The Pros and Cons of Healthcare Revenue Cycle Management Outsourcing

Efficient revenue cycle management is the linchpin of your ability to provide value-based healthcare. Thus, many organizations contract the services of healthcare BPO companies to help address revenue cycle management. So, let's discuss the pros and cons of healthcare RCM outsourcing.
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Written by Allie Delos Santos



Providing patient-centric, high-quality care is easier said than done for many healthcare professionals. Its complexity results from providers having to juggle business functions indirectly related to care provision. Among these, nothing is more crucial than revenue cycle management.

Efficient revenue cycle management is the linchpin of your ability to provide value-based healthcare. Thus, many organizations contract the services of healthcare BPO companies to help address revenue cycle management.

This post explores the advantages and disadvantages of healthcare revenue cycle management (RCM) outsourcing. It also discusses the various industry challenges that make outsourcing ideal.


Advantages of Healthcare Revenue Cycle Management Outsourcing

Advantages of Healthcare Revenue Cycle Management Outsourcing

Saying that handling RCM is challenging is an understatement. Having just enough staff to cover different aspects of the revenue cycle strains your resources. It becomes more daunting when you need to manage compliance and the constantly changing regulations of the medical industry.

Many healthcare professionals recognize the importance of prioritizing RCM in providing value-based care. Healthcare revenue cycle management outsourcing offers numerous benefits. 

Here is a closer look at its advantages.

Outsourcing Helps Optimize the Revenue Cycle

The revenue cycle is a long process full of frustrations, complications, and errors. Hiring a BPO company can solve such problems and simplify operations by addressing most of the pain points within the revenue cycle.

Billing and Collection Errors

Errors in billing make it hard, if not impossible, to have timely and accurate patient collections. Errors account for many of the problems within the revenue cycle management process.

A BPO provider can streamline billing and collections, ensuring that each collection is accurate and your cycle optimized. Outsourced RCM tools eliminate a lot of common human errors involved in encoding data, such as:

  • Incorrect patient information
  • Upcoding
  • Mismatched diagnosis codes
  • Unbundling
  • Leftover billing
  • Duplicate billing
  • Balance billing

Denial Management

Denials are often the result of incomplete patient data, inaccuracies in medical billing codes, or questions regarding insurance coverage. According to Becker’s Hospital Review, about 86% of denials are avoidable.

Following up on denials is typically fruitless and time-consuming for staff. But a reliable RCM provider can enhance the efficiency of your claims management by:

  • Following up on denied claims
  • Implementing a denial management strategy
  • Reducing the total number of denials with error-free and accurate data entry

Change Capture

Charge capture is crucial to the entire healthcare billing lifecycle. Treatment prices should be updated regularly; otherwise, the bill might become inaccurate.

An outsourcing vendor integrates an automated charge capture system, ensuring error-free and up-to-date billing data.

Coding Errors

The medical industry’s compliance regulations are subject to frequent adjustments every year. Ever-changing rules make it hard to code accurately and precisely according to the Current Procedural Terminology (CPT) or the International Classification of Diseases (ICD). Consequently, coding errors are one of the most common problems in revenue cycle management.

Outsourcing to a qualified service provider helps avoid denials and resubmissions caused by coding errors. Their automated tools review each claim before submission and prevent it from progressing if errors occur.

A Lack of Internal Resources

Many healthcare businesses do not have adequate staff adept with each aspect of the revenue cycle. Your RCM efficiency will inevitably fall if you do not have the right infrastructure.

Healthcare revenue cycle management outsourcing handles your daily activities, allowing you to run efficiently with a smaller workforce.

RCM Outsourcing Offers Bigger Cost Savings and Higher Revenue

Outsourcing revenue management saves on costs and increases your collection rates. Staffing costs are one of the biggest expenses when running a healthcare business. Hiring in-house medical billing and coding staff costs more than outsourcing the function.

Outsourced RCM services have experienced and certified billing staff who can maximize your revenue and minimize denials and rejections. Consequently, they reduce ongoing backlogs and keep insurance accounts receivable up-to-date.

They also provide tools to handle patient receivables, such as contacting the individual instead of shipping the balance to a collection firm.

It Ensures Timely Reimbursements

Your service provider ensures timely reimbursements with professional RCM agents working 24/7. Because they do not manage medical functions, they can check on insurance, verify and collect all data in patient enrolment, document treatments and diagnoses, and provide correct medical codes. As such, there is no room for errors. 

Outsourcing your healthcare revenue cycle management enables you to receive an accurate and timely overview of your accounts due. This helps healthcare professionals get a picture of their earnings in real time.

Outsourcing Is Cost-efficient

Outsourcing RCM services significantly reduces operating costs. Local talent is expensive; revenue cycle management needs regular oversight and dedicated, thoroughly trained employees.

In contrast, a good BPO company can reduce operating expenses by up to 70%. It can also help you find quality talent for a fraction of the cost of your local market.

It Lets You Focus on Patients for a Better Experience

Providing patients with the best possible care by focusing on them is every healthcare professional’s ultimate goal. When you outsource RCM, you have more time to focus on what you do best: delivering patient care.

Having your RCM managed by experts also improves a patient’s overall experience. Patients typically complain about billing mistakes. Reducing errors and claim denials gives patients a better experience and

engagement. Eliminating the heavy administrative workload from your desk empowers them to spend more time caring for patients.

Outsourcing Lightens the Administrative Load

Paperwork and medical billing activities are tiresome, especially during treatment changes and updates. Hiring experts to prevent frustration and stress related to learning new regulations, processes, and procedures is an excellent decision.

Healthcare revenue cycle management outsourcing can take care of daily billing tasks such as:

  • Insurance eligibility verification
  • Medical coding
  • Patient scheduling and registration
  • Claims submission
  • Claims management
  • Payment collection and reporting

RCM Outsourcing Offers Dedicated, Experienced Staff

One of the advantages of healthcare BPO is access to trained professionals.

Typically, employees of smaller healthcare businesses juggle multiple tasks. Multitasking means your staff cannot focus on coding and billing as they should. Billing and coding in the healthcare business change often, and not staying up-to-date leads to costly errors and denials.

Outsourcing revenue cycle management to well-trained professionals eliminates errors and reduces HIPAA violations and denials due to inadequately skilled staff.

Outsourced RCM Gives You Access to a More Diverse Talent Pool

Healthcare revenue cycle management outsourcing enables businesses to augment staffing permanently or temporarily or to reposition and include entire departments. This gives an instant infusion of expanded or new expertise.

Healthcare businesses gain access to global talent not otherwise available. For instance, US technology professionals are in great demand and well paid, making it difficult to fill vacancies. Outsourcing offshore gives the dual benefits of lower costs and an enormous supply of talent.

Similarly, compliance and regulations are tedious and require specialized skills more easily available abroad at affordable rates.

It Provides a Competitive Advantage

Outsourcing levels the playing field for smaller healthcare businesses by giving them access to a wealth of talent and capabilities not otherwise possible in-house due to space limitations or budget constraints.

Thanks to the flexibility of outsourced services, hospitals get valuable scalability. Agility is critical in healthcare to support changing needs, adapt to unforeseen events, and facilitate planned growth.

Healthcare professionals can also extend their capacity to generate more revenue by offering a wider range of medical services and accepting additional patients.

It Enhances Consistency and Transparency

Your service provider offers comprehensive dashboards and performance reports when you outsource revenue cycle management. These analytics help you track performance and manage your billing operations without micromanagement.

A BPO company is adept at managing services such as claims management, scrubbing, coding, denials, appeals, follow-ups, and patient statements. You can rely on them for consistent results when outsourcing these functions.

Outsourcing Increases Accuracy

Ensuring your billing processes are accurate and efficient is vital to your organization’s sustainability. Disregarded overdue payment claims or inaccurate coding activities leading to rejections and denials negatively impact your cash flow.

Healthcare revenue cycle management outsourcing keeps your procedures accurate and efficient, improving your daily cash flow.

You Need Not Constantly Retrain Staff

Keeping up with the newest standards and regulations from payers and other government institutions is difficult because these are ever-changing. In-house coding and billing mean you are wasting money retraining employees. However, failure to train staff leads to more denied claims and a hit to your revenue.

Your outsourcing provider manages staff training on your behalf, saving you time and energy for more important clinical operations. Outsourcing to a reliable vendor ensures your coding and billing have a lower chance of errors, boosting your bottom line.

You Enjoy a Cleaner Claims Rate

Claims must be error-free and not need any extra corrections or information. You need a higher clean claims rate to increase your organization’s bottom line.

Outsource your revenue cycle management to qualified experts who can ensure clean claims every time. The healthcare BPO industry specializes in RCM to reduce the possibility of mistakes. This allows you to enjoy a cleaner claims rate, increasing your revenue.

Healthcare Businesses Experience Fewer Interruptions in the Cash Flow

RCM outsourcing vendors have the necessary software and hardware solutions to manage a large amount of billing work.

BPO service providers immediately accomplish billing once they receive documents from the healthcare organization. Other procedures, such as accounts receivable collections and insurance verification, are followed up within 24 to 48 hours.

This process offers a significant improvement in cash flow.

Companies Can Follow up on Accounts Receivable More Easily

A reputable RCM partner helps healthcare businesses follow up on accounts receivable from insurance companies. Following up on accounts receivable is necessary and allows doctors to concentrate on patient care.

Outsourcing to a service provider with a team of experienced accounts receivable specialists ensures streamlined payment processing. Find a vendor who has experience working with several insurance companies and is conversant with policy management.

Leverage HIPAA Compliant Procedures for Better Revenue Collection

RCM service providers remain updated with all regulatory laws, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA). They handle all billing and submissions based on the existing standard.

Healthcare revenue cycle management outsourcing leaves no room for mistakes because vendors follow strict guidelines that improve revenue collection.

Gain Full Access to 24/7 Services for Faster Turnaround Time

Revenue cycle management providers work 24/7 to guarantee timely payments. They manage patient enrolment, verify insurance details, and process documentation, leaving no space for errors. They offer round-the-clock services to make sure you receive payments on time.

You Receive Centralized Reporting

Depending on the tool you use for revenue cycle management, you can set various locations to determine the status of certain amounts in your books.

Healthcare revenue cycle management outsourcing provides transparent reports and regular updates on your entire revenue cycle. Centralized reporting offers additional insights into your organization’s financial health. Moreover, it ensures your trust when delegating the service to your partner.

Outsourcing Produces Better Outcomes

Healthcare outsourcing improves quality in many ways. For instance, outsourcing makes it easier to expand customer support hours without doubling staff and overhead. It does not mean giving up control; rather, it is about changing the “who and where.”

Medical professionals need not worry about tedious tasks or the expenses brought by administrative work—technical requirements, facilities, payroll, HR, etc.—because they are the vendor’s responsibility. Providers can focus on bigger management issues and improve service quality, thus increasing patient satisfaction and competitiveness.

When relieved of tedious, repetitive work, the staff also improves their health and morale, especially doctors who are prone to fatigue, stress, and burnout. Happier employees mean lower turnover and more savings.

Focusing on patients improves their experience and satisfaction. Satisfied patients are more likely to be loyal and promote your service to their friends and family, boosting long-term revenue.


Disadvantages of Healthcare Revenue Cycle Management Outsourcing

Disadvantages of Healthcare Revenue Cycle Management Outsourcing and security

Healthcare revenue cycle management outsourcing also comes with a few drawbacks you must keep in mind.

It Requires Due Diligence

Pricing is one of many considerations when outsourcing RCM. You must do your due diligence to prevent common pitfalls that hamper a promising outsourcing initiative. The cost of dissatisfaction is high, given the competitive consumer and labor markets.

Due diligence starts internally with an assessment of your business operation goals. You can search for smoother cash flow, better flexibility, cost reduction, or the ability to accept more patients without jeopardizing quality.

Risk of Public Backlash

If you outsource overseas, this can engender unhappiness in patients who do not favor sending jobs abroad. Some criticism is inevitable.

Things Get Lost in Translation

Whether you are outsourcing abroad, important instructions can get lost in translation when you give them on the phone or via email. This can potentially lead to greater costs.

Potential Hidden Fees

Some services come with hidden fees. Hence, you need to read the fine print to avoid hidden charges. Check for report generation fees, service cancellation fees, setup fees, or additional costs for printing your statements. Also, be upfront with your provider to avoid surprise charges.

Data Security Concerns

The average data breach size during the second half of 2022 is 81,487 records, amounting to the disclosure of 278,034 patient records. A data breach can be catastrophic, affecting patient confidence and brand reputation.

BPO companies must meet HIPAA and other compliance regulations to protect healthcare professionals and patients’ data. Protect yourself by partnering with a reputable service provider with a proven track record and strict privacy protocols.

Scalability Issues

A service provider might seem like a great fit now, but they might not be able to expand and scale with your growing healthcare business. Change can easily become an issue instead of an advantage if the service provider is not agile. Combat this by working with only a vendor with scalable services that can adapt to your expanding business.

The benefits of healthcare revenue cycle management outsourcing often outweigh the drawbacks. However, you can mitigate the disadvantages by choosing the right service provider.


Healthcare Challenges That Make RCM Outsourcing a Great Choice

Medical providers in the U.S. face various challenges that impede operations, including:

  • Shortage of skilled workers to meet the increasing need for medical and non-medical staff
  • Fierce competition from other providers and a growing range of peripheral companies entering the healthcare arena
  • Size constraints making it almost impossible to increase staffing or even include full-time specialized positions
  • Budget constraints, regardless of organizational size, that impact capital investments decisions and operations
  • Informed patients who demand top-of-the-line, personalized healthcare at affordable costs
  • Ever-changing and complicated compliance requirements
  • Non-medical issues such as cyberattacks that threaten digital health records, patient data, and the organization’s own financial and business information

The pandemic also added more challenges and costs, impacting business operations and patients. These problems will be resolved at some point, but no one is sure when. Assuming things will not be the same is sensible.

Healthcare BPO services successfully augment patient services and quality and mean that you needn’t add facilities and staff that require ongoing management and capital investment.

The trend is moving toward outsourcing business processes such as RCM—tasks necessary to keep the business running smoothly–while front-liners treat patients. While essential, RCM is not a core function, which makes outsourcing it ideal.


What Does Outsourcing Revenue Cycle Management Mean?

To outsource healthcare revenue cycle management means hiring a third-party team to manage administrative work where coding, billing, and other non-provider activities are concerned. Retaining the work of medical BPO services lets you focus on helping patients.

Carefully vet any potential RCM provider before contracting their services, because the nature of this function is highly sensitive and requires strong skills. Ensure that the team you consider hiring has sufficient experience and credentials to handle the needs of large-scale facilities.

A reputable revenue cycle management vendor hires a team of skilled professionals who can help you with:

  • Denial management
  • Claims review and submission
  • Eligibility verifications
  • Patient collections
  • Accounts receivable follow-ups
  • Medical coding optimization
  • Charge capture and billing

Each task is complex, requiring qualified and experienced professionals to manage them. A quality RCM service provider ensures that their employees are up to date with best practices and regulations for medical coding and billing.


Considerations When Making the Right Decision

Considerations When Making the Right Decision

Making the right case for healthcare revenue cycle management outsourcing rests on the details. Here are some factors to consider before committing:

Consider Your Needs

Each healthcare business is different, so there is no one-size-fits-all partnership. You must choose an outsourcing partner that meets your unique needs right from the start.

Assess the value—tangible and intangible costs of maintaining your current approach versus the opportunities and expenses available through outsourcing.

Ensure Trust and Confidence

Successful outsourcing comes down to confidence and trust. When outsourcing fails, it is often due to poor collaboration and working relationships between the partner and the service provider, not the latter’s failure to meet the service level agreement (SLA). So choose someone you like and enjoy working with.

Go Beyond Outsourcing

The right BPO service provider is more than a vendor. It understands that its success depends on your success. They should act as a working partner, sharing insights and knowledge from similar clients to help you assess and improve quality and processes.

Do not disregard this advisory function. Consider the possible strategic planning benefits. The right outsourcing partner can offer crucial insights, helping your healthcare business remain agile amid change and prepared to leverage new opportunities.


The Bottom Line

A trusted RCM provider helps you build and manage a dedicated team of healthcare professionals specifically trained for your unique requirements at up to a 70% savings in your costs.

But remember: outsourcing your healthcare revenue cycle management does not work for every business in this industry. Consider your facility’s unique requirements and determine whether outsourcing RCM is the right solution for you.

If you decide that outsourcing is the right decision for your healthcare business, let Unity Communications know. We are happy to walk you through our RCM services and boost your revenue.

Contact us here!

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