Black Book: CFOs Focused on ROI, Revenue Cycle Outsourcing

September 28, 2015 - Outsourcing may save the healthcare industry, according to Black Book’s yearly survey released today about high performing revenue cycle management (RCM) vendors, as reported by PR Newswire.

With its research focusing primarily on RCM outsourcing and software/technology amendments, Black Book confirms a fast-paced healthcare environment requires a focus on new solutions. According to Doug Brown, Managing Partner of Black Book, "As hospitals and physician practices grapple with intense pressure to optimize revenue cycle management processes, outsourcing has emerged as a powerful solution to the challenges of a rapidly changing healthcare model."

Seventeen percent of surveyed hospitals are synchronizing RCM transition activities via advisors and consultants, says Black Book. As the pendulum swings from volume to value, most healthcare providers – 78 percent – failed to select technology vendors, confirms Black Book. Such is “contributing to the upsurge in outsourcing as a provisional solution,” confirms the PR Newswire press release. 

Additionally, nearly three-quarters of medical group practices – a reported 73 percent – are collaborating with consultants on accountable care reimbursement strategies, concurrently “considering” a 2016 outsourcing RCM approach as the assessment of technology vendors continues.

As RevCycleIntelligence.com reported, Black Book’s June data reported accountable care organizations (ACOs) confirm a slew of revenue cycle challenges as healthcare expenditures are projected to surpass a numerically staggering $3 trillion within the next five years. Additionally reported RevCycleIntelligence.com, previous Black Book data confirmed Electronic Health Records (EHR) vendor loyalty is on the up and up.

Lack of return on investment (ROI) is affecting future focuses, says Black Book this time around. Seventy-nine percent of health organization CFOs claim one upcoming necessity is to eradicate those financial and coding technology vendors not associated with ROI advantages. Over half of health organization CFOs – 54 percent – confirm outsourcing RCM management processes will help promote productivity and will help maintain a strong financial backbone.

As EHRIntelligence.com additionally reported, Black Book reported last year that 89 percent of healthcare providers are in need of an RCM system upgrade. Of pressing concern was the concept that both new twenty-first century technology and antiquated nineteenth-century tools (i.e. the ever familiar pencil and paper mentality) are collectively being used to record critical data and exceed demanding mandatory standards. Such poses complications and is a hindrance to the advancement of medicine, EHRIntelligence.com infers.

Says Brown, last year, CFOs confirmed a focus on non-C suite executives’ perspectives is simply too narrow in itself to accurately predict outsourcing’s likelihood of success. "Claims management appears to be the next for vendor opportunity as ICD-10 effects begin to impact cash flow, followed by eligibility and benefits management," states Brown.

Indeed, a reported 83 percent of hospitals, 58 percent of contract management, and 55 percent of denial management currently outsource some accounts receivable and collections, says Black Book. Says Brown, "Claims management appears to be the next for vendor opportunity as ICD-10 effects begin to impact cash flow, followed by eligibility and benefits management.”

What are the highest ranked RCM outsourcing vendors for 2015?

The best ranked RCM outsourcing vendors for the year are reported by Black Book as follows:

• Optum360 - Hospital Managed Systems Corporations/Systems/Networks and Chains (second consecutive year awarded)
• Emdeon - Hospitals Under 150 Beds
• Conifer Health - Hospitals Over 150 Beds  (third consecutive year awarded)
• Other top ranked RCM outsourcing firms among surveyed hospitals includes: The Advisory Board, McKesson RelayHealth, Dell, Adreima, MedAssets and TruBridge.

Additional highlights of key Black Book findings

Additionally stated by the PR Newswire release, here are more primary research conclusions on behalf of Black Book's findings:

• Roughly half (2,400 of all US hospitals) predicting in 2012 that they would replace their core RCM solution have failed to initiate a sustainable RCM plan as of July 2015. 
• More than 1,000 hospitals confirmed the activation of a new or renegotiated RCM solution/services agreement between January 2014 and July 2015.
• 40% of hospitals under 200 beds are delaying making an RCM transformation program [functional] (sic)
• 58% of CFOs in hospitals under 100 beds expect their RCM strategy will be selected solely on their CIS vendor relationship, compared to 10% of CFOs in larger facilities.
• In Q3 2015, the general sentiment of 13% of CFOs is they could make any RCM solution work if the hospital's clinical staff was satisfied with the health care delivery element of the system.  In 2013, 77% of hospital CFOs held that opinion. The significant drop in CFO conciliation on this viewpoint is reflective of the implementation of functional (and failing) EHRs, and the importance of versatile RCM solutions.
• 80% of Hospital CFOs consider outsourcing to be the best stop gap measure until new RCM software is afforded and installed.  More than two-thirds seek new outsourcing agreements extending at least 18-36 months.
• 72% of Hospital CFOs of hospitals under 200 beds consider end-to-end RCM outsourcing to be the best solution until after value-based payment models are better established and coding challenges are worked through. 
• 58% of Hospital CFOs in large hospitals and academic medical centers over 200 beds see outsourcing at least two revenue cycle management functions.
• 73% of hospitals under 200 beds are considering a combination of new software and outsourcing services to improve their RCM systems before ICD-10 launches. 93% of hospitals with more than 200 beds anticipate supplementing their existing RCM software with outsourcing services in Q1 2016, as the ICD-10 repercussions begin to affect their cash flows and more value-based reimbursement opportunities are presented.