We outsourced our Revenue Cycle – time to get to work!

Becker’s recently interviewed a CEO who outsourced IT and Revenue Cycle services to Optum. He noted one of the key takeaways: “By no means is the partnership perfect, and there are still friction points that we continue to work through to get to the ideal future we envisioned going into it.”

Several things stand out in this brief statement. First, his organization had the foresight to define an “ideal future state” before they embarked on their journey. Many clients are frankly “over it” with the constant challenges encountered in Revenue Cycle (as well as IT) and look at outsourcing as a means to “hand it off” to someone else to manage for them. If your ideal future state is simply someone else will deal with these functions without your input and direction, your future will be far from ideal. Second, he acknowledged that outsourcing is a partnership, not a transaction with a vendor. Treating outsourcing as a transaction versus a relationship will also lead to a less-than-ideal future state.

Several vital points distinguish a partnership from a transactional relationship. One of the most important is regular communication. Your outsourcing partner needs to know both your initial expectations and the evolving needs and expectations as you and your partner deal with the ever-changing healthcare landscape. This communication must happen at several levels, typically beginning with the day-to-day interaction between your outsourcer’s onsite manager and the leader you have tasked to manage the outsourcing relationship. It culminates with regular (at least quarterly) meetings of a structure like a Joint Review Board (JRB) that includes the top executives from both sides of the partnership.

The agenda for the JRB meetings should be a combination of key performance indicators, status updates on key initiatives defined for each party, and a review of any potential contract amendments required to support operational or other changes. Organizations that fail to keep the contract documents current and relevant can find themselves in difficult situations if/when outsourcer executives change and their successors begin managing only to the terms of what they are contractually mandated to perform.   With the typical outsourcing terms being at least 5 to 7 years, there will be a whole host of changes (added staff provided by the outsourcer, tighter Service Level expectations following new technology support, etc.) implemented that were not foreseen in the original contract documents.

The final aspect of the JRB should be a clear and objective review of the successes and failures of the partnership. The day-to-day leaders rarely get a chance to reflect on these. Still, their inclusion in the JRB agenda, which they have to primarily prepare, helps provide the opportunity to develop these perspectives. Such realistic review allows the client to determine when performance is such that contract bounds are exceeded and remediation and/or termination options should be pursued.

Outsourcing can provide a myriad of benefits to clients who are seeking to focus on their core operations versus required administrative tasks. These include:

  • Lower labor costs
  • Access to specialized expertise
  • Increased efficiency
  • Improved customer service
  • Increased flexibility
  • Reduced risk
  • Access to new technology and innovation

However, it is essential to note that outsourcing also has some potential drawbacks, such as loss of control over the outsourced function and the need to manage the relationship with the provider. It is important to consider the pros and cons of outsourcing before deciding.

Carefully considering your reasons for outsourcing, your ideal future state once outsourced, and investing the leadership time and attention to the outsourcing partnership will create the best environment for outsourcing success.

About The Author

Pat Wulf has worked in revenue cycle for over 30 years. His experience includes co-developing the business plan and becoming the COO for one of the first “end-to-end” revenue cycle outsourcers.   Since founding Health Care Program Advisors, Pat has consulted for Accretive (now R1) and Optum 360 in their early development and initiating services to their clients.  He has provided advisory service to several clients in both initial negotiation and the termination of their outsourcing agreements and worked with many on enhancing their partnerships with their outsourcer.