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In recent years, the healthcare industry has undergone a number of significant alterations. As noted by a CNN report, thousands of jobs remain unfilled due to staffing shortages. Based on a report from decision support and financial planning company Strata, days of readily accessible cash sank 28% from January 2022 to June 2023, and volatility rocked accounts receivable  with, at one point, a staggering month-to-month of $14,300. According to revenue-cycle analytics company Kodiak RCA, initial claims denials jumped from 10% in 2020 to 11.8% in 2024. Changes like all of the aforementioned have added to the already challenging task of revenue-cycle management (RCM).

As noted by Vice President and General Manager of revenue cycle services at healthcare technology solutions company Veradigm, Janet Boos, RCM provides a timely, efficient, and precise means for healthcare organizations to collect payments. Not only does this ensure their financial well-being, it also saves physicians from having to take time away from patient visits for RCM. Rather, physicians can maintain their top priority of providing quality patient care, while their organizations can employ technology to manage operational tasks such as billing. Boos adds that occasionally, this requires hiring a third-party vendor to implement a revenue cycle solution (RCS).

Regardless of whether a third-party vendor is involved in the process, efficient RCM is essential for healthcare organizations to provide quality care, improving health results for patients and their communities. It stands to reason, Boos notes, that RCM inefficiencies might yield poor quality of care and could ultimately prove devastating for a physician, both professionally and financially. Boos urges physicians to be aware of certain obvious signs that indicate when a healthcare organization should consider outsourcing its RCM processes, such as falling or stagnating revenues, rising claim denial rates, technological limitations, and staffing difficulties.

Global management consulting firm IMARC Group points out the fast-growing trend of RCM outsourcing, which was valued at $27.8 billion in 2023 and is projected to increase upwards of 15% each year, climbing to almost $103 billion by 2032. According to Boos, benefits of outsourcing RCM include improved health results, increased cost savings, and improved compliance. Patients will report having better experiences with physicians, physicians can cut costs by no longer having to spend on expensive billing software, and physicians can steer clear of financial and professional harm.

Nonetheless, Boos does add that outsourcing is not a one-size-fits-all solution. For instance, a KLAS study concluded that 33% of healthcare organizations were unhappy with their decision to outsource. A Crowe report linked outsourcing with both increased claim denial rates and slower collection times, as compared with in-house RCM operations. Boos points out additional outsourcing concerns, such as handing over control to a third-party, sharing an abundance of sensitive data with an outside company, and heavily relying on a third-party entity that may experience its own financial challenges.

Although no solution is without risks, Boos ultimately recommends outsourcing RCMs, stressing the importance of finding the best partner, along with the right technology. Physicians need to ensure that any third-party vendor can satisfy their specific short-term and long-term needs. Boos suggests asking potential vendors questions about how many physicians they work with, their RCS services history and experience, the kind of payment volume they are equipped to manage, and their customers’ key performance indicators. In the end, notes Boos, a quality vendor will have a track record of success, an effective infrastructure, and the ability to tailor solutions to meet each specific provider’s needs. All in all, Boos emphasizes that such a vendor would enhance human expertise with technology.