Healthcare Revenue Cycle Outsourcing

Historically, the drivers of change in healthcare have been focused on clinical advancements. Applying innovative strategies in healthcare finance and revenue cycle management have lagged significantly behind clinical progressiveness.

Unlike corporate America’s general financial sectors like credit card processing and accounts receivable collections, healthcare finance and business office operations have been slower to adopt the cost-effective improvements offered by the outsourcing of billing and collection accounts.

Recently, due to economic factors and the shifting of patient financial responsibility, healthcare executives have become more accepting of revenue cycle outsourcing initiatives. In spite of a looming paradox, which pits opposing goals against each other, maintaining fiscal health versus the political pressure of keeping jobs in the local community offers a continual balancing act for healthcare executives.

Gartner Research Inc. estimates healthcare executives spend about twenty percent of their budget on all categories of external sourcing options, compared to the general mainstream industries, which typically invest about a third of their budget on external sourcing.

Gartner also estimates that seventy percent of healthcare organizations who do choose to outsource meet or exceed their cost-savings expectations, and most see an improvement in services as they shift their non-core functions to outside experts.

Healthcare outsourcing in general has begun to see a significant rise in acceptance. During the next five to ten years, it is estimated healthcare will see an increase in the outsourcing of many financial, clinical and business processes.

The American Recovery and Reinvestment Act of 2009 (economic stimulus package for the U.S. economy), healthcare reform, and the Health Information Technology for Economic and Clinical Health Act (HITECH), will create significant opportunities for all outsourcing companies to aid healthcare organizations in meeting the requirements for the new set of regulations and requirements mandated by legislative action.

These industry changes will increase outsourcing demand because healthcare providers cannot efficiently implement these changes on their own and certainly not at the speed they want.

Historically, physicians, hospitals and insurance payers with larger footprints and decentralized organizations were the first to initiate outsourcing partnerships. Smaller organizations typically relied on internal resources or in limited cases, local outsourcers.

This trend is changing. All sized healthcare organizations are jumping on the outsourcing bandwagon and are moving toward leveraging IT, clinical and revenue cycle business processing outsourcing to improve the financial viability of their operations.

The motivators for the shift in strategy for smaller healthcare operations are due in part by the margin pressure they are under and the need to cut costs. The key ancillary benefits to an outsourcing strategy are operational efficiencies, cost reductions and delivering superior patient satisfaction.

Healthcare executives have numerous sourcing strategies from which to choose. Utilizing a US based local, regional or national outsourcing company has been the typical choice for healthcare executives who outsource.

With today’s technology, especially in the services’ sector, it is less important to contract with a local provider than to choose the best-in-class provider regardless where their business operation is located.

In the US, outsourcing, in general, has become a polarizing political issue driven by poor economic times and localized job losses. Even with local and national pressure to curtail outsourcing activities by consumer advocates, the return on investment (ROI) from cost reductions and improvements in quality have influenced healthcare executives to pursue offshore and onshore outsourcers as an alternative to maintaining an internal workforce.

Over the past ten years, the providers who have chosen their outsourcing partner wisely, and partnered with qualified process oriented firms, have experienced reduced operating costs and ultimately, higher patient satisfaction encounters.

Americans value the financial opportunities offered by our free-market economy. In every region of the country, community leaders attempt to support and protect local labor forces, which serve nearby businesses. The goal of this action is to keep jobs in the community and surrounding area.

Unfortunately, with budget cuts and margin pressure becoming greater than it’s ever been, healthcare executives cannot meet the demands of managing various clinical and revenue cycle functions, which typically demand a lower cost, more qualified and educated workforce.

The healthcare executives who have avoided non-localized outsourcing have succumbed to the local pressure of keeping jobs within their community regardless of the impact on the financial performance of the health system.

An interesting paradox exists as those same executives and community influencers do not think twice about purchasing clothes, food products, electronics, cars, toys, furniture, and household goods produced globally.