding requirements
Healthcare billing and coding regulations are constantly evolving and becoming more complex. If your organization lacks the resources or expertise to keep up with these changes, outsourcing to a provider with dedicated billing and coding professionals can ensure compliance and accuracy.
Staffing challenges
Recruiting and retaining skilled RCM staff can be challenging, especially in competitive labor markets. If your organization is experiencing high turnover or struggles to hire qualified RCM professionals, outsourcing can provide access to a larger talent pool and specialized expertise.
High administrative costs
Inefficient RCM processes can result in high administrative costs, including labor, technology, and overhead expenses. Outsourcing can offer cost savings through economies of scale and streamlined processes.
Technology limitations
Outdated or inadequate technology infrastructure can hinder RCM performance. Outsourcing to a provider with advanced RCM technology platforms can improve efficiency, accuracy, and data security.
Need to focus on core competencies
For many healthcare organizations, RCM is not a core competency. Outsourcing allows organizations to focus on their primary mission—delivering quality patient care—while leaving RCM responsibilities to specialized providers.
Need for scalability
Outsourcing RCM allows organizations to scale their operations more flexibly in response to changes in patient volume, regulatory requirements, or business growth without significant internal investments.
Compliance risks
Noncompliance with healthcare regulations can result in costly penalties and damage to reputation. Outsourcing to a reputable RCM provider with a strong focus on compliance can mitigate these risks.
Strategic alignment
Outsourcing RCM can align with broader organizational strategies such as cost containment, revenue optimization, and focus on core competencies, enabling healthcare organizations to achieve their long-term goals more effectively.
Veradigm Revenue Cycle Services (RCS)
Before deciding to outsource RCM, healthcare organizations need to conduct a thorough cost-benefit analysis and evaluate potential vendors based on their expertise, track record, technology capabilities, and ability to meet specific organizational needs.
Veradigm Revenue Cycle Services (RCS) may deliver the outcomes your practice seeks. Veradigm RCS are administrative and financial management solutions designed to improve RCM efficiencies. Veradigm RCS can help practices to:
- Improve efficiency and productivity
- Increase cash flow
- Improve the bottom line
Veradigm RCS offers numerous benefits for practices, with characteristics that include:
- Up to Date: Addresses billing and revenue cycle challenges, including transitions to value-based care and complex billing regulations due to MACRA, Promoting Interoperability Measures, and ICD-10.
- Flexible: Offers customized service and workflows while employing best practices.
- Scalable: Provides safety and stability via the Veradigm network, helping your practice expand while optimizing labor.
- Transparent: Enables real-time access to advanced analytics and expertise to maximize technology while retaining control of your finances.
- Efficient: Provides true denial management to help catch and prevent repeat denials, fostering cleaner claims overall.
- Effective: Ensures results by managing the entire revenue cycle from initial contact to final payment.
Veradigm RCS works with over 27,000 providers, managing over $4.3 billion in annual payments with a team with more than 30 years of experience. Our clients have reported outcomes such as:
- 98% net collections
- 98% first-pass clean-claims rate
- 2% to 5% average revenue improvement
Are you uncertain how well your practice is currently doing with revenue cycle management? Take this complimentary online assessment now and determine if RCM services might be what your practice needs to help meet its goals: