What You Need To Know When Choosing A Partner To Negotiate Revenue Cycle Vendor Contracts

by | Jan 3, 2023


Revenue cycle operations have become increasingly expensive and challenging to manage. According to the American Medical Association, 25 – 30% of the country’s total health care expenditures are direct transaction costs and inefficiencies associated with the “claims management revenue cycle.”[1] Outsourcing can be an effective way to mitigate the cost to collect while reducing the burden on limited hospital resources. But achieving a positive return on these relationships begins before the contract is signed.

64% of hospitals report being unsatisfied or unsure of their vendors’ performance.

Positive and effective vendor relationships play a vital role in helping hospitals reduce costs and maximize reimbursements while improving the patient financial experience. As hospitals are being asked to do more with less, identifying the best vendor partners and negotiating the most favorable terms can be challenging. Collaborating with industry leaders can put healthcare providers in a position of power and improve efficiency in the vendor selection process.

The best sourcing and negotiation partners:

1.) Understand the power of having a game plan and that have the expertise to help you build it. This starts with identifying what a win is for your organization. Anyone can negotiate a cheap contract, but that doesn’t guarantee you’ll end up with a best-fit revenue cycle vendor that stands the test of time. In fact, when a win is solely determined by price, you can almost guarantee you won’t receive the greatest return on that investment.

2.) Have strong industry knowledge and insights into things like vendor-specific SLAs, regulatory compliance capabilities, as well as each vendor’s full suite of offerings. This level of specialized vendor information is critical to negotiating from a place of strength.

3.) Value communication; not just with the negotiating team, but with all stakeholders in your organization. This can be especially challenging in large health systems with many layers of management. A single ill-informed person can derail the entire negotiation process. The right negotiating partner understands this and will have proven methodologies to keep everyone on the same page.

4.) Have a high level of negotiation acumen. The best partner understands the importance of remaining cool, how to react to a called bluff, and the power of silence. These qualities can only be learned over time. While you may very well have experienced negotiators on staff, it’s unlikely they have the same level of expertise as a specialized partner that has delivered hundreds of wins over the years. Finding the best revenue cycle outsourcer and ensuring the most favorable terms takes a level of finesse that can’t be learned from just a handful of negotiation experiences.

5.) Possess integrity. You should avoid any partner that uses dishonest or misleading practices that create a win-lose scenario between you and the revenue cycle vendor. True relationships are built on trust. Employing underhanded tactics during negotiations sets the relationship off on the wrong foot and will do little to build a strong, longstanding, trusting partnership.

Success Story
Monument Health, a part of the Mayo Clinic Care Network, is located in Rapid City, South Dakota. It is a community-based healthcare system serving 20 communities across western South Dakota and eastern Wyoming. Regional Health offers care in 32 medical specialties, has more than 4,500 physicians and caregivers, and is comprised of 6 hospitals, 28 specialty and surgical centers, and more than 40 medical clinics and healthcare service centers.

Monument Health had recently completed a conversion to EPIC and needed a way to maximize financial performance to offset conversion costs. They decided to outsource portions of their revenue cycle to help fill gaps in internal resources and to improve collections, but they needed a way to ensure they were getting the most out of those vendor relationships.

Monument Health chose to partner with Healthfuse, the industry leader in vendor sourcing and contract negotiation. Healthfuse identified and renegotiated Monument’s above-market vendor contracts, and updated service-level agreements reflective of the needs of Monument Health.

The results were impressive. In less than 4 years, Monument Health achieved:

$8.5M in contract savings

Furthermore, Healthfuse performed account-level audits on 100% of placed accounts and scrubbed 100% of vendor invoices to help ensure accounts were being worked appropriately and stop inappropriate or duplicative fees from occurring, which resulted in:

• $135M in collections improvement
• $1.3M in additional net revenue by implementing new initiatives
• $525K in invoice recoveries

Healthfuse Vendor Management Program:
As self-pay accounts continue to soar, the role of collections vendors becomes increasingly important to health systems of all sizes. Today, nearly a third of hospitals employ between ten and 15 vendors, with the largest majority spending between 21 – 30% of their revenue cycle budget on those partnerships.[2] However, all vendors aren’t created equal, and hospitals need to be extremely diligent in their evaluation and choice of collections partners.

With vast visibility into vendor pricing, SLAs, service and product summaries, and hospital-specific results, Healthfuse can match the right vendor to each hospital’s unique needs. In addition to negotiating new contracts, Healthfuse can analyze noncompliance among existing contracts and identify vendor contracts that should be renegotiated. Healthfuse helps clients increase net revenue, reduce costs, and achieve optimal return on their outsourcing investments.



[1] https://www.beckershospitalreview.com/pdfs/April_30th_Saturday/1115_F_Dahmen_Denials%20Management%

[2] https://www.healthcarebusinessinsights.com/wp-content/uploads/2017/10/HBI-Fall-2017-Member-Retreat-Vendor-Management-with-Healthfuse.pdf?x34219