RCM Solutions Are on The Rise. Here's What It Means For Rev Cycle Leaders

New market reports project meteoric vendor growth in the coming decade. Execs should tread lightly to avoid being swept away in the hype.

RCM technology is booming.

The vendor market could reach anywhere from $343B to nearly $900B globally within the next decade, according to new projections from Straits Research and Coherent Market Insights. The outsourcing portion alone could achieve $170B by 2032, says HTF Market Intelligence (MI), which values it today at $90B globally.

"This market is expanding due to the increasing complexity of healthcare billing, a focus on reducing operational costs, and improving cash flow through specialized outsourcing partners," states the HTF MI report.

It's something HealthLeaders has been tracking for a while now: Nearly one-third (32%) of systems and hospitals surveyed by Kaufman Hall in 2023 were pursuing outsourced revenue cycle solutions, up from 27% in 2022.

But just because vendor partnerships are on the rise doesn't mean everyone should hop on the bandwagon, revenue cycle execs have told us. Ahead, they share how to set the stage for success.

Scope the state of play

Whether outsourcing revenue cycle management to a new vendor or external team, drivers often include the need for specialized expertise and uniform adherence to increasing regulations, analysts say. There's also the promise of scale and improved focus on core operations without major investments in infrastructure or staffing, Lynn Ansley, vice president of revenue cycle management, at Moffitt Cancer Center, previously told HealthLeaders.

Cost is perhaps the biggest impetus, but "tech's making us all rethink that," Michael Mercurio, vice president of revenue cycle operations at the Boston-based Mass General Brigham, previously said.

The intersection of automated and outsourced solutions only stands to grow as nascent tech gains ground in healthcare. Whether it's robotic process automation (RPA), regular automation, or the "complete revolution that's coming in the next three to five years based on AI," Mercurio said these tools are "going to really change, I think, a lot — if not most — of the way we do things, especially in the rev cycle."

It's a prediction echoed by analysts, who say RCM software already contributes more market share than services. While web-based solutions make up the most market share today compared to cloud-based and on-premise counterparts, according to Straits, cloud adoption presents an opportunity in the coming years, say forecasters, who also point to RPA and patient-centric care as opportunities. McKesson and Cerner are among the most-cited companies to watch.  

Weigh costs against cost savings

While it may be enticing to jump on the vendor train to cut costs, revenue cycle leaders must be crystal clear with their expectations and thoroughly examine what a prospective partner can do for their specific challenges. Making the wrong decision could lead to a loss of control, a dependency on insufficient partnerships, data security risks, and "wasted effort and time for both" parties, Ansley warned.

It's also important to consider the broader strategic implications of outsourcing, she said. This includes evaluating how it aligns with the organization's long-term goals, such as patient experience improvements, clinical outcomes, and operational efficiency. A time when outsourcing often does make sense is during a merger or acquisition, she noted, especially when a deal throws "two different rev cycles" into the mix.

Get real about ROI

An unflinching focus on real return is especially important where emergent tech is involved.

However, RCM execs may not have the budget or the time and resources to spend on new ideas that take too much time to develop value or don't have clear value to begin with.

Several exchange attendees said they follow a technology ROI threshold of 3:1, meaning a new product or program must produce in revenue three times what it cost to launch the project. No one touches anything with a 1:1 return, and a 2:1 return won't hold up against unexpected and additional costs, particularly at a time when so many systems and hospitals are skating on thin margins.

Evaluating ROI starts from the jump, Ansley said. When it comes to outsourcing arrangements, vetting teams should partner with their CFO to review a prospect's track record, technology capabilities, and security measures to ensure they align with the health system's needs, she advised. She's found system executives are becoming more critical in their vendor evaluations. They're asking for things like detailed proofs of concept, assurances or guarantees, and shorter contracts (e.g., three years) to back up ROI — or back out quickly if it isn't there.

Consider a piecemeal approach

One way to boost ROI is to get creative with current partnerships.

Instead of contracting with a single entity for wholesale RCM support, Mercurio partners with "individual vendors that might do pieces and parts" based on Mass General Brigham's goals, as well as cultural, financial, and operational needs. 

It reflects a larger vision to maximize value from existing solutions, including those used to outsource operations. "Oftentimes, you buy one product, and you don't realize that there are other offerings that that company might have that would be really beneficial to implement," he explained. "So we want to really take a hard look at any of our existing partners if we're trying to do something new in a space or expand with a technology, because it's a lot easier to, you know, add a new statement of work than it is to bring someone new inhouse."