Struggling hospitals turn to consolidation, outsourcing for revenue cycle management

Embattled hospitals still have options to update their revenue cycle management (RCM) systems, according to Becker's Hospital Review.

As payment models change post-Affordable Care Act, the Centers for Medicare & Medicaid Services and commercial payers are driven to restructure revenue cycles to put greater emphasis on performance elements outside traditional RCM systems' wheelhouse, Jay Sultan, strategy consultant at Edifecs, a health IT company, told Becker's.

While it is clear providers must update their RCM systems, options are more limited for financially struggling hospitals. For example, many outsource the RCM process to avoid the capital cost of updating the system and instead using their vendors' updated systems, according to the article. At hospitals that chose this option, 21 percent of chief financial officers said they were facing bankruptcy within the next four years if they did not immediately either outsource RCM services or implement state-of-the-art software, according to a Black Book poll. Ninety percent of CFOs who opted to outsource said they did not have the resources to upgrade their own systems when they made the decision.

Of hospitals with more than 200 beds that chose to outsource most or all RCM, 83 percent said 5.3 percent of increased revenue was due to the outsourcing, according to the poll, while 78 percent of hospitals with fewer than 200 beds attributed 6.2 percent of revenue growth to the decision to outsource.

For some hospitals, however, upgrades or outsourcing may not solve the problem, according to Becker's. "These hospitals generally have a lot of deferred capital expenditures and are typically not strong in the market," Joel Gardiner, principal at Deloitte Consulting, who serves as the company's national practice leader for RCM services, told the publication. These hospitals often seek consolidation so they can use the acquiring organization's RCM infrastructure.

Many hospital CFOs expect to lose their jobs in 2015 due to their employers' failure to adjust their RCM to new payment models, FierceHealthFinance previously reported.

To learn more:
- here's the article
- read the Black Book announcement

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