Cost woes drive hospitals to outsource revenue cycle ops

Increasing pressure on healthcare providers to cut costs is fueling growth in their use of revenue cycle management (RCM) consulting and outsourcing firms, a new report from KLAS Research reveals.

“Providers are looking at every process in their revenue cycle,” said Mike Smith, VP of professional services research at KLAS, in a news release. “Many are turning to third-party firms for extra help with everything from temporary project-based work to continual assistance with ongoing A/R follow-up or even full outsourcing of their revenue cycle department.”

Three options: The report, Revenue Cycle Services: Which Firms Deliver Big Returns?, says that in addition to cost pressures, the need to focus on Meaningful Use and ICD-10 requirements have put a strain on IT and staff resources. So healthcare providers are getting outside help with revenue cycle struggles. There are three primary ways they are doing this:

  1. EBOS. Extended business office services (EBOS) firms are being used mostly for follow-up in private insurance (cited in 32% of contracts), self-pay (27%), and government insurance (25%). The top-performing EBOS firms are Deloitte, PwC, Cymetrix, FirstSource, and Xerox, the survey found.
  1. RCO. For full-scale outsourcing, healthcare providers look to revenue cycle outsourcing (RCO) firms. Two providers, Accretive and Dell, were the only RCO firms that KLAS reported on because they were the only ones with enough contracts.
  1. RCT. Revenue cycle transformation (RCT) firms are being used to help improve overall processes. The top three RCT firms are Huron, PwC, and Deloitte, says the survey.

KLAS polled 122 healthcare organizations for the survey, which also reveals that hospitals are more likely to use EBOS than RCT/RCO services to increase Medicaid and charity conversions, lower costs, and minimize revenue fluctuations. The majority (74%) of those using EBOS and RCO firms say they intend to stick to that option or renew their contracts.

While hospitals and health systems of all sizes are seeking third-party help with RCM, the survey found that smaller organizations are more likely than large ones to outsource all or part of their RCM operations.