Healthcare providers in the U.S. have faced big staffing troubles in revenue cycle jobs. A 2023 MGMA Stat poll of 469 medical group leaders showed that the hardest jobs to fill were medical coders (34%), billers (26%), schedulers (18%), and authorization staff (15%). These staff shortages cause delays in claim processing, longer times to collect payments, and more denied claims. For example, 69% of medical practices saw more denied claims in 2021 than in 2020. Also, the average days to collect payments went up in 56% of medical groups during 2022 because of not enough staff.
This lack of staff brings many problems like less work done, lower worker morale, more mistakes, and missed chances to get money owed. For example, coding mistakes that are not fixed because of staff shortages lower income by causing denied claims or less payment. Also, the average turnover rate for business staff in multispecialty groups is 16.72%, meaning hiring and training happen often. These problems make some practices think about outsourcing or using technology to keep revenue cycles running well.
Outsourcing RCM services gives healthcare organizations some benefits, especially with fewer workers and complex payer rules.
Outside RCM providers hire certified coders, billing specialists, and experts who keep up with rules, coding standards, and payer needs. By letting these professionals handle financial tasks, practices lower the risk of breaking rules and making billing errors that can lose money.
Running RCM in-house needs ongoing spending on hiring, training, software, and education. Outsourcing moves these costs to a third party that runs on a larger scale and can handle costs better. Many providers save money by cutting down on internal hiring and training.
Outsourcing partners can adjust to changing patient numbers without lowering quality. This is helpful for small to medium practices that can’t easily grow or shrink their teams. Some RCM firms also use AI technology to speed up work and reduce manual efforts.
Third-party RCM companies that focus on denial management and coding accuracy can improve revenue. For example, Athelas, an outsourced RCM company with nearly 20 years of work, reported denial rates 50% lower than average, first-pass approval rates of 81%, and a collection rate of 94%. Some clients have doubled their monthly collections.
By outsourcing admin tasks, healthcare providers can spend more time and resources on patient care. This can help improve patient satisfaction and health results.
Outsourcing RCM has challenges and possible downsides despite its benefits.
Giving billing and financial tasks to others may make it hard to watch daily work. Without good oversight and clear Key Performance Indicators (KPIs), vendor performance can drop and hurt revenue.
Outsourcing brings risks about privacy and data security. Laws like HIPAA and GDPR require care. For example, the 2024 Change Healthcare data breach showed that external vendors are targets of cyberattacks. These attacks can delay claims processing, lose revenue, and disrupt care. Providers are still responsible for any rule violations, so picking vendors carefully is very important.
Contracts with vendors may have extra fees for system links, service changes, or penalties that lower financial advantages. Costs can rise unexpectedly during system changes or workflow updates.
Working with offshore vendors may bring language problems, time zone differences, and cultural gaps. These issues can slow down solving claim denials or money disputes and cause frustration for internal teams.
Outsourcing companies also face staffing shortages, turnover, and work pressure. High staff turnover in vendors can lower service quality and cause more errors, which reduce expected efficiency.
Healthcare groups in the U.S. should think about these factors carefully when deciding to outsource revenue cycle management to match their needs.
Large health systems may keep RCM in-house for more control and customization. Smaller or mid-sized practices often find outsourcing more affordable and flexible.
Vendor services should work well with current Electronic Health Record (EHR) systems and practice management software. Problems or hard transitions can cancel out benefits. Providers must check if the outsourced RCM partner can connect with their technology to smooth workflows.
Data security and following rules are very important. Healthcare organizations must review vendor cybersecurity policies, certifications, and history to lower breach risks.
Making clear SLAs with KPIs like average days in accounts receivable, denial rates, first-pass approval rates, and collection percentages keeps vendors responsible and shows their performance.
Getting client feedback and case studies helps understand service quality and reliability. Companies like Athelas show how some vendors have good results, but checking carefully is important.
A Health System CFO said “the number one thing is communication” in outsourcing. Clear, quick, and honest communication helps solve issues and build good partnerships.
Some groups use a hybrid method, keeping some RCM tasks inside while outsourcing others. This can balance control and efficiency.
Artificial Intelligence (AI) and automation are becoming important for updating revenue cycle management. Research shows most revenue cycle work is still done by hand, with only 20% of leaders automating more than a quarter of tasks. But the pandemic sped up AI use in healthcare revenue work.
AI systems can do repetitive jobs like payer follow-ups, claims checks, eligibility verification, and denial prediction. This cuts human mistakes and lets staff focus on harder cases.
Machine learning looks at past data to find patterns that cause claim denials. Some software helps with coding and error checks in real time, making claims cleaner before sending. This shortens turnaround and raises first-pass approvals.
Automation tools work inside current clinical and billing systems and adjust as workflows change. Good AI learns from unusual cases and gets better over time.
Amy Raymond, SVP of Revenue Cycle Operations at AKASA, said well-set automation can handle most workflow cases with little staff help. Automation speeds up payments and gives good returns.
AI can help both internal RCM teams and outside vendors. For outsourcing companies, AI handles many claims fast with more capacity. For internal teams, automation cuts bottlenecks and workload.
Revenue cycle management is complicated and faces ongoing pressures from staffing shortages, rule changes, and patient financial duties in the U.S. Outsourcing RCM can solve many problems by giving expert knowledge, cost savings, scalability, and new technology, but it also brings risks about control, security, and communication.
Healthcare leaders should carefully check vendors, make clear agreements, and understand technology, especially AI and automation. Balancing these things will help healthcare groups make revenue cycles smoother, reduce denials, improve cash flow, and focus more on patient care.
The main challenges include hiring medical coders (34%), billers (26%), schedulers (18%), and authorization managers (15%), with many organizations facing difficulties in hiring qualified candidates due to a tight labor market.
Being short-staffed can lead to an increase in days in accounts receivable, resulting in backlogs of unpaid claims and negatively impacting cash flow.
Short-staffed departments may struggle to manage denials effectively, resulting in increased denied claims, which can escalate as coding changes and discrepancies arise.
Consistently short staffing can lead to decreased productivity and morale among staff, resulting in errors and delays that further impact revenue.
Solutions include cross-training staff for multiple tasks, offering part-time or shared roles, providing remote work options, and implementing technology solutions to streamline workload.
Technology solutions like automated billing systems can reduce workload, minimize errors, and allow staff to focus on higher-level tasks.
Organizations should benchmark against industry staffing levels and utilize key performance indicators (KPIs) to optimize revenue, cash flow, and minimize denials.
Trends include remote hiring practices that expand candidate pools, and increasing interest in apprenticeship programs to develop new talent from within.
Effective hiring processes can help reduce turnover rates, which, according to MGMA data, was around 16.72% for business operations staff in multispecialty groups.
Pros of outsourcing include access to specialized skills and potentially lower costs, while cons include potential loss of control and the need for effective monitoring of performance indicators.
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