It may seem obvious that a strong revenue cycle simply requires healthy revenue in the first place. Yet when healthcare organizations manage RCM vendors, complexity can cloud visibility into profitability and increase collection costs.
With healthcare following a trend of digital transformation across many fronts, RCM vendors enhance revenue while freeing up organizational resources to focus on more competitive service avenues and patient facing initiatives.
RCM vendors can be a huge blessing for healthcare organizations that struggle to oversee their internal billing and collections, even with intelligent automation systems in place. The option to outsource parts of the revenue cycle or choose to delegate the entire cycle has been taken by at least half if not more of healthcare providers in the United States.
According to HFMA, the healthcare Financial Management Association[i], outsourcing revenue cycle functions may seem like an attractive strategy to providers, but this prospect should be approached with great care. The benefits will vary from organization to organization, and should be weighed according to each company’s needs, challenges, and growth goals. HFMA warns of the principal-agent problem where the partnership needs to be managed and incentives aligned. There is great advice in this article and we want to hone in on the importance raised of effective performance management. Knowing what goes on behind the scenes is critical, but results ultimately are what matter. The two parties therefore should undertake regular, robust, data-driven reviews of billing performance, with the following considerations stipulated in the contract:
- The frequency of revenue cycle performance reviews, the format for discussions of findings (e.g., in person, teleconference), and who should be included in the discussions
- The performance measures to be tracked as part of the review, how those measures are to be calculated, how the data are to be defined and pulled, and the level of granularity (e.g., group, specialty, location, physician) at which the information should be made available
- What tools will be available for the provider to monitor performance independently
Pay based performance incentive structures, HFMA agrues, can be created that hold both accountable by tying the collections percentage to a schedule that considers the clean claims rate and the net collections rate. At the risk of oversimplification, the clean claims rate is determined by how effectively the provider organization captures appropriate information needed to process claims, and the net collections rate essentially measures how effectively the billing agency collects the allowable amount on claims. The exhibit below illustrates how these factors could determine the percentage of collections the vendor receives.
Further considerations when working with RCM vendors:
- Organizational alignment – Not every vendor is created equal and there is no “one size fits all” solution for third-party RCM. An RCM vendor can standardize patient access and ensure industry best practices are being followed every step of the way. But your company must review what each vendor offers and whether the cost of their service will provide the optimal ROI.
- Collaborative focus– An RCM vendor should provide more than just service fulfillment. The best relationship is a true partnership where the third party truly understands and supports your culture, your central goals, and your mission. Take the time to have more in-depth conversations with vendors and help them understand your perspective and approach to determine who can best fill both the service and skill gaps in the most complementary fashion.
- Reporting oversight and analytics– Putting your RCM under a third-party vendor shouldn’t be a black box, especially when it comes to monitoring the performance and results. RCM vendors should be able to help you identify deeper problems that may exist in your revenue cycle, eliminate them, and support real change across your organization. This is facilitated by end-to-end reporting and consistent meetings that allow for education, training, and support every step of the way for more effective and permanent growth.
A few other factors can play a significant part in the outcome of RCM vendor partnerships:
- Tracked processes for both patients and providers
- Accurate patient end-to-end identification methods
- Redundant process elimination
- Denial analysis and collection streamlining
- Real-time reporting for performance optimization
What does your company require most in considering RCM vendors? Which area of your revenue cycle do you need the most help with as far as skill gaps and resource availability?
To find out more about how Currance supports providers outsourcing their Revenue Cycle with tools, analytics, and support services, email us for a demo.