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Practice Academy Winter 2023: Mastering revenue cycle management - in-house vs. outsourcing

Medical Economics JournalMedical Economics February 2024
Volume 101
Issue 2

Should RCM be done in-house or outsourced?: ©Jane -

Should RCM be done in-house or outsourced?: ©Jane -


In a time when independent medical practices are seeing ever-shrinking margins and growing competition, efficient revenue cycle management (RCM)—the ability to bill patients quickly and minimize the number and dollar amounts of accounts receivable (A/R)—can be the difference between a practice thriving financially or barely hanging on.

A recent Medical Group Management Association white paper on A/R helps to tell the story. It finds that among better-performing practices, total A/R per full-time equivalent physician is $123,329 compared with $170,626 for other practices—a difference of 38%.

As this and similar data demonstrate, getting RCM right can be difficult, which is why many practices turn it over to outside vendors. But choosing that path has its own challenges. So how does a practice decide whether to outsource the RCM function or keep it in-house? That question was the topic of a session at Medical Economics Winter 2023 Practice Academy.


  • Understanding the essence of revenue cycle management.
  • Making the crucial decision to in-house or outsource RCM.
  • Craft your practice’s path to success.

Meet the panelists

Tiffany Wells, CRCP-I,
senior director of RCM, EverHealth

Allison Bowlick,
director of RCM, EverHealth

To watch this session on-demand, click here.

Effective RCM is key to surviving in independent practice

Other than providing high-quality care, probably nothing is more important to a medical practice than successful RCM. Practices that can quickly and efficiently collect what patients owe and minimize the number and duration of invoices in A/R greatly improve their odds of survival.

Succeeding at RCM requires paying attention to a claim through every phase of its life cycle from when the patient registers to when the claim is paid in full, says Tiffany Wells, CRCP-I, senior director of RCM for EverHealth. “What’s working, what isn’t and how we can make it better is the first step to understanding what the RCM process is all about,” Wells says.

A claim begins when the patient’s name is first entered into the practice’s data system, Wells says. It’s when the practice collects basic information such as the correct spelling of the patient’s name, their age and their insurance eligibility. “Registration is where you’re going to gather the information to set the rest of the life cycle of the claim up for success,” Wells explains.

Next is preparing to submit the claim for payment, including charting for the patient’s visit and the correct CPT and International Classification of Diseases, Tenth Revision, codes and ensuring it is submitted on time.

The back end of the RCM, Wells says, consists of claims and A/R management. Claims management include posting payments, preventing and resolving denials, and writing denial appeals.

A/R management is the part of the cycle that addresses claims languishing in A/R. “What are your tactics for making sure you’re attacking those A/Rs? Do you have a strategy for partnering with your billing team to get with the payers and make sure those are overturned?” she asks.

Key to any successful RCM program is identifying and tracking a practice’s key performance indicators (KPIs). “If we don’t know what we’re doing or how successful we are at doing it it’s hard to replicate and find best practices,” Wells notes. While KPIs differ from practice to practice, Wells cites a list compiled by the Medical Group Management Association that includes the following:

  • Success at collecting from patients at the time of service.
  • The length of time required for charge capture.
  • The clean claim rate.
  • The initial denial rate.
  • The average length of balances in A/R.
  • The net collection rate.
  • The bad debt rate.

After understanding KPIs and how to measure them, the next step is deciding whether to manage the revenue cycle in-house or outsource it. Each option comes with advantages and drawbacks. The main advantage of an outside vendor, according to Wells, is its experience with a practice’s specialty. “They know it in and out and get really good at understanding the denials, the trends, the workflows,” she says.

The downside of outsourcing these tasks is some loss of control. Many third-party billers transfer client data into their own computer system before working with it, providing little transparency to the practice.

Data transfer between system also creates security concerns. “You’ve got to be prepared for and be fully comfortable with how that information is being shared.”

Another RCM option is what Bowlick calls the holistic approach, in which a practice’s RCM, electronic health record and practice management systems are operated by the same outside vendor. This has the benefit of allowing the practice full access to its RCM data because the outside billing team works in the same system as the practice.

On the other hand, some practices prefer having billers on-site. “Some providers like the idea of being able to walk down the hall and speak to them at any time,” she notes.

Regardless of whether it’s outsourced or kept in-house, Bowlick emphasizes the importance of regular communication with the billing team to track progress in meeting KPIs. “A lot of practices don’t have those conversations with their team and just assume that the health of the practice is great based on the revenue coming in the door,” she says. “But you could be missing revenue if you’re not tracking your performance and reviewing those KPIs on a regular basis.”

Solutions & takeaways

  • Know your practice’s KPIs and how to measure them.
  • Monitor the practice’s financial health through frequent communication with thebilling team.
  • Carefully evaluate the pros and cons of outsourcing billing/RCM versus keeping it in-house.
  • Track the reasons for denied claims and work to address them.
  • Develop a strategy for reducing the number and duration of accounts in A/R.
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