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The Hidden Costs of Maintaining the Status Quo for Revenue Cycle Management

November 10, 2023

Sandra Greefkes

VP, Product and Partner Marketing

Continued margin compression in healthcare providers and diagnostic services, driven by higher labor and recruitment costs, price pressure, and reimbursement complexity, poses significant challenges. Many organizations now operate on thin profit margins, prompting leadership teams to contemplate delaying investments as a strategy for profit preservation and cash flow management.

Whether you operate a laboratory, a pathology practice, or are a molecular diagnostic provider, a remote patient monitoring organization, or even one of the nation’s largest hospitals offering ancillary services, your bottom line is under constant threat from various factors that lead to revenue compression. These factors include:

Staffing challenges remain a primary concern for healthcare providers, with the recruitment and retention of staff posing significant cost and resource burdens. Balancing the need for a skilled workforce with financial constraints remains a critical issue in the healthcare industry.

Changing regulations and compliance requirements introduce administrative complexities, billing process revisions, and documentation burdens that divert resources from patient care. Additionally, if not adhered to, results in penalties, claim denials, delayed reimbursements, and a lack of financial integrity, all of which that directly impact the revenue stream.

Payors are adopting increasingly rigid policies that are often inconsistent from payor to payor, leading to an increase in denials or appeals; and tracking these denials and appeals can create a cause costly administrative burdens that results resulting in revenue leakage (abandoning the appeal) or margin reduction (processing the appeals).

The growing prevalence of self-insured patients with high-deductible health plans may lead to delays in non-essential medical procedures and medical bill payments.

Declining fee schedules from both governmental and commercial payors remain an ongoing concern. Over the past few years, due to the public health emergency (PHE), Congress has stepped in to delay pending Medicare cuts. Now that the PHE has ended, providers need to start planning to mitigate potential reimbursement cuts.

For many organizations, operating on thin profit margins has become the new normal. In such challenging times marked by lost revenue, it might be tempting for leadership teams to postpone investments as a means to safeguard profits. However, maintaining the status quo can ultimately prove more costly than anticipated. Neglecting to invest in technology that can optimize your Revenue Cycle Management (RCM), improve reimbursements, and actually reduce total billing costs could be a costly mistake. Here’s why.

If you haven’t adopted a modern RCM system, you’re likely missing out on critical features that can enhance revenue and efficiency such as:

Advanced rules-engines with built-in compliance logic.

Real-time visibility into errors and exceptions in the billing process.

Automated appeals process and payor-specific forms.

Automated eligibility verification and correction of inaccurate data.

Interactive patient and client portals.

Patient responsibility estimator to estimate cost prior to service.

Compliance with GAAP, Sarbanes-Oxley, and FASB for accurate, accessible reporting.

Timely system updates that incorporate payor requirements and edits.

When providers contemplate whether to invest in their information technology infrastructure, it’s crucial to understand the genuine cost of maintaining the status quo, particularly when it comes to RCM. Inaction carries tangible opportunity costs and business risks, including:

  • Business and compliance risk
  • Lost revenue
  • Lack of visibility into business and operational performance
  • Limited financial integrity
  • Insufficient client and patient engagement
  • Outdated systems and processes

Outsourcing as an Alternative to the Status Quo

An alternative to the status quo is outsourcing your RCM. Contrary to a common misconception, you don’t need an in-house team to manage it. Healthcare executives are increasingly turning to third-party vendors for both clinical and non-clinical functions.  According to the 2023 Black Book Market Research report, 88% of respondents are considering outsourcing their RCM functions to improve revenue and cost efficiencies.

Why? Because the benefits of outsourcing outweigh the RCM status quo. Providers who outsource their RCM to XiFin improve their cash collections on average by 20% to 40%.

Outsourcing to a reputable RCM partner offers numerous advantages:

  • Expertise. Access to specialized expertise is necessary for effective diagnostic billing and claims processing.
  • Compliance. Separating billing from coding reduces compliance concerns, ensuring legal requirements are met.
  • Secure Cloud-Based Infrastructure. Minimizes maintenance costs and provides flexibility for remote work.
  • Payor Relations. A reliable RCM vendor can manage relationships with numerous payors.
  • Visibility and Control. Outsourcing offers clarity at every stage of the claims process.
  • Flexibility and Scalability. RCM outsourcing allows your organization to adapt to market dynamics and grow.

Not Ready? Rather than Choosing the Status Quo, Outsource Part of Your RCM

If you’re not ready for a complete RCM overhaul, consider outsourcing part of your RCM to bridge the gap. It doesn’t need to be an all-or-nothing decision. With XiFin RPM, the choice between managing tasks in-house or outsourcing them is not limited to just two options. Clients have the flexibility to determine how much they want to handle internally and which aspects they prefer to delegate. Moreover, thanks to the unified platform, clients can smoothly shift their entire revenue cycle management (RCM) process or specific components without causing significant disruptions. This adaptability allows you to seamlessly adjust your approach as your business requirements evolve.

At its core, revenue cycle management is about submitting clean claims to payors and tracking them until reimbursement is complete – as quickly as possible. To maximize your eligible reimbursements, you need a highly automated revenue cycle management solution that maximizes efficiency, optimizes cash collection, and has financial integrity. Frankly, most systems just cannot do this.

Irrespective of your profit margin, the investment in optimizing your revenue cycle management pays for itself through improved cash collections, and reduced billing labor, and reduced while also reducing compliance risks. Don’t miss out on the opportunity to enhance your financial and operational performance.

 

Additional XiFin Resources:

To delve deeper into the true cost of deferring billing improvements and maintaining the status quo, download the XiFin white paper, “A Healthcare Provider’s Guide to the True Cost of Deferred Billing Improvements.”

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