Healthcare research group KLAS released a new report on 6/25/19: “Outsourced Revenue Cycle Services 2019”.  The report details interviews with 140 healthcare provider organizations (hospitals and systems) regarding their experience with outsourcing their billing, aka revenue cycle management (RCM) or as KLAS calls it – Revenue Cycle Outsourcing (RCO).

Following are some of the most startling findings from the report:

  1. One third (33%) of all providers regret their decision
  2. 70% of Cerner outsourced billing clients have buyer’s remorse

That fully one-third of providers who outsourced had buyer’s remorse is extraordinary.  This means they wished they had not done it.  Many billing service outsourcing companies have been declining in customer satisfaction in the last 2 years, including a 10% drop for Parallon, a 13% for nThrive, and a whopping 18% drop in customer satisfaction for Cerner RCM clients.

A staggering 70% of all Cerner interviewed clients stated they would not use Cerner’s revenue cycle management services again in the future.

A frequent issue identified and cited was that even if the vendor was underperforming, there seemed to be few consequences. There was also little or no billing or RCM strategy offered by most medical billing companies. In other words, no one was helping the providers figure out what to do to improve their financial results. Many felt like vendors were only working the low-hanging fruit and were insufficiently staffed, which has been an issue for probably all-time in this industry.

Good news

The KLAS report finds that many providers are in fact not only overall satisfied with their outsourcing, but that has specific positive comments for many different billing companies:

  • Navigant “partners with a flexible approach”
  • Analytics tools from R1 RCM drive satisfaction although there is limited data on this.
  • MediRevv has strong pre-engagement planning
  • PwC offers strategic guidance based on analytics insights.
  • MedAssist & HGS (limited data on this also) create transparency with proactive, detailed performance reports and regular review meetings

While this is sensational in the headlines, the majority are satisfied with the performance of their billing company.


Do you think these companies didn’t get references before engaging these revenue cycle management companies? How can you avoid the problems many of these facilities experienced with their billing company?

Can you put in the contract specific staffing levels if the issue is only working the low-hanging fruit or understaffing? You can certainly try, although how will you know at what level to set it? Moreover, a vendor may balk (and possibly legitimately) because if they are more efficient or productive than their competitors or your in-house staff, they will want to staff at an appropriate level or charge you more for excess staffing.

Transparency is critical, which can be accomplished with the help of an outside auditing firm like Apache Health. Checking to see if the vendor is meeting the SLA (contract) is essential. Ensuring contractually that claims are working in a reasonable time frame is an integral part of the SLA, which you can monitor.

Benchmarking Analytics

Wouldn’t it be nice to know how well they will perform prior to signing the contract?  Even Cerner with a horrific 70% buyer’s remorse rate can still find enough clients that are willing to be references that they can continue to attract clients if their primary vetting is via references.

It is possible to take data from a prospective revenue cycle management company and compare it to your current results and even compare it to other RCM companies to see which will perform the best for your particular business (service mix, payer mix, etc.)  This can be quantified into a specific dollar projection, as we have discussed in other articles.  This is a far better predictor of success than checking a few references.

Going Back to In-House Outsourcing

Wondering whether you should take it back in-house?  That could be the best option for you, but how to know that?  Ideally, you would compare not only the current billing company (which is presumably underperforming), but also compare your baseline performance prior to outsourcing the billing.  This would give you a good gauge of which is the better choice.  An objective analysis would compare the baseline prior to outsourcing the revenue cycle management to the current RCM company to several other RCM companies that would seem to be a good fit.

There is no one size fits all or “greatest” medical billing company for all providers or even for each specialty.  The key is whether there is a good one for your company, quantifying their performance, signing a good contract, and then having ongoing performance monitoring by an external auditing company to ensure your results.

About Apache Health

Apache Health is a revenue cycle management (RCM) analytics, benchmarking, and auditing company.  The founders of Apache formerly ran a large RCM company that was acquired by a private equity group in a rollup.  Apache’s predictive analytics will benchmark billing performance and project exactly how much more revenue you should earn from your existing volume of patients. Using many factors and a blend of artificial intelligence and specialty-specific benchmarks, the model projects whether changing the billing process would improve collections for your particular mix of procedures and payers.  Apache Health can help you evaluate whether to outsource the billing, determine which billing company to select to maximize performance or track in-house billing performance improvement over time.


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