Should You Outsource Your Revenue Cycle Management ?


The revenue cycle management (RCM) in healthcare facilities is fraught with problems. Medical billing errors, coding mistakes, revenue leakage, failure to get prior authorization, claim denials, untrained staff, and neglect of account receivables are just a few reasons why RCM processes turn inefficient.

Revenue Cycle Management
Should You Outsource Your Revenue Cycle Management?

As the healthcare business switches to value-based care payment models, it is important to transit to the next level of RCM which is technology-intensive and centered around data analytics. This helps healthcare providers track overheads, identify opportunities for cost savings, gain efficiencies, and enhance financial performance.

Advantages and Disadvantages of RCM Outsourcing

Traditionally, all functions that are not core to a business are outsourced. When it comes to RCM, which comprises both the administrative and clinical aspects of healthcare- the decision to outsource depends mostly on the competency of the healthcare facility to handle diverse functions. Hospitals are facing a decline in revenues due to reduced reimbursements and shrinking margins, forcing them to outsource RCM.

Outsourcing RCM comes with both advantages and disadvantages:


    • Improved Patient Care
      Improved Patient CareOutsourcing RCM will lead to an increase in the level of patient care and thus make practices more patient-centric.
    • Clarity and Responsibility
      As the RCM partner will take on more responsibilities, there will be a more dedicated focus on the patient cycle.
    • Cash Flow Enhancement and optimization of the overall revenue cycle
      As the RCM vendor will wholly work on the RCM cycle enhancement, there will be increased cash flow and more prospects for optimization.


    • Data Security
      With the RCM process being outsourced, there may be a risk of data leakage if proper compliance is not followed.
    • Additional Costs
      There can be additional costs which may include setup charges, printing costs, expenses on sending reports, and membership cancellation.
    • Inferior Software
      RCM partners may utilize outdated software which may adversely affect claim denials and account receivables

Factors That Affect Performance of Your Organization During RCM

    1. Billing And Collection Errors
      Medical billing and collection errors account for 80 percent of problems in RCM. Billing errors include upcoding: where entering the code of a more serious medical condition than what was treated inflates the bill; similarly, unbundling, balance billing or leftover billing, duplicate billing, incorrect patient information, and mismatched diagnosis codes also affect RCM. When there are errors in billing, it is difficult to ensure collections from patients.
    2. Charge Capture
      Charge capture is the core of a medical billing cycle. Without frequent updates to prices for services, the charging and billing can go very wrong. An up-to-date and error-free electronic charge capture system and a good process for management of charge capture can ensure there are no errors. In the absence of electronic charge capture, mistakes can definitely creep in.
    3. Coding Errors
      Due to the vast compliance standards, it is very tough for providers to code precisely. ICD-10-CM requests to document diagnoses frequently lead to errors in diagnosis codes. The usage of generic diagnosis codes, incorrect modifiers, and under-coding also contribute to errors.
    4. Denial Management
      Denied claims from billing errors, incomplete information, and questions about patient coverage make the RCM weak. The reworking of denials is costlier than the submission of a new claim, and the challenges only compound as organizations grow.
    5. Lack of Expert Resources
      Many healthcare facilities struggle to find the right workforce with a sufficient understanding of revenue cycle functions. Without a good team of revenue cycle management experts, the denial claims queue grows longer, and there will be a lot of unaddressed claims in the workflow.
    6. Lack of Team Training
      Though finding the right RCM-trained staff is a big challenge, hiring them is not the end of the road. The workforce should be trained adequately to prevent front-end errors. Lack of training can also make staff easy targets of cybercriminals and turn them into security liabilities.
    7. Failure to Scrutinize Claims Process
      The entire claims process life cycle requires a close watch. Checking claims is a vital part of a healthcare provider’s RCM processes. Best care practices like obtaining automated alerts for claim denials and tracking and analysis of repetitive denials for a particular procedure or code are required.

Problems That Come with In-house RCM

Revenue Cycle Management Steps

It is daunting for hospitals to optimize RCM, starting from patient eligibility to final claim settlement.

  1. Paperwork Leaves No Time for Patient Care
    In a tech-forward, customer-driven market, paper-based payment systems not only raise inadequacies but also brings with it the risk of stolen or lost documents. Besides, incomplete paperwork can delay both claims and denials.
  2. Pre-registration
    The Pre-registration phase also adds to errors. Failure to review patient eligibility information, non-declaration of copay at the front desk, neglect of pre-authorization for services, and taking incomplete information will lead to RCM inefficiency.
  3. Claim Submissions
    Claim hold-ups prevent patients from receiving payments. If claims are not paid on the first pass and gaps between care completion, billing, and payment increase, you require support. An outsourcing RCM partner utilizes tools and technologies that keep tabs on declining payments and records claim denial details.
  4. AR Delays Follow-up
    Most outsourcing partners report issues in real-time. Getting feedback on the financial functions across your healthcare facility enables you to take timely action. For instance, an alert on account receivables, a professionally managed credit balance resolution, and continuous monitoring of revenue cycles …can all empower you to improve the financial performance of the healthcare practice.
  5. Posting of Payments
    Some patients pay upfront. Some pay it out over time. Some insurers manage everything while some don’t. Others — firms and individual patients — don’t pay at all. A system of posting payments rapidly and professionally permits you to avoid duplication of duties and to focus on the accounts that have gone aberrant. This eventually guarantees a higher rate of realization than if you’re trying to manage claims with the current staff.
  6. Processing of Appeals
    Appeals regarding certain billing items can create a deadlock that keeps you from getting paid promptly. Furthermore, if you’re not competent to fight it, it could result in your clinic or hospital losing out on rightful revenue.

Regulatory Issues-Handling the Changes and Repercussions of ICD-10
Healthcare compliance is linked to ethical, legal, and professional criteria that require expert attention. Healthcare regulations cover a host of issues including billing and reimbursement, processes and policies, HIPAA privacy, and other rules both under the state and federal legal framework. An outsourcing partner with lawyers and regulatory experts on board can help you meet cumbersome procedures better. However, mistakes can recur if the billing staff is overworked, not equipped with an updated chargemaster, or is relying on an outdated coding system.
You Have to Cut Costs
Administrative costs, expenditure on supplies, and wages are hitting healthcare facilities. To add to this, billing of operations can be expensive, as it requires a focused team with ongoing training. Outsourcing this function to an RCM firm can save both costs and time and thus enhance the profitability of your claims.
Your Staff Cannot Keep Up with Training
It is challenging to hire and manage staff from various disciplines and allocate them to numerous tasks not related to clinical practice alone. It is a good practice to focus on medical care and therapeutic services instead of expending energies on training staff to convey out revenue cycle management work. Outsourcing to an RCM partner will release you of the pressure associated with documentation, analysis, and refinement of processes, policies, and procedures.
rent staff.

How Can Outsourcing Help?

  1. Improve your Practice Profitability
    Outsourcing RCM functions from claims submission to payer collections to an outsourced expert can arrest the revenue slide in a healthcare facility. According to the Medical Group Management Association (MGMA), 50-65 percent of denials go unaddressed. Not only are the practices deprived of revenue, but the problem also remains untackled.
  2. Lighten Your Administrative Workload
    With RCM and related work being taken care of by a trusted partner, a healthcare provider can focus on patient care; developing a trust-based relationship between doctor-patient, upholding professional links with hospital networks, and forming a rapport with other medical professionals go a long way to foster high standards in healthcare. Your outsourcing agency will also propose ways to enhance reimbursements and internal processes for coding and billing. It is more cost-efficient than tackling collection issues in-house.
  3. Reduce Disruption from Industry Change
    Outsourcing RCM to a dependable partner can help you manage your transition to ICD-10 Not only would the correct partner handle a considerable portion of the transition work, but the healthcare facility would also get the support required to effect the transition. By capturing the value and reducing risk, the decision to outsource helps build partnerships that foster excellence in core functions.


To conclude, the better way to go about revenue cycle management is to outsource it to experts. Healthcare providers who outsource RCM can improve business with substantial savings and enhance efficiencies in their core areas of competence


Please enter your comment!
Please enter your name here