If having one vendor is good, then having two, three, or four must be better, right? Not when it comes to Revenue Cycle Management (RCM). A recent survey finds that the more vendors practices and hospitals use, the higher their claims denials percentage. When it comes to RCM in healthcare, it looks like too many cooks spoil the broth. In this blog, we explore why having too many vendors providing RCM services actually harms both practices and hospitals.

A recent HIMSS and Dimensional Insights survey found that 69% of healthcare organizations use more than one vendor solution for RCM, “and those organizations that do use more than one solution report larger issues with denials.” Using more than one medical revenue service does not clarify RCM issues — rather, it confuses an already complicated issue. Moreover, it does not improve the success of claims that deliver revenue — it achieves precisely the opposite and increases denials.

Why Are Healthcare Organizations Using More than One RCM Vendor?

The survey of 117 senior level decision makers (the majority in the C-suite) showed that the majority of practices and hospitals are using the wrong type of medical revenue service to begin with, necessitating their reliance on multiple healthcare revenue cycle vendors. Nearly 71%(70.9) of respondents are using their EMR (electronic medical record) system as their revenue cycle management (RCM) solution. EMR wasn’t designed as an RCM system — it’s a clinical system.

The Office of the National Coordinator for Health Information Technology defines EMR as “…a digital version of the paper charts in the clinician’s office. An EMR contains the medical and treatment history of the patients in one practice.” That is not a system that is going to provide accurate, detailed RCM data. Trying to make it generate any data for revenue cycle management is a bit like working a 20,000-acre farm with a rake and a hoe.

However, practices and hospitals are using EMR for RCM, and because of that, they need a lot of medical revenue service vendors to help extract data. The survey revealed just how many vendors practices and hospitals use:

  • EMR plus more than three vendors: 34.5%
  • EMR with one vendor: 12.1%
  • EMR with two vendors: 6.9%
  • Do not use EMR for RCM, three or more vendors: 11.2%
  • Do not use EMR for RCM, two vendors: 4.3%

The survey also revealed other core deficits in the way healthcare organizations are addressing their RCM. Here is an overview:

A lack of automation: 36.8% of respondents say that less than 25% of their revenue cycle process is automated using analytics.

An astonishing 12.8% of healthcare executives say they do not know what percentage of their RCM systems are automated.

In other words, at a time when practices and hospitals are struggling to maintain a positive bottom line in the face of crushing regulations and pressures to decrease utilization and costs, the one thing that can make revenue collection, analysis, and projections concrete is unknown to some healthcare executives. Automated RCM systems generate the patient information needed for accurate coding, precise billing, increased patient pay, and successful claims. Automated systems begin to collect data at the time of patient appointment and continue through billing and successful claims. To not employ automated systems is to throw RCM to the wind.

Denials are the biggest challenge: The survey found that the more vendors an organization used, the bigger their problems with denials. In fact, the highest rates were reported by hospitals and health systems that use their EMR for RCM and work with one or two other vendors.

More than 75% of executives said that denials were their biggest RCM challenge when asked, “What are your biggest challenges within RCM?”:

  • EMR with 3+ RCM vendors: 72.5%
  • EMR with 2 vendors: 100%
  • EMR with 1 vendor: 100%
  • EMR only: 76%

The right vendor will generate a higher percentage of successful claims. When denials are received, the vendor will appeal them within the payer’s designated window and track every step of the denial process until each denial becomes a successful claim.

It’s difficult getting data from different sources: Survey respondents indicated that data collection was a “big” challenge when asked, “How big of a challenge is collecting data from disparate sources for revenue reimbursement?” In fact, this question revealed a pervasive problem with RCM. Nearly every executive polled ( 97.8%) said collecting data from different sources is a challenge for revenue reimbursement.

  • 65.2% called it moderately challenging
  • 32.6% said it is extremely challenging
  • 2.3% said it is not a challenge

Having one RCM vendor becomes one source for accurate data. That data winds its way through every step of the revenue generating system until it becomes cash in the door. When one expert vendor is used, there is one source of accountability and one source that will doggedly track every successful claim.

Conclusion

The moral of the story is that EMR is not meant for RCM. Using it for that purpose results in sluggish data retrieval, missed information, and the increased cost of using multiple vendors. The solution is to use one vendor who is an expert in RCM for healthcare. When one vendor implements a comprehensive solution for prior authorization, insurance verification, coding, billing, and patient pay, claims are more successful, denials are reduced significantly, and revenue is increased. It’s a tightly woven web of precise data that generates more revenue. For many practices and hospitals, it’s time to put down the rake and the hoe and move on to modern technology that can streamline workflow and improve the harvest of revenue dollars.