Is RCM Outsourcing Right for Your Medical Practice?

Sources, like the Black Book survey, report that providers of all sizes are considering outsourcing their revenue cycle management (RCM). The reasoning is straightforward: Medical billing is changing so fast, it seems harder for an individual medical practice or even a single hospital to profitably manage it in house; new payment models are only increasing the need for upgraded technology; and ICD-10 is looming later this year. These trends make outsourcing medical billing very appealing, and the trend shows no sign of waning soon. But how do you know if it's the best move for your practice or organization?

In our consulting business, this question comes up in virtually every one of our engagements. It seems to be on the mind of every physician and practice administrator. However, the answer is not the same for every practice, or even every specialty.

One reason the decision is not cut and dried is that better billing technology is now within reach of smaller practices. Cloud computing has helped heat up competition and innovation in the medical billing and practice management software category in recent years. You no longer need to use a billing service in order to switch software or tap into the best technology platforms. Many of the most versatile solutions are easy to implement and attractively priced, and many are even designed for smaller practices. Upgrades to cloud-based systems also are typically easy - usually just a brief download of updates before you log in. It's also often possible to integrate your billing with your EHR to increase billing speed and accuracy. Best of all for customers, the competition in this category keeps the pressure on these vendors to continue to improve and to keep up with all of the insurance and regulatory changes that affect their clientele.

Three important factors

When we help practices decide whether to outsource or manage billing in house, one of the first questions we ask about is talent. Has the practice tried to recruit qualified billing talent? Are desirable employees hard or easy to find? If the qualified employees you'll need to run your billing aren't easy to find in your area that alone may favor outsourcing.

Another important variable is your specialty. If you're in a relatively rare specialty with unusual coding needs or payment programs, you may prefer in-house talent to deal with your payers - not just for day-to-day billing, but for negotiating contracts, too. Outsourcing has historically been easier to implement for primary-care practices, but new payment models emphasizing care coordination may mean that primary-care billing will require more specific skills. You may find that an in-house expert or team is necessary to ensure you comply with and are fully compensated under value-based payment models.

Smaller practices - solo practices and practices with two or three providers - are most likely to feel that outsourcing is the most sensible option. But even solo practices have choices. Sometimes, a contractor can be shared between two or three practices located near each other. This can be a way to outsource without losing personal attention, while retaining some of the advantages of an in-house biller.

Taking advantage of the new billing climate

This spotlights another big benefit of the increased competition and innovation in billing software: It's enabling billing services of all sizes to offer better technology and better service. Entrepreneurial billers can strike out on their own and offer a great billing platform to their clients for a relatively small monthly fee. Larger services can offer multiple platforms easily and affordably. Technology improvements make it easier for practices to keep billing in house, but can also make their outsourcing options more appealing. For example, a billing service offered by a software vendor may offer the practice an opportunity to have a voice in specifying new features.

Perhaps the best thing about the current environment is that it's easier than ever to implement a solution that's just right for your practice, whether you ultimately decide on an in-house team or a billing service.

Whichever option you choose, remember that the revenue cycle is not just your biller's responsibility. With most patients now responsible for a big chunk of their healthcare costs, every front-office job overlaps at least a bit with billing. Your staff's ability to secure patient payments confidently will make all the difference in your practice's profitability and your patient relationships. Even if you decide to outsource billing, your in-house staff members are a part of your revenue cycle team; even if that's only part of what they do.

You must manage a third-party billing service with the same diligence you would with employed staff. Good communication between your front desk, providers, and billing will enable you to collect all the revenue your practice has earned - whether billing is in house, handled by a contractor down the street, or managed by a service in another part of the country.

Laurie Morganis a partner and senior consultant for Capko & Morgan, with experience in marketing, business operations, and strategic consulting. She is also the author of the Management Rx series of e-books, offering practice managers and physicians a more accessible dose of business knowledge to read in one sitting. She can be reached at lmorgan@capko.com.