Leveraging Outsourcers To Improve Agility in Difficult Times

by | May 20, 2021

As states begin canceling COVID restrictions and work their way toward a new post-pandemic normal, hospitals across the country continue to lose revenue at an alarming rate. In our last blog, we addressed the importance of remaining agile during difficult times. This blog will focus on the role of outsourcers in helping improve agility by streamlining revenue cycle processes. But not all vendors are created equal, and achieving a positive ROI can be challenging.

Vendor noncompliance

Healthfuse research has found that 64% of hospitals are dissatisfied with, or unsure about, their vendors’ performance. That’s a lot of uncertainty considering $30 billion is spent each year on outsourcing. Our analysis spanned 91 facilities in 29 states and included comprehensive data from more than two billion hospital accounts, which equates to 8.31 million unique guarantors. We found that more than 50% of early-out and self-pay vendors were noncompliant in best practices, SLAs, or regulatory requirements.

In times like these, hospitals cannot afford underperforming vendors. Following are four key capabilities hospitals should insist upon when partnering with a revenue cycle outsourcer.


We surveyed more than 2,000 hospital revenue cycle leaders and discovered that 91% relied on vendor-generated reporting to assess performance. This presents a problem since vendors use their own methods for tracking and measuring results, and those results are typically skewed in the vendor’s favor. Hospitals would never put patients at risk by hiring a physician without checking credentials and past performance. Yet, they put their revenue cycle at risk by blindly accepting their vendors’ self-reported performance information without the data to support that assessment. In times such as these, hospitals can’t afford this level of financial ambiguity.

Transparency in your vendor relationships is critical to remaining agile. It’s difficult to identify issues and opportunities for improvement without insight. As part of this effort, hospitals should review all accounts through biweekly audits. Having this ongoing stream of real-time data allows revenue cycle leaders to proactively identify underperforming vendors. For example, when accounts appear to be stagnant, it’s a good indicator that they aren’t being worked appropriately or that they’re being turned over to bad debt too soon. When this happens, hospitals increase their cost to collect while losing out on revenue that should have been collectable.


The antithesis of agility is manual processes. Revenue cycle vendors, no matter how long they’ve been around, should be using the most up-to-date automation technology available. If a vendor lacks the technology necessary to increase efficiencies and reduce costs, you have to wonder why. They could be trying to hide their own inadequacies. According to our analysis, more than 20% of accounts placed with vendors are aged beyond 120 days. Without the right technology, hospitals may never discover the issue, losing millions in receivables. Just like claims scrubbing software is used to detect errors before submission, auditing software continuously monitors a hospital’s systems to detect issues with a vendor’s activity files. This technology can uncover issues such as rules violations, duplicate fees, accounts being placed with more than one vendor, or accounts not being worked. Vendors should embrace revenue cycle technology to help them improve processes and, thus, their value to their provider clients.

Patient-centric processes

The revenue cycle of today is vastly different from even a few years ago. Gone are the days of seeing a patient, collecting a small co-pay, and billing the payer for the rest. Today, patients are responsible for more of their healthcare costs, and they want the same types of interactions with their providers as they have with retailers. Surveys have found that 65% of consumers say they would change providers if it meant a better financial experience.[1] The best vendors understand that each patient encounter reflects the hospital’s brand reputation and, as such, ensures all patients are treated with dignity and respect. They embrace the hospital’s culture as their own and conduct regular call audits to ensure compliance.

These patient-centric processes should also include capabilities such as patient responsibility estimations, customized payment plans based on the patient’s unique financial situation, digital payment options, and billing statements that are easy to understand. When hospitals and their vendors make it easier for patients to pay, it enhances the patient experience and ensures hospitals maximize patient pay revenue. Achieving optimal collections is essential for hospitals in their recovery journey.

Process improvement

Hospitals often have vendor relationships that last for years or decades. Trust and familiarity build up over time, and there can be a hesitancy on the hospital’s part to confront the vendor about lagging performance. However, most vendors don’t want to risk losing a long-time client, and they’ll do whatever they can to meet expectations, including remediation with a third party. Having an unbiased third party manage the remediation process can help alleviate some of the discomfort that comes with confrontation. Plus, third parties have a level of remediation expertise hospitals typically lack, as well as proven methodologies to achieve the most favorable outcomes for both the hospital and the vendor. These methodologies should include setting clear expectations and establishing benchmarks and KPIs. The three parties then work together to design improvement strategies aligned with the hospital’s needs and the vendor’s capabilities.

The path forward

Hospitals face a great unknown right now. It’s hard to pinpoint exactly how long recovery from the pandemic is going to take. Outsourcing all or parts of the revenue cycle can alleviate much of this burden and improve a hospital’s ability to remain agile in what might be a very long process. It’s critical, however, that hospitals choose vendors who align with their needs and values, who embrace technology and process improvement, and who understand the importance of providing a positive patient financial experience.

[1] https://www.instamed.com/blog/trends-in-healthcare-payments-eighth-annual-report-2017/

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