10 tips to assess Revenue Cycle Management vendors
Outsourcing this vital service can ease strain on practices, but study the details before signing a contract
Running a financially successful practice depends on efficient revenue cycle management (RCM). RCM describes all of the steps involved in managing claims processing, payment, and revenue generation, starting with patient scheduling and ending with payment. As practices face heavier workloads, many are evaluating whether to outsource these services.
As physician compensation moves away from fee-for-service to shared savings and outcomes-based models, and practices embrace new team-based approaches to care, calculating what and to whom monies are owed is becoming a far more complex process. Many physicians are discovering that the talent and technology needed to get the job done correctly is beyond their current capabilities, or will cost more than what they are able to invest. The solution many are considering is outsourcing.
Outsourced RCM can be as narrow as producing and sending billing statements or as large as the entire RCM cycle, says Robert Magnuson, MPA, principal advisor with Impact Advisors, a Naperville, Illinois-based healthcare consulting firm. Outsourcing aspects of the RCM cycle, or the entire process, could have a tremendous impact on a practice’s finances. On the other hand, if the wrong vendor is chosen or if the relationship is not properly managed, outsourcing RCM services could have a devastating impact.
“The RCM cycle can only be as successful as the individual overseeing it,” says Christopher Parrella, JD, an attorney and consultant with the health law offices of Anthony C. Vitale in Miami.
The Discovery Phase
Before hiring an RCM vendor, physicians should go through what Magnuson calls the “discovery phase.” This is when practice leaders calculate the practice’s baseline performance for all RCM cycle metrics and identifies gaps or challenges. Physicians should then set objectives and goals for the practice.
Key metrics to consider when evaluluating an RCM service are costs to collect (e.g. percentage of revenue needed to collect payments) and the return on that investment.
Keep in mind, calculating cost to collect varies by practice, making it a difficult to benchmark, explains Jeffrey Milburn, MBA, CMPE, a healthcare consultant with the MGMA Health Care Consulting Group. Practice leaders should continually be looking for ways to reduce the cost to collect while moving its net collection rate as close to 100% as possible.