Lessons from the Field- the Hospital as an RCM Outsourced Enterprise -15 Benefits

Clarity image by Gerd Altmann from Pixabay

Suppose there are some intuitive insights that have occurred during the SARS-CoV-2 pandemic for hospitals. In that case, it may very well be that to gain organizational efficiencies, increase cash flow, and provide a higher quality of patient care, experience, and engagement, that outsourcing will be required.   

It is understood that one does not outsource every department in the hospital as some functions still need direct organizational control, such as nursing.  However, it has become increasingly apparent as healthcare 3.0 is further defined with digital healthcare, the decentralization of care to community-based sites, innovations in treatment, technology, and pharmaceuticals, the hospital or health system faces formidable challenges. Changes and reductions in reimbursement also have significant impacts are that can negatively impact cash flow and the ability to meet internal or external demands.

While leadership understands the need to outsource to reduce cost and improve operating efficiencies, the decision is not clear-cut emotionally.  To stay open and continue the mission of the hospital or health system, outsourcing, regardless of the emotional discomfort at the perception of loss of power and prestige, is an inherent fiduciary responsibility leading to improved patient care, satisfaction, experience, and engagement.

The quickest way to improve cash flow, patient experience, and satisfaction is to outsource the Revenue Cycle Management (RCM) functions.

Performance up image by Gerd Altmann from Pixabay

The complexity of hospital billing, coding, and collections for inpatient, outpatient, ambulatory surgical centers, employed physicians, etc., will only increase. Annual changes in Medicare and Medicaid reimbursement managed care contract management, denial management, etc., require billers, coders, denial managers, collections experts, and the required information technology to maintain. All substantial investments in people and technology that are operational and capital expenses that never diminish.

Why then should a hospital outsource its revenue cycle management functions before any other department?

Problem solution image by Gerd Altmann from Pixabay

As is said, “no margin, no mission.” Outsourcing the RCM has a direct financial impact that flows right to the bottom line and frees up the cash required to improve patient care and experience, acquire new treatment and diagnostic technologies, renovate, or build facilities. With that in mind, what follows are the additional benefits of outsourcing your RCM.

Fifteen benefits the hospital will accrue from outsourcing the RCM activities.

1. More timely reimbursements.
2. Improved denial management.
3. Reduction in billing errors.
4. Reduction of regulatory compliance risks.
5. Enhanced payer contract management.
6. Optimization of reimbursements.
7. Improved monthly cash flow.
8. Streamlined operations and reduction of overall cost human and capital.
9. Improved Accounts Receivable management.
10. More robust financial performance from increased revenue, reduced cost, and fewer capital investments.
11. Improved profitability and efficiency.
12. Improved patient satisfaction with billing.
13. Fewer interruptions in cash flow.
14. Fewer employees to manage and replace.
15. Freeing up resources to improve direct patient care.

To survive and continue the hospital’s mission in healthcare 3.0, outsourcing the RCM functions is one of the last significant activities that will have a nearly immediate positive impact on the hospital’s bottom line.  

It doesn’t matter if the hospital is a tax-exempt or for-profit enterprise; the truth remains, “no margin, no mission.”

Michael is a healthcare business, marketing, communications strategist, and thought leader. As an internationally followed healthcare strategy blogger, his blog, Healthcare Business & Marketing Matters, is read in 52 countries and ranked No. 3 on the 100 Top Healthcare Marketing Blogs & Websites to follow by Feedspot.com. Michael is a Life Fellow American College of Healthcare Executives.  For inquiries regarding strategic consulting engagements, you can email me at michael@themichaeljgroup.com. 

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The opinions expressed are my own.