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RCM Outsourcing: 6 Signs It's Time to Outsource


Hospitals and healthcare providers have come to expect denials and reimbursement inaccuracies to rear their heads throughout the revenue cycle and medical billing process.

Mistakes and bottlenecks can particularly occur with more frequency during times of transition, such as the shift to value-based care.

However, during these transitions those with fully stocked medical billing teams and more resources may experience fewer bumps in the road to adoption. On the other hand, smaller community and rural hospitals may not be as insulated from change. Some of these facilities may choose to simply accept an increase in denials and payment shortfalls as their new reality. This perception is shortsighted and financially unhealthy.

Regardless of size or industry shifts, the judicious hospital CFO or Business Director knows that inaction is no solution to an ailing revenue cycle management.  Studies show that close to two-thirds of denials are recoverable and 90 percent of denials are preventable. In fact, even the smallest, most remote facilities can achieve a lower percentage of denials.

Many hospitals have discovered complete or partial outsourcing of their RCM as a financially savvy way to help ease the transition to value-based care. Some have also found that working with a third-party RCM vendor can come with added customer service benefits.

How do you know if outsourcing your RCM is the right move? The first step is recognizing your problems.

How to Know You Should Outsource Your RCM: 6 Signs

  1. Incomplete registration and collection worklists: Ignoring eligibility flags, not asking for money upfront, obtaining authorizations for services, capturing complete patient insurance information, or following up on claims. If worklist items are overlooked or incomplete, RCM can fail before the process has a chance to get started.
  1. Consistent drop-off in revenues: New staff, additional training, new processes, cashflow-to-net revenue ratios keep decreasing. Maintaining a high credit balance in accounts receivable can also work to sustain a downward trending revenue stream. Another sign to look for is consistent underpayments from insurance payers
  1. Inability to provide price transparency: Patients are consumers. Like your typical consumer of goods, over 92% of patients want to know out-of-pocket costs upfront. A patient surprised by costs is likely to become a patient slow to pay.
  1. Inability to receive patient or insurance payments electronically: In a tech-forward, consumer-driven marketplace, paper-based payment systems not only breed inefficiencies, but can also increase the likelihood of documentation getting lost or stolen. Missing paperwork can hold up both claims and denials.
  1. Consistent coding errors: With codes changing quarterly and becoming more and more specific, an overworked medical billing staff, plus an outdated charge master or coding system, is a recipe for disaster at all levels of RCM.
  1. Long waits for claim payments: Claim bottlenecks and trouble payers keep you from getting paid. If claims are habitually not paid on the first pass and large gaps of time exists between care completion, billing, and payment, you need help.

3 Ways Outsourcing Revenue Cycle Management Can Help:

  1. Access to dedicated and experienced RCM specialists: A focused RCM partner has one job and one job only—verifying everything is in place and accurately recorded (contract management, eligibility, patient info, claims follow-ups, etc.) with the objective of making sure you are getting paid everything owed.

Many of these common issues arise simply because a hospital’s medical billing staff does not have the time to pay attention to minor day-to-day RCM tasks. Lapses in attention are especially tough for smaller hospitals. By outsourcing the more detail-oriented tasks, you can reduce many of the small errors that can cause big problems.

  1. Builds more visibility into RCM process: A dependable revenue cycle management partner will operate within the hospital’s own system. This level of transparency allows the hospital to see everything that is happening with every account, claim, and reimbursement. Along with regular reporting, this execution of outsourced RCM provides added confidence. Your partner can focus on performing due diligence necessary for you to get paid and stay compliant.
  2. Optimize RCM process. Revenue cycle management success is one-part human resources and one-part technology. By bringing in an RCM specialist to help ensure systems are properly setup and people are using them the way they are supposed to—link human and technology—hospitals can avoid medical coding and charge errors that lead to denials.

There are a variety of telltale signs that a hospital billing office may need the help of a focused revenue cycle management partner. The ones covered here are just a few of the most common and easily identifiable.

At times, finding the source of RCM issues may be challenging and take too much time from other critical RCM tasks. If you know you have problems, but do not know their root causes, bringing on a third-party to run an RCM audit is a wise first step.

Choosing the Right Revenue Cycle Management Partner

There is one key aspect a hospital needs to look for—partnership. The dedication, transparency, and optimization benefits of outsourcing RCM will shine through most powerfully if your vendor of choice approaches the situation as not only an invested specialist, but an extension of your team.

To experience that level of partnership and get your revenue cycle management on track to record breaking claims, connect with our experts at MEDHOST by emailing us at or calling 1.800.383.6278. Put our financial solutions to work for you, the facility, and the patient.

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