Outsourcing Revenue Cycle Management: 3 Lessons Learned

Leaders at Hutchinson Clinic share their experiences on outsourcing revenue cycle management processes to ensure the success of the organization.

Running an effective revenue cycle is no easy feat. That is why leaders at Hutchinson Clinic in Hutchinson, Kansas, knew they had to outsource some of its revenue cycle processes to ensure the success of their organization.

There are many areas within the revenue cycle that benefit from being streamlined, from better patient access to less coding denials, but one area of focus that is becoming more common is the need to reduce accounts receivable days in the billing department. Outstanding accounts receivable in healthcare are one of the most critical issues for an organization as they affect a hospital's bottom line.

Common benchmarks for accounts receivable days in healthcare include:

• High performing: 30 days or less
• Average performing: 40 to 50 days
• Below average: 60 days or more

As the accounts receivable days for Hutchinson Clinic were hovering around average, Mike Heck, CEO, and Dashun Monk, CFO, knew the organization needed to reduce these days and rework the management of denied claims, among other inefficiencies, in order to prosper.  

After brainstorming, their team realized that having an experienced, outsourced group of professionals working behind-the-scenes to handle the complexities of revenue cycle management was the missing piece that Hutchinson Clinic needed.

Heck and Monk recently spoke about their journey as leaders at the largest multispecialty clinic in Kansas and the three lessons they learned in enlisting a third party to help with its revenue cycle management.

Lesson 1: Realize the need for revenue cycle management expertise

Hutchinson Clinic is home to 535 employees, 63 physicians, 95 providers, and over 30 outpatient specialties. These include specialty ancillary services such as an ambulatory surgery center, physical therapy, radiology/diagnostic imaging, endoscopy center, and dietitian services.

Despite a culture at Hutchinson Clinic known for its convenience and patient satisfaction, there remained one lingering problem: a lack of an experienced revenue cycle management team that could ensure that basic financial responsibilities were being met efficiently and correctly.

In 2018, after a year of research and extensive interviews with third-party vendors, Heck and Hutchinson Clinic's board of directors brought on CareCloud (the parent company of Meridian Medical Management) to help with a variety of deliverables, including:

• Accounts receivable follow-up
• Charge entry
• Claims coding
• Denial feedback on coding
• Patient posting
• Physician education

"To me, it came down to leadership," Heck said. "We needed the right level and technical ability of leaders in the revenue cycle management arena. We couldn't establish consistency before they came on board."

Once Hutchinson Clinic's new revenue cycle management team ramped up, the positive results were seen fairly quickly across the board.

"Aside from the fact that we have drastically improved the financial stability of accounts receivable, the biggest benefit that I didn't foresee has been the ability to apply a larger trained workforce to certain projects," Heck said.

In addition to outsourcing an experienced and robust staff, Hutchinson Clinic introduced a healthcare analytics and business intelligence platform. The technology is used to manage data across the organization, which in turn, closes care gaps, increases revenue, and improves overall workflow within the organization.

Lesson 2: Keep patient experience in the forefront

While having an experienced partner was one piece of the puzzle, equally important to the Hutchinson Clinic team was the ability to find which methods worked the best for the organization internally, while still working to improve the patient experience.  

The clinic has a team of roughly 60 in-house revenue cycle management employees who needed onboarding and training before all processes could be improved. At the same time, Heck was adamant that this process didn't disrupt continuity of care for the patients stretched across Hutchinson's large geographic footprint.

"The beauty of working with a partner like this is that they're handing all of the heavy lifting behind the scenes, enabling us to focus on patient engagement, provider recruitment, and retention," Heck said. "We've recently seen a positive response from the community as a result."

Being that Hutchinson Clinic is the primary source of care for those in Reno County, it's imperative that patient engagement is at the head.

"We see quality care and patient satisfaction as our number one responsibility," Heck said. "Having a stable revenue cycle management ensures that bills are getting out the door and payments are being made, which frees our team up to focus on other areas."

Echoed Monk, "I have peace of mind knowing that our revenue cycle, specifically the coding, accounts receivable, and posting components are happening correctly and in an efficient manner."

Lesson 3: Listen to staff and community stakeholders

Making an important change in revenue cycle management has a large effect on everyone involved with an organization, and one thing Hutchinson Clinic says it has gained through this experience is the importance of knowing their audience. In the case of its current partnership, the audience is twofold: the staff and the patients in the community.

Letting staff and patients know that you are listening to their questions and concerns when implementing a large change such as outsourcing is any easy way to help aid in a positive transition.

"We didn't want to sacrifice what was important to us and our community," Heck said. "When we're talking to our physicians about their pain points, such as coding or compensation, it's important for them to know we're listening. Same goes for the patients—we need to be making their lives easier, not harder."

Seeing results

While bringing in a third-party vendor isn't viable for every organization, Heck and Monk say there are takeaways that can be applied from their experience to help other health system executives accomplish their goals. These include:

• Identify gaps. Every organization has areas they want to improve (e.g., reducing number of accounts receivable days, increasing cash flow).
• Ask for help. "Find a subject matter expert on revenue cycle management and don't be afraid to ask tough questions," Monk said.
• Change takes time. "It took us a year to identify a solution for outsourcing our revenue cycle management needs. It also takes time for a new partner to learn your language. Don't rush the process," Heck said.

Since outsourcing its revenue cycle management processes, Hutchinson Clinic has seen a reduction in accounts receivable days from 38 days to 33 days, thus shortening the time it receives payments from the insurance carriers. This five-day improvement of accounts receivable days is a 15% improvement for the organization. On top of this, the aged accounts receivable days of greater than 120 days has been reduced by 3% at Hutchinson Clinic.

"The processes put in place before outsourcing weren't moving us in the right direction," said Monk. "Today, we're meeting industry standards in terms of reducing accounts receivable days, ensuring doctor's compensation, and the efficient reworking of denied claims."