A quick study of the administration and financial structure of the healthcare industry, specifically private medical practice, is a study of small business in general. The one big difference is the complexity of the third party insurance claims and reimbursements process, but even that element has its parallels in the business world, as noted in purchasing groups and centralizedized corporate billing. If one ignores the fact that healthcare has a “life and death” mystique regarding service, and simply focuses on the mechanics of invoicing, accounts receivable, and cash flow, then a medical practice is nothing more than a small business, much like an oil and gas distributor, a lumber yard, or even a landscaping wholesaler / supplier.
A lesser known difference between medical practices and small businesses in general is the disproportation use of outsourcing in the medical industry compared to business in general. What is so special about medical accounts receivable that nearly 50% of the providers use some form of outsourcing to help manage the business, and especially to improve and maintain cash flow? The quick answer is “nothing.”
Certainly medical practices have their challenges regarding “reasonable and customary” fee justification at the point of service; However, this process (known as coding) is often the responsibility of the licensed medical staff, or a trained clerical worker, and most recently has been semi-automated through EMR (electronic medical records) systems, as mandated by the HITECH Act of 2009 The act of obtaining insurance claims out the door is generally no more time consuming than the invoicing process in business in general. So, why the heavy use of outsourcing in the medical world?
The answer, in simple terms, is staffing, or more accurately the lack of adequate, trained staff to swiftly and professionally maximize the cash flow once customers are invoiced. Because of this, many medical providers utilize a professional revenue cycle management company to control the entire process, or possibly just to manage the receivables once claims have been submitted. The latter is the equivalent of a small or medium sized business partnering with a receivables management company dedicated to maximizing the cash flow after invoicing. When one stops to consider the concept, whether in healthcare or business in general, it makes sense.
Outsourcers who specialize in managing receivables are well trained and customer focused. In fact, some receive praise for their enhancement of the customer experience, and therefore the image of the business which contracted their services. They are not simply 9 to 5 employees. They are motivated to maximize the cash flow using all available technologies, and customer-sensitive methods.
The medical industry's model of outsourcing receivables may be the model of the future for many businesses, or sometimes the model of the present for companies looking to gain an edge in increasing profits without sacrificing customer PR or company image.