RCM tip of the day: Tracking outsourced RCM performance

Many healthcare organizations choose to outsource revenue cycle management processes, but just because RCM is no longer in-house does not mean tracking performance is unnecessary.

If you would like to share your RCM best practices, please email Carrie Pallardy at cpallardy@beckershealthcare.com to be featured in the "RCM tip of the day" series.

Eric Slimp, Operations Analyst, MD Buyline: Revenue cycle management as an outsourced service is highly complex and includes a vast number of elements and functions such as billing, A/R management, denials management, cash posting, credit balance processing, customer service, bad debt management and medical eligibility. For example, collecting on a single account revenue cycle management can often involve data passed between a variety of distinct organizations, which can lead to errors. For this reason, if possible, you should seek out a single provider that can take on all or many functions of the revenue cycle management process in order to minimize errors during data exchanges.

Including the appropriate performance metrics in the contract helps hospitals to minimize risk, enhance efficiency and maximize revenue collected. A few performance metrics that should be addressed with specific performance targets in the contract and monitored on an ongoing basis include:

•    Cost to collect – Total fees as a percentage of total collections
•    Gross A/R Days – Total A/R divided by average daily gross revenue
•    Collections as a percent of net A/R – Total collections divided by net A/R
•    Customer service ratings – Based on customer satisfaction surveys
•    Self-pay A/R as a percentage of total A/R – Portion owed by patients as a percentage of total receivables
•    Bad debt as a percentage of gross patient revenue – Bad debt divided by gross patient revenue

Each of these metrics should be explicitly defined in the contract. This contract should also allow for incentives if the above metrics are met or exceeded, and ensure that appropriate penalties are in place if performance falls below defined thresholds.

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