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Outsourcing revenue cycle management

June 07, 2022
Business Affairs
From the June 2022 issue of HealthCare Business News magazine

By Eric Slimp and Mitali Maheshwari

Revenue cycle management (RCM) refers to the entire process of a patient care episode, beginning at the time a patient is registered for an appointment, continuing through delivery of care, and ultimately ending with billing and obtaining payment for the services rendered. RCM is a tedious and resource-consuming process due to:

• The sheer number of participants, including patients, payers, physicians (and other providers), and third-party partners
• Use of highly complex and specialized, siloed software systems
• Changing rules for reimbursement and coding languages

Due to such complexity, almost every health system chooses to outsource some or most of the RCM process. As with many purchased service categories, hospitals simply cannot afford to hire staff who bring all of the highly specialized knowledge and training necessary or build their own software systems to support their RCM process, yet still optimize efficiency. As a result, health systems tend to buy this expertise and these systems from third parties in the form of purchased services or software solutions.

Below is a discussion of several of the key RCM subcategories that symplr commonly sees outsourced to third parties, as well as key components of those subcategories that are noteworthy. Please note that this should not be considered an exhaustive list. Rather, these are the areas of key significance that we have seen in working with health systems across the U.S.

We also discuss best practices related to performance monitoring to ensure that the ultimate result of this mosaic of services and platforms is an organism running in a cohesive manner at peak efficiency.

Billing and collections
Billing and collections services are among the most outsourced components of RCM, simply because the processes involved tend to be challenging. For example, the billing agencies must ensure they are billing the appropriate amounts for the services rendered and that they are billing the appropriate party for those services. Many companies offer billing and collections services for hospitals and healthcare organizations, and this category tends to be highly fragmented as a result. Some health systems choose to contract with multiple collections agencies and run them in tandem, for example. Other health systems utilize different agencies within different departments, adding further complexity.

Pricing for collections services is especially variable and depends on several factors. The predominant fee structure for collections is a percentage of the revenue collected. However, contingency fees can vary from single-digit percentages to as high as 50% depending on the type and age of the debt to be collected. It is important to ensure the pricing quote(s) you receive and agree upon are within industry benchmarks depending on the specific nature of the debt being turned over to each agency.

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