Revenue cycle management sector expected to boom
The task of revenue cycle management (RCM) will be one of the fastest growing segments of healthcare delivery in the coming years, but hospitals will likely outsource it more often, Becker's Hospital CFO has reported.
The RCM market is expected to grow at a compounded annual rate of 7.2 percent from 2014 to 2019, according to upcoming data from MicroMarket Monitor.
But Hospital CFOs are under increasing pressure to outsource the business in order to ensure it is both competently run and saves money for the organization, according to data from Black Book Market Research.
"After carefully identifying and assessing their organizations' core competencies, hundreds of hospitals have moved to outsourced RCM services over the last two years," Doug Brown, the managing partner of Black Book, said in an announcement. "It has been no surprise that many overwhelmed hospital leaders have realized that RCM isn't their organization's core competency, and have turned to large end-to-end outsourcing firms for RCM to refocus on patient care and clinical service delivery." Indeed, many hospitals recruit top executives with experience other than in finance.
The market is enormous for potential bidders to hospitals: Black Book estimates it is currently worth about $7.7 billion, but it could grow to nearly $10 billion by next year.
The bottom line results appear to be driving that trend: More than 80 percent of hospitals fewer than 200 beds reported that they experienced revenue increases in 2014 as the result of outsourcing, with growth averaging 5.3 percent. The average growth was even higher among larger hospitals.
However, some hospitals appear to turn the equation on its head. The most recent example would be Brigham & Women's Hospital in Boston, which last year created its own unit to provide consulting services to other hospitals--as a way to boost its revenue. And hospital system Dignity Health in California moved in 2013 to create an RCM business in conjunction with Optum Health.
Brigham & Women's turns to consulting to boost revenue
Hospitals seek leaders with finance--not healthcare--experience
Many CFOs at struggling hospitals expect to lose their jobs
Dignity Health, Optum form revenue management cycle firm