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Outsourcing the revenue cycle isn’t right for everyone


Outsourcing the billing process has become popular but it isn’t the right choice for every practice.

revenue cycle management | © thodonal -

© thodonal -

Managing revenue cycle management (RCM) has traditionally been a complicated process for medical practices, and it is only getting more challenging. Staffing shortages, constant changes in payer rules and regulations, and the nonstop bank-and-forth with payers to cover appropriate charges have all added layers of complexity to the process in recent years.

Outsourcing the billing process has become popular to help manage those challenges, as it can help to reduce costs and streamline processes. However, it isn’t the right choice for every practice. Before making the decision to outsource billing, it’s important to consider the pros and cons and determine if it’s the right fit for your business.

When it makes sense to outsource

Staffing shortages continue to plague all aspects of the healthcare system, and RCM is no exception. In fact, a recent study by CWH Advisors found 63 percent of providers were experiencing revenue cycle staffing shortages.

Practices without the staff to efficiently manage RCM run the risk of falling behind, particularly when it comes to addressing denials and claims management. When internal billing staff in a practice spend a significant amount of time cleaning up incorrect claims and resubmitting them, it pulls them away from their primary role of keeping other revenue flowing into the practice.

An outside vendor can add some stability to a practice’s revenue stream when staff either get reassigned or leave. When a long-time biller leaves, they take all that knowledge and experience with them, which can present another reason to contract with an outside RCM firm.

In other cases, smaller practices sometimes expand more than a small internal billing staff can handle. Outsourcing RCM can make sense in that case because it allows providers to focus on expansion and serving more patients as the business grows.

Who do you trust with your cash flow?

For practices that do outsource, it’s imperative to find a trustworthy vendor and ensure open communication and transparency at all times. Make sure the outside party is using systems that you have full access to, including the ability to report on all elements of the revenue cycle.

Choosing a vendor with the right capacity, knowledge and experience has the potential to save time and money in the long run. Do they have a large and stable team with knowledge of your specialty and experience on your practice management system?

The right vendor should know how to track practice metrics, identify where the biggest challenges are, and suggest ways to improve the RCM process. It’s great if a vendor produces beautiful, full-color reports brimming with financial data, but the most valuable firms highlight problem areas and actionable opportunities to improve them.

When reviewing demos from outside RCM vendors, ask questions about how each system can meet the needs of your individual practice. Ask for references of other practices that have signed contracts with the firms – they can tell you how responsive the company is when an issue arises, how dedicated they will likely be to your bottom line, and if they successfully increased revenue over time.

It’s also important to hold billing and RCM staff accountable, whether the personnel are internal or external. Set clear expectations for their role and track performance over time. Consider sharing some practice metrics with staff to help foster a culture around accountability. If you do not feel comfortable sharing all the financials with everyone at the practice, you can share ratios or changes as percentages.

Beyond billing

There is more to RCM than billing, and outsourcing can mean handing over multiple tasks to an outside vendor. RCM refers to the complete cycle of a claim, which starts pre-service with scheduling, through registration, prior authorizations, eligibility and every other step along the way. A recent survey of hospital executives by the Healthcare Financial Management Association found nearly half of respondents intended to buy at least five different solutions for RCM issues that include prior authorization, denials/appeals management, and patient self-service/digital front door.

RCM optimization will always have room for improvement, but outsourcing the process can help to make it less complicated. For practices that struggle with staffing shortages, high rates of claim denials, or finding the right talent to fill out your billing team, it might make sense to outsource to a firm that focuses solely on RCM and billing.

For practices looking to move to an outsourced model, choose an RCM vendor that can grow with you as your practice expands and provides care to more and more patients over time.

Rob Ware is Senior Vice President and General Manager of Revenue Cycle Management at the healthcare software solutions company ModMed, in Boca Raton, Fla.

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