Today’s RCM Challenges Require an Outsourcing Partner  

In the ever-evolving landscape of healthcare, revenue cycle management (RCM) has undergone significant transformations. To best keep up with the changes, hospitals and health systems are increasingly finding that RCM partnerships are essential in helping them leverage advanced technologies, streamline processes and improve financial outcomes.  

To discuss this changing landscape and the increasing trend of hospitals choosing to outsource, Jennifer Williams, chief financial officer at R1, sat down with clients from Providence and Intermountain Health, where they talked through strategies for creating and managing effective, win-win, revenue cycle outsourcing partnerships. 

Bert Zimmerli, recently retired chief financial officer at IMH, said that while hospitals and health systems have not outsourced as much as other industries, he thinks most will turn to outsourcing. “A lot of us in healthcare like to think we’re different, but we’re really not. I think outsourcing is the direction almost all hospitals will go because it offers greater long-term benefits than they can achieve alone,” he stated. 

LISTEN TO THE FULL CONVERSATION

Evolution of revenue cycle management

The RCM landscape is being reshaped by several key challenges, including increasing denial rates, rising collection costs, cybersecurity concerns and the need to stay ahead of rapidly evolving technological advancements. As Williams stated at the beginning of the conversation, “Revenue cycle has come a long way from piles of paper and filing cabinets. It has transitioned into a highly complex, interconnected, specialized and automated function.” 

Payer behavior issues have increased over the past few years with no end in sight. Greg Hoffman, chief financial officer at Providence states these types of issues, including underpayments and denials, have caused a lot of recent change among RCM processes. “We’ve seen our underpayments and initial denials skyrocket over a two-year time period, leading to a significant increase in cost to collect,” he told Williams.  

Another significant challenge in recent years has been the rise of cyber threats targeting the revenue cycle. Hoffman highlighted this issue, stating, “The impact of cybercriminals targeting revenue cycle functions has been a major concern,” he said.  

Technological advancements, particularly around AI and automation, have the ability to play a crucial role in addressing these challenges. For example, high-powered revenue cycle AI tools can guard against cybersecurity threats by continuously monitoring vast amounts of patient data and identifying anomalies signaling a cyber threat. Hoffman emphasized the importance of this technology, saying, “There are a ton of exciting technology developments occurring, particularly in the space of AI.“  

For many health systems, the question becomes how to access this type of expensive and fast-changing technology. This is where revenue cycle partnerships – and their scaled technology – can come into play. “We were very purposeful in examining and understanding how a technology roadmap could benefit us, and we sought out a partner who already had that roadmap in place. This drove a lot of our decisions,” said Hoffman. 

Forming and managing revenue cycle partnerships

As Zimmerli thinks strategic partnerships have become essential for health systems to navigate the complexities of revenue cycle management, the question becomes how to create and manage win-win partnerships. The key is to take a strategic approach to partnership and identify a partner that can balance technological capabilities, expertise, flexibility and cultural alignment. 

Zimmerli said the idea of outsourcing came through a series of strategic retreats and the assistance of a large consultant group. “Through our efforts, we started seeing that outsourcing could help us deliver strong benefits, so we developed principles for selecting outsourcing partners that focused on improved quality, reduced costs and cultural alignment. These principles guided us during our decision-making process,” Zimmerli said.  

After all the strategic decision-making is complete, the contracting work begins, which should include building a strong, win-win contract in which all stakeholders benefit – from patients and employees to providers and health system leadership. As all health systems enter partnerships with their own unique set of challenges and needs, Zimmerli says there is no one-size-fits-all approach to contracting. However, he told Williams that if you focus on your guiding principles, you can build a bespoke, mutually beneficial contract.  

One critical component of a successful partnership is to have a plan for mitigating risks and expanding possible opportunities. Ryan Thompson, chief revenue cycle officer at Providence, discussed one example of risk mitigation as it related to specific work roles among a set of employees, such as financial counselors. Thompson told Williams that by drilling down into specifics and examining the details regarding how work is divided among the heath system and the RCM partner, they were able to improve rates of success with confidence. “It was important to balance the overall impact on the organization and the patients we serve,” Thompson said.  

While all outsourcing partnerships place a strong focus on contracts, risk mitigation and financial KPIs, both Hoffman and Zimmerli stated that cultural alignment and trust have an equally important role. “You have to reach a point where you trust your partner. It’s not just about the contract; it’s about having processes in place where we can work out issues as they occur,” said Zimmerli. 

Stakeholder and change management

Effective stakeholder management and change management are vital for the success of revenue cycle partnerships. These partnerships must work for all key stakeholders, including patients, providers, employees and health system leadership.  

Hoffman states that teamwork is vital for successful stakeholder management and that it’s important for all stakeholders to view themselves as part of a common team working towards the same goal. When this occurs, everyone involved can more quickly and easily find success in the partnership. “We are all part of a common team. It’s more than a contract and design. It’s cultural alignment and alignment at a leadership level,” said Hoffman. 

Change management is a core component of an RCM outsourcing partnership. Regarding the emotional aspects of change, Thompson said “Change comes with resistance. It’s important to hear people and understand their emotions.” He said that to address these issues, transparency and communication are key. “Having a clear change management roadmap and a plan in place to manage expectations is crucial for a smooth transition,” he told Williams.  

Measuring the success of these partnerships is essential for ensuring progress and long-term financial stability. Hoffman shared his approach, “We have a very detailed process for monitoring key performance indicators and metrics. It’s about continuous improvement and rigorous monitoring to ensure we achieve our goals.” He also stated that it’s important to look at the same reports you were looking at before, as a way to measure the value your partner is bringing. 

While revenue cycle outsourcing will look a little different for each health system, there are common themes and steps that ensure success – namely taking a strategic approach to partnership and identifying a partner that can help you address your biggest challenges, while honoring your guiding principles.