The constant changes in healthcare reimbursement and throughout the revenue cycle for healthcare providers continues to create leakage points in revenue. Knowing where these leakage areas occur and how to avoid them is a challenge for hospitals and physician groups nationwide.
The market for revenue cycle outsourcing is maturing, allowing more healthcare executives to explore it.
Getting a claim accurately adjudicated has become more and more complicated, according to Mike Morris, president of Xtend Healthcare. “At the same time, the amount that health systems are paid for the services they render is shrinking,” Morris says. “Because reimbursements are going down while the complexity of managing revenue cycle processes is increasing, healthcare systems are seeking new ideas and new ways to perform revenue cycle processes in an effective and cost-efficient manner.”
Outsourcing has long been available as a strategy, but many health systems took a fragmented approach. “They would have many disconnected vendors working bits and pieces of their revenue cycle, and that patchwork approach was very difficult to manage,” Morris says. “Many providers now strive to consolidate their revenue cycle efforts around a single point of accountability, to manage their revenue cycle holistically, and avoid finger-pointing between disparate vendors who own small subsets of the puzzle.”
Outsourcing can also bring cost certainty to health systems that might otherwise encounter unbudgeted staffing needs and unexpected issues within their revenue cycle. “When you have your revenue cycle in-house and you've got an issue that pops up, you end up allocating additional labor resources to address it, which has an incremental cost,” Morris says. “If those employees are not getting the work done as efficiently as you would like, you don't have any real controls over that cost structure. You still end up paying those employees regardless of the results that they're driving. If you have an outsourcing partner, you can sign up for an agreement that provides much better cost certainty and shifts that labor volatility risk to your outsource partner.”
Furthermore, using a partner such as Xtend Healthcare, health systems can negotiate key performance indicators (KPIs), assuring that the vendor gets paid in proportion to the results the health system is seeking. “That’s a deal construct that is difficult to replicate if you are performing revenue cycle functions in-house,” Morris says. Well-crafted KPIs are also a great tool to assure goal alignment between a health system and an outsourcer.
In addition, outsourcers have access to tools that can increase both the amount and the velocity of revenue. “Often, a health system has invested in technology tools, but the tools have been deployed in a manner that is not driving the benefits they were intended to achieve,” according to Morris. “Underutilization of in-house technology tools is one of the key reasons why a health system might consider moving in a new direction—because they didn't get the ROI they were seeking when they invested in their existing tools.”
Since outsourced revenue cycle engagements are a key driver of cash flow to health systems, Morris says it is critical to make certain that the right account governance is in place. All parties must have a clear understanding of what constitutes success and then be able to depend upon accurate reporting and analytics to objectively measure that success.
Early in an outsourcing relationship, Xtend Healthcare takes the time to set up a recurring cadence for meetings to discuss both monthly performance as well as future events that can impact the revenue cycle. An Xtend Healthcare account executive becomes a contributing member of the health system’s leadership group and leads interdepartmental efforts to address and remediate issues that impact the revenue cycle. The results of these initiatives are then communicated throughout the health system.
We like to understand the drivers of our customer’s key initiatives, and we want to be engaged in ongoing dialogue with our customers so that we can make sure that our delivery stays in lockstep with what our customers are seeking,” Morris states. “So we’ll actually build a governance process into a contract, with meeting descriptions, frequency, and attendees, that we commit to and our customers commit to in order to make sure that we don't end up in a situation down the road where we're not quite aligned strategically.”
Morris says the old adage that outsourcing solutions have to be “better, faster, and cheaper” is even more true today. “The financial challenges that health systems face are daunting and will likely continue in the future,” he notes. “If Xtend Healthcare increases a health system’s net patient revenue by 3% to 5%, and turn that revenue into cash at a lower price point, the ROI is dramatic.”
Mike Morris is president of Xtend Healthcare.