TRENDS IN REVENUE CYCLE MANAGEMENT

EXECUTIVE SUMMARY

No price tag is too high for personal health, but healthcare always comes at a cost. Effective management of a provider organization’s revenue cycle means higher margins and/or cost savings for patients. However, this critical role falls on a handful of skilled individuals who find themselves faced with a host of issues such as the looming migration to more nebulous value-based care models, fraud or constant updates to processes designed to squeeze out every bit of available margin. Given the critical role revenue cycle management plays in the sustainability of provider organizations, we decided to query decision-making leadership across different sizes and types of provider organizations regarding the primary needs vendors can best assist with in this space.

In this report, you will find those results broken down to give a better snapshot of RCM trends by facility size. We also identify the most common jobs hospital leaders outsource. It’s really not surprising that solutions involving money are often handled by everyone but the hospital itself. This could also be symptomatic of the industry-wide trend among vendors toward consolidation. In any case, healthcare providers see a lot more value in sticking to patient care and leaving the bill handling to someone else. Special note to providers: Collaboration between providers and suppliers improves the healthcare environment for all stakeholders. In an effort to facilitate effective communication, our methodology and research platform are built as an outlet for providers to rapidly let their voices be heard on a number of top healthcare issues. In return, we provide our premium industry reports to participants that cover top trends in healthcare. Many of your peers are opting to participate in our research here because they see our provider community as the future of productive information exchange. We hope you’ll consider joining us as we reshape communication in healthcare.

Author: Chris Jensen Junior Author: Fran Djoukeng

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DEMOGRAPHICS

Participants by Title

Participants by Facility Size

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DECIDING FACTORS WHEN CHOOSING REVENUE CYCLE MANAGEMENT PARTNERS

Business 101 teaches that revenue does not equal profit. Hospital executives certainly understand that principle because they consider cost as the number one factor for choosing an RCM vendor. Not surprisingly, more than 80 percent said that cost is the most important criterion before partnering with a revenue cycle management vendor. The opinions of their peers is another critical factor (about 75 percent) that decision-makers take into account. It should be noted that only 44 percent of those surveyed cited innovation as a key factor. Lastly, adoption or use by other healthcare providers is a top factor, ahead of relationship management. Looks like keeping up with the Joneses is relevant even in healthcare.

PROVIDER RESPONSE BY HOSPITAL SIZE

Hospital organizations will arguably never turn a blind eye to cost-containment. Comparing top factors by hospital size confirms that cost reigns as the most important factor. Mid-sized hospitals as well as ambulatory organizations rank cost as the number one factor for choosing a RCM partner (100 percent of the time). Smaller hospitals say cost is the #1 factor at least 75 percent of the time.

In fact, cost and presented results (the vendor’s stated results) are in a tie for most important at the largest hospitals. This is reasonable considering the need to optimize all resources when dealing with hundreds of patients. Recommendations from industry peers significantly impact decision-makers at all hospital facilities except ambulatory agencies where they rate it at 33 percent. Would this produce an industry full of copy-cats and less competition?

This is also true for innovation. Ambulatory agencies and smaller hospitals say innovation is less of a factor at about 33 percent. RCM vendors targeting mid-size and largest hospitals should make sure they are living on the cutting-edge of technology. For these organizations, innovation is heavily evaluated (63 and 78 percent).

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TOP OUTSOURCED SERVICES AMONG PROVIDERS

The discussions never end about the ills and virtues of outsourcing, but love it or hate it, this practice offers practical efficiencies that will ensure it has staying power. An overwhelming majority of healthcare providers have partially or fully outsourced the business of collections. 80 percent of C-suite executives, managers, and VPs have collections at the top of the outsourcing list. Half of the participants said that coding is the #2 outsourced service.

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OUTSOURCED SOLUTIONS BY HOSPITAL SIZE

There is something about collections that seems to be universal. After all, most hospital executives report that collections lead as the top outsourced activity by a wide margin. At the biggest hospitals, ambulatory facilities, and mid-range hospitals (101-250 beds), collections is the number one outsourced solution (100 percent). While coding is the second most outsourced solution for all hospitals, it skews higher for the smallest and largest hospitals.

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WEAKNESSES OF REVENUE CYCLE MANAGEMENT VENDORS

The consensus from business managers, financial directors, CFOsz, billing specialists, analysts, and their colleagues is that RCM overall still needs to be fine-tuned. Certain aspects of RCM solutions are underperforming across the board, specifically: denials management, contract management and support, and value-based reimbursements.

After the big 3, other weak areas among RCM vendor solutions are less serious. Providers say patient access, patient engagement, and patient registration are weaknesses. Better use of mobile tools and resources could explain the rating. Coding, which is the second most outsourced solution, is among the lowest-ranked areas of need. Out of sight, out of mind.

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UNMET NEEDS BY BED COUNT

Take a closer look at ambulatory facilities. This group indicates they have two major unmet needs: denials management and patient financial engagement. On the other hand, denials management at hospitals with bed counts between 501-1000 doesn’t even move the needle.

Revenue Cycle Management Needs by Bed Count

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HOW MANY RCM VENDORS DOES IT TAKE TO...

Yes, sounds like a familiar joke, but while 38% of respondents state they prefer to have all of their RCM needs handled by a single vendor, even more suggest they don’t care as they just want the job done right.

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PREFERRED VENDOR MIX BY HOSPITAL SIZE

Looking at the smallest hospitals, we see that whenever possible, using just one vendor is considered ideal. The “doesn’t matter” preference shows up strongly in almost every inpatient category. Considering the specialized operations of ambulatory facilities, it makes sense that they unanimously agree that one RCM vendor is preferable.

TRENDS IN REVENUE CYCLE MANAGEMENT

TOP CRITERIA FOR SELECTING A NEW RCM VENDOR

When considering a new RCM vendor, how do providers cut to the chase? They overwhelmingly lean on the experiences and recommendations of their peers (61%), which is viewed as the only ironclad method for building a shortlist of RCM vendors.

Prioritized at a 50%+ margin to all other options, it becomes clear that the self-important research reports that rate and rank vendors really only hold weight in vendor circles and not among providers, which at the end of the day is the only thing that really matters, right? Industry research reports were viewed as important by only 11% of providers, which is marginally higher than good old generic online searches. This kind of puts things into perspective.

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RCM Vendor Selection Criteria

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TOP CRITERIA FOR NEW VENDOR SELECTION BY BED SIZE

By all bed facility sizes, discussions with industry peers dwarfs all other due diligence methods for providers in choosing their RCM vendors, with industry reports emerging as a very distant second. Industry research reports have a slightly higher role among middle to large size hospitals compared to the smallest groups. For the biggest hospitals (501+), trade shows and conferences never make it to their research agenda. Vendors in this space that cater to larger hospitals may need to re-evaluate the depth of their trade show presence and emphasize other strategies. Yet, only for the largest hospitals do online searches get attention (20%). Remember that this group also prefers one RCM vendor.

TRENDS IN REVENUE CYCLE MANAGEMENT

Top Vendor Selection Methods by Bed Count

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WHO IS CALLING THE FINAL SHOT?

It shouldn’t come as a surprise that CFOs are involved in the decision-making process or approval. They are the defacto leaders in all things related to finance, so their decisions count for an overwhelming majority at 81 percent. In fact, they are more influential than the VP of RCM and the CEO. These leaders get 47 and 43 percent respectively. However, this trend is partially due to the fact that a surprising number of hospitals still have not designated a VP of RCM.

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Notice what happens to CFO influence as the bed size increases? CFOs of small to medium-sized hospitals wield incredible influence in this selection process compared to their counterparts in large facilities. One reason for this is larger hospitals more often hire a head of revenue cycle management with a VP or similar title, who works under the CFO’s direction and mandate.

It would make sense that in these cases the specialists would hold more influence over any final decisions.

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PREFERRED SERVICES FOR REVENUE CYCLE MANAGEMENT

The myriad of payment models in revenue cycle management might have something to do with the preferences that providers have for RCM services. It’s a close tie for consulting only and co-management, at an average of 39%. Only a small percentage want to completely outsource RCM services.

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PREFERRED ARRANGEMENT BY ORGANIZATION SIZE

Ambulatory organizations’ arrangement with RCM services stands out for their preferred arrangements. These organizations prefer “co-management” to “consulting only” by almost double. Given their specialized work, it’s not surprising that they prefer not to outsource RCM solutions. “Consulting only” is high for medium and smaller-size facilities. However, for larger hospitals, consulting drops below 40 percent for preference. Why the big drop?

“Consulting only” and “co-management” of RCM are the frontrunners in every organization size with the exception of 1001+ facilities. These mega-hospitals take more ownership over their revenue cycle management and more often only utilize vendor software solutions. However, for all other hospital organizations, IT only does not surpass 28%. You might have noticed the happy medium achieved for the 501-1000 bed category, where “co-management” is the most preferred RCM arrangement. Data suggests that fully-outsourcing RCM services is a rather dead arrangement, as a mere 5% prefer that solution.

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Organization Size

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IMPACT OF CORPORATE OWNERSHIP ON VENDOR SELECTION

Businesses with hands in multiple cookie jars (i.e. payers that also own RCM solutions) are viewed with some, but not immense, skepticism. Most providers say corporate ownership does not matter for vendor selection. Where we see the biggest break from this narrative is among the largest hospital organizations: 50 percent say corporate ownership does not matter for vendor selection while the other 50 percent say they do not work with payer-owned RCM vendors. At the largest care facilities (1001+ beds) and at ambulatory facilities, about 33 percent do not work with RCM vendors that are owned by health systems.

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CONCLUSION

The accelerated migration of financial services to the outsourcing market has irreversibly changed the operations for healthcare IT vendors, namely, revenue cycle management. Vendors providing solutions here should be sounding their alarms over denials management, contract management and support, and value-based reimbursement. The big 3 are considered big weaknesses and need improvement, according to providers. Besides the obvious virtues of better services, an improved arrangement for RCM solutions means increased revenue. Other RCM services that get less flack for poor performance have seen actual migration. The most outsourced activities seem to mimic trends outside of healthcare IT, including coding, billing, and follow-up.

At all hospital organizations (with the exception of large hospitals), RCM vendors should have one figure in mind in order to get their business through the door: CFOs. It goes without saying that these executives hold the purse strings for many purchasing decisions but none more so than revenue cycle management solutions. Regardless of which leader makes the final decision, cost is the number one factor across the board. Besides cost, providers trust feedback from their peers and the vendor’s stated performance results (presented results) to guide their RCM vendor choices. Moving forward, the industry shift towards delivering value-based care and a bigger emphasis on population health could influence the way RCM arranges its services. The RCM solutions market potential is expected to be worth around $9 billion by mid-2016. Consolidation, coupled with outsourcing, and an impending dose of regulations will continue to shape the RCM landscape.

TRENDS IN REVENUE CYCLE MANAGEMENT