Cost of Revenue Cycle Management services in 2023

How is the cash flow in your medical practice these days? Or, to put it strategically, how is your revenue cycle management going? 

During the coronavirus pandemic, medical professionals across the healthcare industry have seen a decrease in patient traffic and, as a result, patient payments. Some people avoided and are still avoiding enclosed spaces, including doctor’s waiting rooms, out of fear of infection. That has caused practices to reconsider the costs of revenue cycle management. 

But, even before the current health crisis, you must have considered outsourcing revenue cycle management to a third party. If you’re dissatisfied with the efficiency of your current revenue cycle management setup, it might be time to consider outsourcing this critical component of your business.

Most medical practices base their decision to outsource billing on a single factor: cost. Consider the cost of healthcare revenue cycle management services to gear up your team for a possible change. 

Your RCM is costing you more than just your money.

Many practices delegate medical billing to concentrate on their core competencies. The plan is to spend more time diagnosing and treating patients. You can redirect staff energy away from the intricacies of billing by outsourcing. 

When you consider the critical tasks associated with revenue cycle management and the amount of expertise required on staff to handle them, outsourcing becomes appealing. Eight billing tasks require critical staff attention. A third party would most likely be able to handle them more proficiently than your team:

• Eligibility verification
• Fill Out Patient Demographics in Records 
• Charge Entry
• Claim Submission 
• Payment Posting
• Scheduled follow-ups to secure the payment
• Denial Management
• Complete Reporting 

Each task takes a different amount of time and is difficult to calculate. Consider employees waiting on hold to confirm that a patient is currently insured. A significant amount of staff time is spent keeping track of unpaid bills and determining which bills have been pending the longest.

There are numerous other details to be worked out along the way. Before services are rendered, for example, your staff must ensure that patients understand their financial obligations. Then, some patients require bill reminder notices. Later on, you switch to sending out-of-date bills to collections. Such tasks consume an increasing amount of your valuable time. 

Pricing issues and the potential for revenue growth 

Your practice is correct to be concerned about the increase in overhead expenses if you outsource billing. That can be attributed to apprehension about the unknown. However, investigating and comparing such things is trivial.

When paying a third party to handle payments/billing sounds expensive, it is usually less expensive than having an internal billing department. With internal billing, you pay not only your billing employee’s salaries but also their healthcare, taxes, training, and supplementary office costs.

Not only are practices paying for poorer quality billing, but work is also less precise when done in-house rather than by experts. A billing services company may not ask for a signup fee. However, you should budget around $300 for each doctor on staff. 

If you have a large office with multiple doctors, the RCM services cost with an outsourcing company may be a flat fee, such as $1,000 per office. Then there are the administrative costs. They typically range between $3,000 and $6,000. Administrative fees are determined by the size of your practice and the number of patients you see each year. 

You can pay a flat fee based on a percentage of the collected patient service revenue for claims processing. When you outsource revenue cycle management in medical billing, keep in mind that your income should increase rather than decrease.

Even if you are paying any amount in fees now, the decreasing percentage of unpaid insurance claims should more than compensate. According to Medical Billing Service Review, practices pay about 5% to 10% of the money collected. Capline Healthcare Management, however, charges 4% for the same.

When we look at the big picture, healthcare organizations spend much more on their in-house billing than they would typically spend on outsourcing. This is not just it. The estimated in-house collection is around 60%, which goes up to 90% when outsourced. The difference in net cost between in-house and outsourced RCM  is a lot, with outsourced RCM clearly taking the lead.

Remember that an RCM company will devote its entire time to billing. As a result, they will also experience lower employee turnover than doctors’ offices. Furthermore, their billing professionals will benefit from regular, ongoing training and increased levels of expertise.

Getting Ready To Outsource RCM Services 

The decision to outsource your healthcare practice’s insurance billing to a third party requires careful thought. The question is whether it will improve the bottom line over keeping the services in-house.

Capline Healthcare Management has assisted hundreds of new healthcare organization clients in transitioning from their existing services and systems to better and more efficient platforms. We have helped hundreds of practices grow, and you can be next.