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Revenue Cycle the Most Common Area for Outsourcing Among Hospital Leaders

Analysis  |  By Jay Asser  
   November 04, 2022

A Kaufman Hall report highlights pandemic-related impacts of the past year on revenue cycle challenges.

As the labor shortage continues to hamper healthcare organizations, outsourcing has become a common strategy to mitigate costs.

Nearly one-third of hospital and health system leaders (63%) have pursued at least one outsourcing solution, with revenue cycle functions at the top of the list (27%), according to Kaufman Hall's 2022 State of Healthcare Performance Improvement report.

Revenue cycle was ahead of other outsourcing solutions like environmental services (23%) and IT services (21%) among the 86 hospital and health system leaders surveyed from across the country.

The medical billing outsourcing market in particular is set to hit record growth this year, a study published by Future Market Insights in August found.

The research states that the market is anticipated to increase at a compound annual growth rate of 16% from 2022-2032 and hit a valuation of $55.6 billion by the end of 2032.

The Kaufman Hall report also reveals that revenue cycle challenges have only picked up over the past year.

Only 7% of respondents said they saw no pandemic-related impacts on the last 12 months, compared to 25% reporting no impacts in 2021.

Claim denials especially skyrocketed as 67% of respondents reported an increased rate, more than double who reported increased denials in 2021 (33%).

Meanwhile, more than half (51%) reported an unfavorable change in payer mix, with a lower percentage of commercially insured patients, and 41% reported an increase in bad debt or compensated care.

More than half of leaders (52%) said that inflationary pressures have impacted bad debt and uncompensated care.

As leaders navigate the current environment, it's clear placing an emphasis on revenue cycle can lead to better outcomes and positive margins.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


The Kaufman Hall 2022 State of Healthcare Performance Improvement report surveyed 86 hospital and health system leaders.

Twenty-seven percent of respondents said they've pursued outsourcing revenue cycle functions, which topped the list.

Ninety-three percent of leaders said revenue cycle challenges have increased over the past year.

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