The inside baseball on outsourcing your revenue cycle

Baseball has been around close to two centuries. While a lot has changed, the rules have remained fairly static in modern times.

When manager Casey Stengel was leading the New York Yankees to a championship in the 1950s, he cautioned, “If we are going to win the pennant, we’ve got to start thinking we are not as good as we think we are.” A similar mindset is useful when looking at your medical practice’s revenue cycle. Are you as good as you think you are?

Think about your team. You work diligently to select the right people and depend on others to play their role — and when your team is not winning, you look for alternate solutions that will help you win.

Is outsourcing the answer?

Is the alternate solution to outsource your problem to someone else? Outsourcing has become a popular solution for various aspects of practice operations, including revenue cycle management, but there are key considerations before making changes to your proverbial lineup.

Outside resourcing rose to prominence in the 1980s, when healthcare organizations began implementing arms-length agreements from direct patient care — services such as security, dietary, laundry, housekeeping and grounds maintenance. In recent years, services directly involved in the delivery of patient care are also being outsourced, including medical care itself. Many hospitals use emergency medicine contractors, hospitalist companies and agency nurses to help control cost and stabilize staffing. Services such as physician credentialing, patient call centers, coding, transcription, after-hours radiology and components of the revenue cycle have become a focus of outsourcing in recent years.

Outsourcing benefits in some areas have included reducing costs and improving efficiencies for some organizations, while in other cases results have been disappointing with dismal outcomes, only to see practices change strategy and return the work to in-house resources.

Who’s on first?

A strategic outsourcing approach should be well-defined. For example, an outsourced vendor performing collection work will probably not be able to correct internal processes gone awry (e.g., registration errors, physician delinquency, clinical documentation errors, coding delays, billing problems). Whether services are in house or outsourced, there is no substitute for the hard work of finding (training, retaining and rewarding) the right people, processes and technology.

There are a few primary reasons why outsourcing strategies don’t work out. If you are savvy and dedicated to managing vendors, your reasons for returning to an in-house solution may include:

• Not realizing expected cost savings
• Unmet service levels
• Increases in manual work-arounds due to information technology integration issues

When under financial or emotional stress, we sometimes ascertain that a complete outsource of the revenue cycle is the best decision. Before you decide, it is critical to thoroughly outline the problem you need to solve. You should ask:

• Are there management issues within the revenue cycle? Is there accountability for results?
• Do I need a productivity and quality program?
• Are there other transformation initiatives that will compete for resources?
• Is my existing technology fully optimized? If not, do I need additional technology? Do I have a lack of capital to invest in new technology? Are there other sources of technology (e.g., reporting package from source data files to effectively monitor and trend performance against key performance indicators) that would offer the solution? Do I have manual or automated processes?
• Can I reduce labor costs? Are there excessive labor costs or is it difficult to hire adequate staff? Do I have the right people on my team? Are the right people in the right role? Do I have manual processes and is there redundancy in work or other inefficiencies in processes?
• Are processes too decentralized? Are there office politics around controls and reporting relationships? What could be centralized to increase efficiency and realign/reduce staff?
• Are there low standards or an organizational tolerance of poor performance?  How is the process for improving performance handled?
• Do I need a backlog reduction plan (e.g., cleaning up old accounts)?
• What would it take to solve the problem internally in terms of resources: money, time, people, leadership? What are the obstacles and are they likely to be overcome with an outsourced solution?
• Are there issues with timeline constraints? Would it take too long to fix internally or does the organization have too many competing priorities (e.g., a large IT installation may mean the organization doesn’t have the bandwidth to launch additional technology)? All of these factors influence the decision to outsource.
• Who is managing the outsourced team? Do we have experience with governance of outsourced vendors?
• Do I have the right leadership, the right reporting and analytics in place to achieve desired results from our outsourced solution?

Before visiting the mound to change your pitcher

1. Determine decisions to be made.

• What decisions have already been made? Identify current outsource strategy. Most revenue cycles already have partial outsourcing, such as outsourcing work for Medicaid eligibility, self-pay collections, small-dollar insurance follow-up collections and bad debt collections.
• Are you satisfied with current vendors? This does not mean whether you like them. Are they producing desired results? How do you know? Do you need to make a change?
• Are you going to add additional vendors or outsource additional scopes of work? If so, what facts support this need?
• Are you going to outsource 100% of your department? Determine the pros and cons for complete outsourcing.
• How will you proceed with selecting a vendor? Determine the level of quality and service expected, technology needs, pricing and consider a site visit to review their operations, if possible. You should look at more than one vendor before making a decision.

2. Determine future alternatives.

• In-house
• Partial outsource/co-source
• Outsource entire department/revenue cycle
• Intelligent automation
• Technology improvements (including data analytics
• and reporting)
• Operational process improvements
• Gain alignment with key stakeholders

There are options with cognitive technology — artificial intelligence (AI), robotic process automation (RPA) and natural language processing (NLP), for example — you can consider replacing current processes. This may include robotic processes to respond to insurance/third-party requests to improve timeliness and follow-up in claim resolution.

3. Establish goals and objectives.

A proper process must begin with establishing written goals and objectives (e.g., productivity, quality, cost savings) to make decisions around outsourcing the right activities.

4. Determine criteria.

State your criteria to accurately reflect your desired outcomes. A decision to completely outsource the revenue cycle might include functions such as billing, collections, denials, bad debt and cash posting functions. It is important to weigh the pros and cons of each area based on your current situation. Determine criteria for each area, facts and risks.

5. Weigh your criteria to help make decisions.

Use a scale of 1 to 10 based on importance and level of risk.

Pre-planning for outsourcing considerations

• Assess current state and determine areas/functions that your organization might consider outsourcing. Determine if internal centralization is an option to improve efficiencies.
• Make decisions with organizational leadership to ensure support and to determine constraints related to time, money, resources and scope. This might include forming a steering committee.
• Develop and complete analysis for ROI including vendor fees, software expenses, monitoring/internal staff required versus cost to retain in house. Identify roadblocks, time and resource constraints.
• Identify the area/department and further conduct research to clarify and define the description and scope (e.g., exactly what does this entail (e.g., all or partial, etc.).
• Determine if AI, robotic processes, etc., can be used in place of outsourcing options.
• Determine if the option for outsourcing includes off-shore vendors/resources.

Hitting a home run

Making the decision to outsource is never easy. To make the best decision to outsource, you should include the following steps in the process:

• Clearly state the decision to be made
• Define your criteria/standards/benchmarks
• Make sure your criteria are quantifiable and measurable
• Define deal-breakers
• Do not rush into a decision

Too often expectations of the vendor/service provider and client are mismatched and poorly communicated. This pitfall can be avoided if goals and objectives are clear from the beginning, proper metrics and measures are in place, and communication is transparent and frequent.

Early in the process, it also helps to develop a budget to evaluate costs and define a good return on investment (ROI). Since no organization is absent of politics, what are the sacred cows (and other assumptions we don’t talk about)?

• Are there managers or staff who must be guaranteed employment?
• Is there a lease that cannot be broken because a board member owns the building?
• Must certain technology remain in place because too much has been invested?
• Where are the guardrails, and what could derail the outsourcing process?

It is best to deal with these issues up front and set the guardrails where they make sense.

Game plan

Be prepared when you leave the dugout. Assess current state and determine functions/areas that your organization might consider outsourcing. Determine if internal centralization is an option to improve efficiencies.

Like baseball, healthcare is very competitive. If you are going to win the pennant, it is important to consider all your options.