Outsourcing revenue cycle functions is a strategic decision more hospitals and health systems are considering as they navigate financial pressures, workforce challenges and the growing complexity of payer negotiations. While the concept can evoke concerns about job security and loss of control, the reality is more nuanced.
A common misconception about outsourcing revenue cycle operations is that it inevitably results in job losses and instability. However, the goal is often not to cut jobs but to expand career opportunities for existing staff and arm them with more comprehensive resources, Brad Gingerich, vice president of payer strategy at Ensemble Health Partners, said during an episode of the Becker’s CFO and Revenue Cycle Podcast.
For instance, in a typical scenario involving a community health system with $1 billion in revenue and 500 beds, most of the revenue cycle staff would transition to become employees of the outsourcing partner, such as Ensemble, according to Mr. Gingerich. They would remain in the same community, interacting with patients daily, but with the added support of a leading healthcare employer.
“Some providers fear being locked into a long-term contract without an easy exit strategy,” Mr. Gingerich said “However, in reality, providers can and do separate from underperforming outsourcing partners if expectations aren’t met. That’s why it’s critical to choose an outsourcing partner with a strong track record and reputation. Checking referrals, reviewing performance data, and ensuring cultural alignment are all essential steps.”
Another challenge some providers face is fragmented outsourcing — where different aspects of the revenue cycle are contracted to multiple vendors.
“For example, one vendor may handle coding, another complex claims, and another third-party liability. This can create inefficiencies, as vendors may lack seamless integration and instead point fingers at one another when issues arise,” Mr. Gingerich said. “Our approach is to take full accountability, ensuring that all revenue cycle functions work together smoothly under a single, unified strategy.”
Despite the potential challenges, the benefits of outsourcing revenue cycle operations can be significant. Community health systems often struggle to attract and retain top revenue cycle talent — particularly in rural areas. Outsourcing can provide immediate access to skilled experts with deep industry experience.
“Additionally, technology investments — such as AI-driven automation and advanced analytics — are often out of reach for individual health systems but become readily available through a specialized outsourcing partner,” Mr. Gingerich said.
Outsourcing can also strengthen leverage in payer negotiations. For community systems, navigating direct negotiations with major payers can be challenging. Outsourcing gives them access to established relationships with key payer executives, allowing for more effective dispute resolution and negotiation of more favorable reimbursement terms.
“Ultimately, outsourcing — when done strategically — enhances efficiency, strengthens financial performance, and provides long-term career growth opportunities for healthcare employees,” Mr. Gingerich said. “The key is selecting the right partner and ensuring alignment with the organization’s mission and goals.”
