At a time when revenue cycle leaders are being more conservative with their vendors, one health system is betting big with a 15-year contract.
Editor’s note: The article was updated on 2/2/24.
Revenue cycle leaders have been implementing technology for years, and as some vendor promises are falling short or systems remain incompatible, more leaders are becoming conservative when implementing new tech and signing those long-term contracts.
But not VHC Health.
Earlier this month, VHC Health announced an exclusive, 15-year partnership with Med-Metrix, a revenue cycle management solution provider, for end-to-end coverage of the system’s revenue cycle functions.
As mentioned, the partnership deviates from the current trend of revenue cycle leaders moving away from outsourcing operations, usually due to a lack of results. But, John Zabrowski, senior vice president, chief financial officer, and chief strategy officer at VHC Health believes that there’s a trend “in both directions.”
“Regarding organizations pulling out [of contracts], I would argue the agreement and cultures were not aligned,” he said.
Why such a long contract?
The system had already established a relationship with the vendor for different ancillary services and as they considered different RCM providers, the familiarity and demonstrated reliability set them apart from the rest.
“When we coupled our past experience with a thorough review and understanding of what else we could bring by moving that relationship a little deeper into an end-to-end process, it just made a lot of sense,” Zabrowski said.
Having a 15-year agreement, compared to 10-year agreement, Zabrowski explained, will allow the system to get more value from the partnership. One month into the partnership, the partnership has found over $13 million of incremental value that is “currently in the process of collection and realization.”
“My view is in a 10-year deal, you’re really getting seven years of value and I just don’t find that to be worth the effort,” Zabrowski explained. “If I take those same time frames, I can generate 12 years of value on a 15-year deal and spend a lot more time executing, refining, and driving value for the system.”
As the system begins to implement the partnership, a shared governance council will develop 30- and 60-day plans and identify priorities and high value areas within the system’s revenue cycle.
“The reality of the situation for organizations terminating agreements and pulling back, they most likely forgot the most important part of the equation: people,” Zabrowski said.
Consistent with the system’s “people first” philosophy, in addition to C-suite leaders like the chief information officer and chief operating officer, revenue cycle leads are also part of the shared governance council.
“It’s a very clear open governance structure to make sure that from an overall management perspective, our priorities remain aligned, and we’ve got real clear communication,” Zabrowski said.
Jasmyne Ray is the revenue cycle editor at HealthLeaders.