Growing Number of Hospitals Plan to Adopt or Improve Revenue Cycle Management System While Others Risk Value-Based Reimbursement without a Plan

Christopher Fisher, maxRTE Business Development Director


While the percent of hospitals without a plan to optimize or replace an outmoded revenue cycle management system has dropped from 35 percent in 2012 to 26 percent over the past six years, a significant number of hospitals are planning either to risk entering value-based reimbursement without a revenue cycle management “net” or seek consulting services.


Good news for some hospitals:

According to the latest Black Book survey, revenue cycle management (RCM) is improving. Answers from 4,640 individuals at 522 hospitals and healthcare delivery networks about their use of technology services and solutionsrevealed that about 400 hospitals implemented a viable, effective revenue cycle management optimization or replacement plan over the past six years.


Bad news for others:

On the other end of the spectrum, one-quarter of U.S. hospitals do not have an effective healthcare RCM solution in place. Further, about 82 percent of this group expect to make value-based reimbursement decisions in 2019 without the use of advanced RCM software or an outsourced partner, the survey showed.


Risky proposition for hospitals

Value-based reimbursement is a rising alternative payment model (APM) to traditional fee-for-service system, having reached 29% of healthcare payments in 2016, according to a report issued by the Health Care Payment Learning and Action Network (LAN)—a public-private partnership launched in March 2015to drive adoption and alignment of APMs.These results indicate that health care payments are on their way to meeting LAN’s goal to link 50% of total U.S. health care payments to APMs by 2018 to lower costs for private and public payers and improve care quality.


What does value-based reimbursement mean for hospitals? In a word, RISK. To effectively address the clinical and financial risks, hospitals will need powerful analytics that combine clinical and outcomes data residing in clinical systems with financial data to accurately measure quality improvements based on outcomes results.


Effective revenue cycle management solutions can help hospitals make the transition to value-based reimbursement. Without a viable, effective revenue cycle management solution, hospitals could lose revenue during their transition to this risk-laden form of reimbursement.


According to 95 percent of large hospital finance executives polled by the survey, revenue cycle management transformations should occur sooner rather than later. They believe neglecting transformation projects will catch up with hospitals by the first quarter of 2019, negatively impacting their transition to value-based reimbursement transition and revenue.


Short-term vs. long-term solutions

While 85 percent of Black Book survey respondents said they would partner with a revenue cycle management consultant or advisory company, hospitals will need to partner with a third-party vendor to implement an optimized RCM solution for the long-term.

Core, platform, and/or point solutions that cover enterprise-wide functions require larger budgets in contrast to bolt-on solutions that automate specific components of the healthcare revenue cycle and complement their legacy financial and clinical systems. Bolt-on solutions are currently the more popular option, with about 45 percent of large and community hospitals in the survey planning to use multiple bolt-on solutions for revenue cycle management in 2019.

Bolt-on solution preferred by majority of hospitals

Few hospitals expect to use a core legacy vendor for a software solution. Only 23 percent of small hospital staff, 15 percent of community hospital staff, and 17 percent of large hospital staff said a core solution is their organization’s 2019 revenue cycle management strategy.

Hospitals are investing in more bolt-on solutions versus core software because of staffing concerns, which are the top challenges hospitals face in implementing new revenue cycle management solutions or improving legacy software. Finding skilled revenue cycle management talent for new solutions is a major obstacle to optimize or replace legacy systems.

Bottom-line conclusion: RCM system imperative

“If hospitals are to maximize revenue and reduce claims take-backs, it is imperative that those still behind the curve find a way to dedicate appropriate resources toward implementing an effective RCM system,” the market research firm concluded.


maxRTE has been helping healthcare providers shorten the revenue cycle for more than 20 years. With maxRTE, just one click validates plan-specific benefit data such as patient coverage effective dates, co-pays and deductible information. Visit for your free web demo.