Delivering high-quality patient service while ensuring cost-effectiveness and profitability is a familiar challenge for most hospital and healthcare system administrators. While patient care is the focus, ensuring efficient revenue cycle management (RCM) is essential to an organization’s business health. However, achieving excellence in RCM can prove difficult and costly for administrators to handle themselves.

As one example, although waiting to obtain payer approval ahead of treatment may reduce the risk of lost revenue, it’s often not practical from a patient care perspective. Outsourcing payer approvals to relevant experts can speed the process significantly, thus ensuring better revenue capture. 

 It’s for reasons like this that more and more organizations are looking to outsource RCM processes to business process service experts. According recent reports, RCM processes are some of those most commonly outsourced, as hospital and healthcare system leaders hone their focus on core competencies, such as patient service and growth. In fact, the demand for RCM outsourcing providers is expected to expand significantly over the coming years, with the market potentially reaching nearly $10 billion by next year, according to Black Book Market Research. 

While administrators increasingly turn to outsourced RCM, outsourcing partners are also delivering more comprehensive solutions. Recently, the outsourcing industry has undergone a fundamental shift, moving from a fixed-cost labor arbitrage model to a transaction-based, technology-enabled model. Providers combine industry expertise with domain knowledge of financial processes and innovative solutions, such as robotics and automation, to drive continuous improvement of processes and to increase cost-savings. 

Take robotic process automation (RPA) for example. RPA essentially entails teaching software to process and trigger decisions for multi-step, repetitive tasks, such as bookkeeping or vendor management. It can do the job of human employees in a fraction of the time, eliminating the risk of error while offering a 24/7 labor source. Its early benefits are compelling – Xchanging employs RPA on behalf of its customers, and cost savings have ranged from 20 to 40 percent, depending on the project. 

However, RPA and other platforms are not silver-bullet solutions. They’re part of a puzzle combining people, process reengineering and technology that outsourcers use to reduce costs and improve operational efficiency, while freeing up organizations’ resources to focus on core competencies. For hospitals and healthcare systems, this can improve RCM in several ways.

 Accounts receivable and collections. Most fundamental to an organization’s profitability is its ability to quickly and accurately obtain payment for services. Unfortunately, most organizations lack the internal bandwidth to do so. Outsourcers, however, have myriad resources to streamline these processes, improving cash flow through faster billing while reducing operational costs. For example, with advanced analytics, providers can identify delinquent payment risks early to reduce the resources needed to collect a debt. With streamlined billing processes in place, Xchanging has seen organizations reduce cost per invoice from $4 to less than $2 and improve productivity by more than 100 percent. 

Accounts payable and invoicing. Just as important as receiving payments in a timely manner is keeping the books up-to-date with outgoing payments. Outsourcers can automate and standardize this process, capturing and logging invoices in a consistent, digital format, while adding transparency to an organization’s expenses. 

Vendor management and margin optimization. Maintaining a roster of reputable vendors is essential to ensuring high-quality patient care. However, the administrative processes behind vendor management – selection, procurement and billing – impact cash flow and profitability as well. By enlisting an outsourcing partner, organizations can optimize their vendor spend without compromising service quality. 

Through advanced analytical models, outsourcers can help organizations better understand their vendors’ service and cost performance and identify areas for improvement. At the same time, many also provide an end-to-end vendor management solution, including a central, credentialed database through which organizations can automatically select and purchase from qualified and cost-effective vendors. 

Claims management. Moving from paper-based to digital claims processing can be an onerous process, and many hospitals and healthcare systems simply lack the resources and expertise. Outsourcers bring digital and automated solutions such as RPA to help organizations comply with tighter provisions from the Health Insurance Portability and Accountability Act while reducing overall revenue cycle time. By assessing and optimizing these claims processes, outsourcers also reduce operational costs associated with claims settlement. 

Over the past few years, we’ve seen a significant shift in hospital and healthcare systems’ operating models, as many move internal resources into core activities. With the development of more advanced and intuitive solutions, outsourcing RCM won’t simply provide a competitive advantage – moving to an outsourced model will be a strategic business imperative.

Sean Allen is vice president for Xchanging’s business process services (BPS) group in North America. He has more than 18 years of experience as a leader in the business process outsourcing (BPO) industry, working with some of the largest insurance and financial services firms in North America to reengineer processes from billing to payment to reporting. For more information, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. or visit his website at xchanging.com.

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