30% of Hospitals Use Two or More Revenue Cycle Management Vendors

Many hospitals and health systems are relying on a multitude of vendors to automate various aspects of revenue cycle management, according to a new survey.

Approximately 30 percent of healthcare finance leaders polled through the Healthcare Financial Management Association's (HFMA) Pulse Survey program for Alpha Health said their organization uses two or more vendors to handle parts of the automation process in the revenue cycle.

Of those respondents, nearly 20 percent use two vendors with one handling multiple parts of the automation process, while about 5 percent use three vendors that each handle a different aspect and 5 percent use four or more vendors to fully manage revenue cycle automation.

Just over 38 percent of respondents said their organization uses just one vendor for all automation steps in the revenue cycle and 31 percent have an internal team dedicated to automating revenue cycle management.

Hospitals and health systems with internal teams tended to be larger, with over three-quarters (76 percent) of these organizations generating $1 billion or more in net patient revenues.

Smaller organizations were less likely to have an internal team dedicated to revenue cycle automation – 34 percent with less than $500 million in net patient revenues and 26 percent with $500 million $1 billion in net patient revenues – and more likely to use one or more vendors.

Approximately 60 percent of hospitals and health systems with less than $1 billion in net patient revenues use one vendor to automate revenue cycle management, including nearly 49 percent of the smallest organizations by net patient revenue and 52 percent of the mid-size organizations.

Meanwhile, almost 10 percent of the smallest hospitals and health systems and 22 percent of the mid-size hospitals and health systems use two vendors.

Notably, no mid-sized hospital or health system uses three or more vendors, while three vendors were used by 2.4 percent of the small organizations and four or more vendors by almost 5 percent of the small organizations.

Revenue cycle automation has been a challenge for the healthcare industry. A survey from June 2019 found that just one-fifth of hospitals and health systems have more than a quarter of their organization’s financial and revenue cycle operations fully digitized or automated.

The majority of respondents said less than a quarter of their finance and revenue cycle operations were automated, while 30 percent had none or close to none of the transactional work digitized in the recent past.

Automation within the revenue cycle can be a challenge because of the complexity of the process. However, automation can reap big rewards for healthcare providers.

Technology has the potential to boost waning margins after the devastating impact COVID-19 had on revenues the past year, according to some healthcare finance leaders. Meanwhile, revenue cycle automation has also been linked to faster patient collections, less administrative burden and cost, and better claims management.

For these reasons and more, the revenue cycle was named one of the top areas in healthcare ripe for innovation and disruption.

But whether organizations rely on a vendor or an internal team for revenue cycle automation, leaders should consider the three steps, Alpha Health stated. Those steps include observing and documenting workflows, programming technology to perform the work as documented, and maintaining the solution as inputs and variables in specific processes change.

“Many automation technologies, such as robotic process automation (RPA), were originally developed for other industries and purposes. Trying to retrofit these solutions to healthcare revenue cycle operations can result in unnecessarily complex deployment processes. This also requires significant investments in maintenance resources, whether those be multiple vendors or entirely new internal automation teams,” Ben Beadle-Ryby, co-founder and vice president of operations at Alpha Health, said in the press release.

Fortunately, artificial intelligence, machine learning, and other advanced analytics are evolving for healthcare finance and revenue cycle management teams. Additionally, the revenue cycle management market is poised to grow significantly and predicted to surpass $135.1 billion in the next decade.