6 min read

Keep it or let it go?

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It’s an often-debated topic within health care organizations: whether or not to outsource components of their revenue cycle. As much as you might like to manage all aspects of the revenue cycle in-house, you may be seeing signs that are nudging you toward outsourcing.

Key drivers behind an organization’s decision to outsource include increasingly complex payer rules and coding procedures as well as the continued decline in reimbursement from payers.

Industry experts advise that if you find yourself asking some of the following questions, it might be time for you to consider outsourcing:

  • Is A/R growing or becoming unmanageable?
  • Is cash trickling rather than flowing in?
  • Can processes or tasks be handled more efficiently or automated?
  • Does your staff have the expertise to successfully do their jobs? Do you have training programs available to them?

Studies show that most health care organizations have already done some outsourcing or considered it.

In fact, approximately 80 percent of hospital leaders in a recent Black Book Market Research survey said theywere evaluating outsourcing management of the entire revenue cycle. The survey also showed that 18 percent of hospitals executed or implemented a full revenue cycle management outsourcing project in 2018, compared to only 11 percent three years prior.

What are the benefits gained by these revenue cycle managers?

  • Access to technology and tools beyond the organization’s scope of operations, size or expertise.
  • Project management talent to expedite solutions for the provider in an efficient way.
  • Freeing management’s time to focus on projects and new operational demands rather than on training and developing processes.
  • Mitigate the stress of dealing with turnover and reallocate resources to other vital roles.
  • Consistent Results: When you outsource billing, the company you hire is obligated to perform the agreed-upon services with a certain rate of success.
  • Improved compliance.

Revenue cycle managers will be the first to admit they seldom have enough experienced staff to implement new technology, procedures and also train staff, especially in the middle of a merger or large project like electronic medical record conversion.

So, the ability to hand off segments of operations to an experienced business partner is quite likely essential to the success of these projects.

It is important, however, to do your due diligence before signing any contracts.


Research has shown that hospital executives tend to get their colleagues’ opinions on vendors before deciding on one. About 61 percent said peer referrals were major factors in the decision-making process, noting that references are helpful, especially if you know the person giving a reference.

If the vendor has experience with the intricacies of your state and demographics, it’s helpful because they will be more familiar with the payers as well as the community. Look for business partners who specialize in working with health care clients and have trained their employees to work with health care consumers.

Cost - The Fine Print

Cost is the most important criterion named by 83 percent of hospital executives in the revenue cycle management vendor decision-making process, studies show. It’s important to beware of hidden fees, however. Some vendors will charge for such things as startup costs, generating and sending reports, cancellation fees, printing statements, and more, so make sure that you ask about any fees that might be in the fine print. If they are doing collections, will they keep a certain percentage of the collections beyond the fees they are charging? If yes, how much?  

Another aspect of cost is “up-selling.” Have you ever had your vehicle’s oil changed and had the technician tell you that you also need a new filter or a new battery? After you have hired a vendor, they may try to convince you to buy additional services. You might also run into a situation where your vendor sells you a service but doesn’t actually perform that service. They may sell you that service, but then outsource that service to another vendor. Be sure to ask about these things upfront.

Protecting Patient Data

The Health Insurance Portability and Accountability Act (HIPAA) generally requires health care providers to have business associate agreements with any company or individual performing functions on its behalf that require access to protected health information (PHI). The agreements define each party’s responsibilities regarding the handling and use of PHI. If a data breach occurs, it’s essential for parties to understand when and how security incidents need to be reported under the terms of business associate agreements.

As previously mentioned, the agencies you hire might farm out some services to another vendor. Ask your business associates to require these vendors to sign agreements containing the same provisions as the agreements between you and the agency helps ensure data integrity and reduce risk.

Avoid Fraud

When looking for a business associate, health care providers need to know that, going into effect November 4, CMS has a new regulation that allows them to bar individuals and organizations that "pose an undue risk of fraud, waste or abuse based on their relationships with other sanctioned entities."

Medicare, Medicaid and CHIP providers will have to disclose any current or previous affiliation with an organization that has uncollected debt, has had a payment suspension under a federal healthcare program, has been excluded from those programs, or has had billing privileges denied or rescinded.

Providers can look at a database maintained by the Office of Inspector General. OIG maintains a list of all currently excluded individuals and entities called the List of Excluded Individuals/Entities (http://exclusions.oig.hhs.gov/exclusions). Anyone who hires an individual or entity on the LEIE may be subject to civil monetary penalties. To avoid civil monetary liability, health care entities should routinely check the list to ensure that new hires and current employees are not on it.

Secure Buy-in

This point might seem less important, but it could be significant. Have you ever been involved with a project or implementation that never got off the ground or fell behind schedule because relevant team members weren’t sold on the value? Issues like that can delay timelines and limit a team’s ability to reach their desired goal.

Similar issues can occur when outsourcing, so it’s important to consider every department that the business partner will and could interact with.

Alignment and buy-in are important for all projects

For areas of high interaction, involve people in the consideration process. For low/no interaction areas you should at least make them aware about pending changes because they might know something that could impact the project that you didn’t consider.

The main goal of securing buy-in is to ensure everyone is on board, aware of their role and expectations, so the partnership gets off to a successful start.  

Going Ahead

If you make the decision to go ahead and outsource some or all your revenue cycle duties to a third-party, you will be joining a burgeoning group of health care providers who’ve made that move. But don’t make that decision lightly; there’s a lot to consider, as we’ve pointed out. Delegating those tasks can seem like a risky proposition but as long as you do your homework, you should be adding a valued partner to benefit your revenue cycle strategy. 

One final piece of advice:

“If you’re bringing in a business partner to help improve A/R, make sure to include success criteria in the contract. Whether it’s a reduction in outstanding A/R or a set number of accounts they will resolve each week, including language in the contract that ensures a higher level of accountability is beneficial for both parties.”

-efficientC & OS inc. President Lori Zindl

Why Revenue Cycle Matters to You?

As a revenue cycle services company with 25+ years in the industry, we have no shortage of experience dealing with the same challenges as you. If your organization is experiencing an uptick in A/R or is considering outsourcing certain aspects of your revenue cycle, please contact our revenue cycle experts. They'll be happy to assess your situation and provide recommendations as to your best course of action. 

Waiting too long can lead to unnecessary write-offs and costly cash flow disruptions. 

If you're interested in learning about how clearinghouse performance can go a long way in increasing the efficiency of your revenue cycle you might find, Should You Expect More From Your Clearinghouse to be another thought-provoking read!