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Revenue Cycle Management is So Popular Because Most Physicians Aren’t Business People

Posted on April 10, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

In a previous post, I asked the really important question: Is Revenue Cycle Management Sexy? I was amazed and impressed by the discussion that spurred out of that post. People were talking revenue cycle management details in the comments, on Twitter and even on their own blogs about how revenue cycle management is indeed sexy.

Turns out that a number of doctors wouldn’t be practicing medicine today if it weren’t for revenue cycle management companies that support these doctors. Keeping doctors in business is sexy to me. I know that the media often spins revenue cycle management as the rich (doctors) getting richer. They also love to talk about revenue cycle management companies taking such a huge chunk of a physician’s reimbursement. Let’s look at these two factors.

Are Doctors Rich?
First, it’s a little bit of a misnomer that doctors are all rich. Doctors don’t do anything to help this image since so many of them drive around in their high priced Mercedes and BMWs. There are many doctors (specialists top this list) that do make a very large amount of money. Many primary care doctors and certain specialties make much less. Don’t get me wrong. Every doctor I know is making plenty of money to live and live well. In fact, they’re making more than the average American. Although, when you look at their overhead, medical school expenses, etc you wouldn’t classify most doctors as rich.

Plus, let’s be honest for a minute. Many doctors are great at caring for patients and terrible at running their practice. Most physicians aren’t business people. There’s nothing wrong with this. In fact, some of the very best doctors are terrible business people. In these cases, many doctors turn to revenue cycle management to help them improve the business side of things. In some examples, no revenue cycle management assistance for a practice means the practice goes out of business. Hard to classify a practice that can’t collect money and goes out of business as someone that’s rich.

Revenue Cycle Management Company Fees
I’m sure if we looked across the spectrum of revenue cycle management companies, we could likely find some bad actors that are really gouging doctors more than they should because the doctor is in a vulnerable position. However, I think this is more the exception than the rule from what I’ve seen. In most cases where I see revenue cycle management in play, it’s because the practice for one reason or another couldn’t keep up with the demands required to do good revenue processing or didn’t have the expertise to do it well.

The problem is those doctors who are great business men don’t understand why their colleagues would allow a company to take a percentage of their reimbursement. What these great businessmen/doctors seem to miss is the choice that most doctors are really making when they choose to get assistance with their revenue cycle from another company.

The real choice for many doctors is whether they’re ok paying 7% of their reimbursement in return for a huge increase in how much reimbursement they actually receive. It’s just basic math really. If I can increase a doctors reimbursement more than the percentage I take, then it’s a good choice for many (definitely not all) doctors.

Could the doctor just increase the reimbursement themselves without having to pay a fee to someone else? Sure they could. In fact, many try this approach over an extended period. Then, many realize that they’re not very good at that part of the business. They realize that an outside revenue cycle management company can help them find missed claims that will now get paid. They realize that revenue cycle management companies can help those providers get paid faster.

Revenue Cycle Management and EHR
Some of the most popular EHR companies are built around this fact and offer the EHR for free or nearly free as a compliment to the core revenue cycle management. Plus, more and more EHR companies are building in some sort of revenue cycle management component. In many cases this is a good way for an EHR company to generate revenue, but for many practices it’s also a great service for them.

Of course, I’ve also heard from the many EHR vendors who don’t provide these revenue cycle management services to their providers. They usually give me an exasperated “How can doctors pay of their reimbursement to these companies?” A part of me understands this exasperation completely since I’m an entrepreneur like these EHR executives. If I were in a physician’s shoes I’d figure out the business process myself instead of giving a big chunk of my reimbursement to another company. This just ignores that many doctors can’t (or in many cases don’t want to) figure out the business process. In these cases, a percentage of their reimbursement is a better business decision.

Conclusion
The biggest challenge to revenue cycle management is doctors don’t want to admit that they need a revenue cycle management company. By doing so, they’d be admitting their not business people and that’s a really hard thing to do. Although, in many cases it is the best business decision.

Next up in my series on revenue cycle management I’ll talk more about the relationship of EHR and RCM.

Is Revenue Cycle Management Sexy?

Posted on March 9, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

A few months back I attended a user group meeting for a large EHR vendor. While waiting for the opening keynote speech I was talking with the EHR vendor’s PR person. During our conversation they made a really interesting comment that stuck with me. I can’t remember the exact context of the conversation, but they said something to the effect of, “We also do a lot of work in revenue cycle management (RCM) and Accountable Care Organizations (ACOs), but that’s not the sexy things that people like to write about even though that’s where a lot of the money is in our business.”

It begs the question, “Is Revenue Cycle Management (RCM) sexy?”

Her comment really has had me thinking about revenue cycle management and particularly her final point about that being where the money is in their business. I’ve always believed in business that it’s a smart thing to follow the money, whether its sexy or not. On that note, I plan to do a series of posts related to revenue cycle management here on EMR and EHR. As for ACOs, I already started a series of ACO posts on EMR and HIPAA starting with my post “ACO Model Risks and Rewards.”

While I might not try and achieve the lofty goal of making revenue cycle management sexy, I do hope to be able to dig into many of the dynamics around revenue cycle management. I hope to look at reasons why revenue cycle management is so popular and doing so well. Why do so many doctors and hospital CIO/CFOs turn to revenue cycle management for their practice and hospitals? Are all RCM options created equal? What separates the various RCM options? What will be the future of revenue cycle management going forward?

In the past week, a number of online discussions have kicked up around a post I did on EMR and HIPAA around Streamlining Revenue Cycle Automation. The discussion shows there’s a real interest in discussing this topic.

I’m also interested to hear your thoughts on revenue cycle management. Are there areas you’d like me to cover? Are there important trends in RCM that more people should know about? No, this isn’t an open invitation for revenue cycle management companies to pitch me. I’m interested in good information about what’s happening with revenue cycle management.

No doubt that managing the revenue of a hospital of physician practice is incredibly important. Hopefully we can add to that knowledge base. Plus, I think it’s likely worth exploring how adoption of EHR is impacting revenue cycle management as well. Will there be less of a need for revenue cycle management with more EHR software or more of a need for RCM?

Let’s hear your thoughts, suggestions and ideas about RCM in the comments. Hopefully I can build on them in future posts.