Revenue Cycle Management Services to Trump Software — For Now

Listen
Text
  • Small
  • Medium
  • Large
New regulations and payment models may catalyze major growth in the revenue cycle management market, as providers with clinical improvement priorities replace their RCM platforms or outsource such services entirely in the early years of health reform, according to two recent reports by Mountain View, Calif.-based market research and consulting firm Frost & Sullivan.

The RCM technology and services industry in 2012 was valued at $1.9 billion for hospitals and $11.1 billion for physician groups. As providers devote their internal staff and resources to increasing the quality and value of clinical services, those industries could grow to more than $3 billion and $14.6 billion, respectively, within the next five years, according to the reports.

Nancy Fabozzi, principle analyst for Frost & Sullivan's Connected Health practice, was the author of both reports. . In it, she describes the market factors that will lead to a short-term boom in outsourced RCM services, followed by a gradual adoption of next generation technology solutions to recapture revenue lost to vendor services.

Many hospitals have “clumsy and outmoded" RCM solutions that lack key functionality needed to address a number of RCM complexities. Hospitals must also deploy "bolt-on" solutions from various vendors to address gaps and provide additional capabilities around things like claims denials or patient engagement, Ms. Fabozzi says.

"Providers seek tighter integration between their RCM systems and clinical data in EHRs  in order to drive efficiencies and plug the data leaks and time lags that happen across the RCM pathway," she says. "The better and more accurate the coding, the better the claim is supported so that it will not be denied by the payor." Integrated systems speed up the process and improve accuracy because clinical and billing data are linked together.

"Providers know they need to upgrade their old RCM systems so that they can have better integration and next gen functionality like analytics, decision support, automated workflows, et cetera," Ms. Fabozzi adds, "but because of [meaningful use], they are mostly focused on upgrading their clinical systems [such as] EHRs and haven’t been able to devote time and staff to RCM. But that is changing."

Contracting vendors to perform RCM services has the added advantage of alleviating hospitals' burden of training staff on a deluge of new regulations and market changes, including ICD-10, diagnosis-related grouping and ever-increasing recovery audit contractor activity, she says. "Service companies have been doing a good job going after those dollars that hospitals don't have the staff or bandwidth to pursue," she says, providing valuable services to providers that would otherwise be forced to leave money on the table.

Those companies will continue to prosper in the coming years, Ms. Fabozzi says, but over time, providers will build the capacity to manage more RCM functions in-house in order to retain revenue previously paid to services providers. The legacy RCM IT solutions that currently lack many core functionalities needed for patient-centered care and value-based reimbursement will increasingly be replaced by next-generation solutions that will expedite and improve the entire RCM process, mitigating the need for many external services.

The business of RCM technology, then, will eventually overcome the business RCM services, Ms. Fabozzi says, as hospitals divide and conquer their clinical improvement goals and move on to their revenue management targets. This is especially true for ambulatory medical practices as the market for RCM platforms gets increasingly saturated by low-cost, easily scalable cloud-based programs, she adds.

More Articles on Revenue Cycle Management:

4 Steps to a "Leaner" Revenue Cycle
5 Retail Principles for a More Effective Hospital Market Share Strategy
4 Features to Flaunt to Attract an Acquirer

Copyright © 2021 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars