Rising costs and fewer resources in human capital make revenue cycle outsourcing a growing necessity. Outsourcing can be a winning strategy for streamlining operations and boosting revenue through optimized patient balance collections.

However, a 2019 report from KLAS reveals that some healthcare providers are less-than-pleased with their outsourced services. KLAS spoke with 140 providers using either full revenue cycle outsourcing (RCO) or extended business office (EBO) services from some of the most prominent providers. Over one-third of respondents reported they would not purchase their vendor’s services again. A much larger number reported dissatisfaction with their full RCO services, as opposed to EBO services.

Reasons for the dissatisfaction ranged from the pricing structure to slow claims management to a “cookie cutter approach.” Others reported a lack of expertise, strategy and guidance. Respondents using one particular RCO solution felt that there were “few consequences for the firm if they underperformed.”

KLAS summed up the root cause of the problem this way:

“Provider organizations investing in outsourced revenue cycle services to relieve cost and resource burdens need their firms to take true ownership of the complex revenue cycle and deliver accordingly. Unfortunately, some firms are falling short—most common for clients using full RCO.”

This doesn’t mean healthcare providers don’t want RCO services. On the contrary, interest in outsourcing continues to rise, with 80% of hospital leaders considering full RCO as per a Black Book survey. Nearly all leaders are considering outsourcing some functions to a third-party vendor according to the same survey. Healthcare providers simply want better services and improved relationships with outsourcing partners.

Overcoming negative experiences with outsourcing depends on:

a) choosing the right partner

b) addressing common challenges appropriately

Many of these challenges are not particular to healthcare, but are present in most outsourcing relationships.

Let’s look at solutions to these revenue cycle outsourcing challenges.

Negative Experience: Lack of Ownership & Accountability for Performance

Solution #1: Establish Clear KPIs, Roles & Expectations

This is the foundation on which any successful outsourcing relationship is built.

During the contract process, internal leadership and the outsourced partner should discuss and codify the exact roles each will play in the revenue cycle process, and the measurable goals the outsourced partner needs to hit. Vague goals (save money, increase self-pay collections) serve no one. The parties should decide together on reasonable, measurable key performance indicators (KPIs). There should be a process for how and when to report the KPIs, including validation by third parties if desired.

Establishing KPIs and expectations is not a one-time event, however. The outsourcing relationship is not a static one. Regulatory requirements, technology, staff, leadership, organizational strategy and processes will change the parameters over time.

In a joint whitepaper by Becker’s Hospital Review and accounting firm RSM, a hospital CFO reported outsourcing success through transparency and clear KPIs. “We know exactly what the status [of collections] is, and then we have our key performance indicators that we monitor on an ongoing basis.” The CFO reported a 100% increase in self-pay collections after outsourcing its entire self-pay function.

Solution #2: Strong Internal Leadership

A successful outsourcing partnership starts at the top. Leaders play a crucial role in setting expectations, communicating a consistent message to the outsourced team, and obtaining buy-in from internal teams. Leaders can also hold the outsourcing company accountable for meeting KPIs.

Solution #3: Transparency, Strong Communication & Internal Support

“Set and forget” doesn’t work well for outsourcing relationships.

Just as internal teams communicate frequently, so too should internal and outsourced teams. A lack of communication or access to information will quickly hobble both teams. Problems and inefficiencies—such as denied claims or incorrect billing codes—will go unresolved. While today’s technologies allow for real-time monitoring and communication, they aren’t effective if the teams aren’t clear about how to use them.

During the contracting phase, internal leadership and the outsourced partner should establish:

  • Points of authority
  • Key points of contact
  • Communication channels
  • Specific processes, such as timetables for meetings and check-ins

Once operations are underway, designated leaders for both the provider and outsourcing partner must continue to monitor the relationship to ensure communication is flowing. This way, leadership can quickly follow up on any trouble spots.

Solution #4: Establish Decision Rights & Chain of Authority

A lack of decision-making authority is one of the biggest impediments to an outsourcing partner taking ownership of the revenue cycle. An outsourcing partner cannot be fully responsible for results without the ability to own the process. Internal employees may also unintentionally impede progress by assuming they have full authority, when typically some authority is transferred to the outsourced service provider.

This challenge is best overcome by codifying decision rights in the contract. It should cover these questions:

  • What types of decisions can the outsourced partner make independently?
  • When must permission/sign-offs be sought from internal leadership?
  • Who has the authority to make and sign off on decisions?

Everyone involved on both teams needs to understand the agreement terms.

Some healthcare providers hire a specific person to act as liaison between the teams. This keeps communication streamlined. It is important that this point person has the authority to sign off on decisions.

Negative Experience: Cookie Cutter Approach or Wrong Fit

Business team assembling puzzle on dark table

Solution #1: Select a Flexible Outsourcing Partner

With increasing pressure to maximize the bottom line, healthcare providers may be tempted to engage the first RCO vendor they encounter. That may be the biggest company with the commiserate advertising budget to garner attention. However, while that vendor may be the right fit for many, it may not be the best fit in every case.

In choosing the right company to handle their revenue cycle, healthcare providers should seek a true partner, not just another vendor or service partner. This partner should be willing to learn and adapt to how the provider operates. The provider and partner should jointly come to terms on key operational processes.

Solution #2: Values Alignment

When choosing an outsourcing partner, many companies look only at the services and pricing structure. What is just as important—if not more important—is an alignment in values and company culture. Culture clashes derail the success of any revenue cycle outsourcing collaboration, with problems ranging from a lack of buy-in from internal teams to negative impact on patient experience.

Healthcare providers can overcome this challenge by researching the outsourcing partner’s organizational culture as part of the vetting process. Are there organizational values or policies that could cause conflict? What will the impact be on patients?

Negative Experience: Decreased Patient Satisfaction

Solution: Choose a Partner With a Focus on Patient Dignity and Retention

In an article in Becker’s Hospital Review, healthcare executives named “the difficult nature of aligning values” as the biggest setback to revenue cycle outsourcing—particularly when it came to patient experience.

We at RevCycle agree. Healthcare providers need outsourced partners that can improve financial performance without sacrificing the patient experience. We believe that the revenue cycle can’t be truly optimized unless it’s treated as a tool for patient retention. Every patient touch point is an opportunity to build loyalty.

If you are a healthcare provider seeking an RCO or EBO outsourcing solution that puts patients first, we invite you to read about our Dignity Survey program. It is possible to optimize your revenue cycle with a focus on patient dignity and retention.

Send us a message or call 888.576.5290 to schedule a phone consultation at your convenience. We’re happy to address any revenue cycle concern!