Hospital Revenue Cycle Management Marketplace to Reach $9.9B by 2016
A new study found in-trouble hospitals are leaning on end-to-end RCM solutions to improve operations.
- Earlier this week, RevCycleIntelligence.com featured an interview with San Francisco Sport and Spine Therapy CEO Sturdy McKee, in which he spoke about the challenges of outsourcing his practice’s revenue cycle management solutions. Once he found the right vendor that fostered trust as well as solid systems, a partnership was created that benefited both parties.
McKee and his practice are one of a growing number that are realizing the benefits of outsourcing their revenue cycle management solutions. More hospitals and practices are looking to replace fragmented, niche systems, with comprehensive, end-to-end outsourcing service vendors.
According to a recent survey of 2,250 CFOs, CIOs, business office managers and technology and financial services staffers by industry watchdog Black Book Research, 45 percent of struggling hospitals plan on diving deeper into a full RCM outsourcing.
“After carefully identifying and assessing their organizations’ core competencies, hundreds of hospitals have moved to outsourced RCM services over the last two years,” said Doug Brown, Managing Partner of Black Book Market Research. “It has been no surprise that many overwhelmed hospital leaders have realized that RCM isn’t their organization’s core competency, and have turned to large end-to-end outsourcing firms for RCM to refocus on patient care and clinical service delivery.”
Black Book estimates that the market potential for RCM outsourcing is $7.7 billion and could grow to $9.9 billion by mid-2016. Claims reimbursement processing costs will reportedly vary from $30 to $90 per transaction and billing paperwork will cost providers a collective total of $252 billion in 2014.
According to Brown, the healthcare industry has the opportunity to leverage the economies of scale offered by RCM outsourcers, which successfully handle high volumes of encounters. These providers have the staff and technological expertise to integrate patient billing, collections, accounts receivables and grievances as ICD-10 and value-based payment models present ever more potential for internal inefficiencies.
The financial benefits of outsourcing RCM systems was also seen in the survey. Eighty-three percent of hospitals over 200 beds that have outsources all of most of its RCM operations attributed revenue increases of 5.3 percent year-to-date. For hospitals under 200 beds new to outsourcing, 78 percent reported a revenue increase of 6.2 percent.
The survey also found that there was an immediate need for these hospitals to upgrade their RCM solutions, either because of evolving value-based solutions or dire financial problems. It was cited by 82 percent of hospital financial leaders that changed to an end-to-end solution, their biggest reason for upgrading was a fear of whether the older system could deliver meaningful analytics or operate outside fee-for-service payment models. It was also found that 21 percent of financial leaders were facing bankruptcy or closure within four years if state-of-the-art RCM systems are not implemented immediately and 90 percent said they did not have either the capital or proper approvals for a new system when they made the decision to outsource.
