Outsourcing Billing: The Strategic Edge FQHCs Need to Thrive - Protecting Revenue & Data: A Series, Part One

Picture this: Revenue is the lifeblood that fuels the rich programs and services that your community health centers provide. Unfortunately, regulations and red tape have clogged the arteries of your health centers, and getting paid for health care has never been more challenging. The complexity of billing requirements, the challenges of hiring qualified billing managers, and the emphasis on cybersecurity have forced health centers to seek alternative solutions.

A rapidly growing number of health center CEOs and CFOs are choosing to outsource their revenue cycle and billing operations. What do these executives know that others don't?

As healthcare continues to evolve, FQHC executives are confronted with the complex task of optimizing billing processes while ensuring compliance and data security. Here, we explore why changing times have introduced more difficulties for FQHC executives and how outsourcing billing operations to a third-party RCM company can be a strategic move compared to managing these functions in-house.

The Challenges of In-House Billing Operations

One of the most significant hurdles FQHCs face is the scarcity of qualified billing experts. The healthcare billing landscape is intricate, requiring professionals who are well-versed in the nuances of FQHC billing requirements, payer regulations, and coding updates. Unfortunately, finding and retaining such talent is increasingly difficult due to a competitive job market and the specialized knowledge required.

1. Shortage of Qualified Billing Experts

The demand for skilled billers far exceeds the supply, making recruitment a daunting task.

High turnover rates in the healthcare industry exacerbate the challenge, leading to frequent disruptions in billing processes.

Today, billing requirements are different for every payer, and claim submission time limits are shorter than ever. The majority of health centers report it is impossible to find a qualified billing manager who understands the complexity of federally qualified health centers along with billing and coding requirements. As a result, the average community health center collects less than 75% of possible reimbursements and writes off an exorbitant amount in insurance bad debt each year. The volatility of regulation and the lackluster results have caused many health centers to flock in droves to outsourced billing.

2. Training and Retention Issues

Even if qualified candidates are found, substantial resources must be invested in training and ongoing education to keep pace with regulatory changes. Retaining these experts is another challenge, as they are often lured away by larger healthcare organizations offering more competitive salaries and benefits.

Hiring qualified billers who understand the unique requirements of FQHC billing can be nearly impossible. In the absence of a national standard certification for FQHC billing, health center executives report challenges assessing the technical skills of billing professionals.

One health center CFO compares the hiring process for billers to "rolling the dice in Vegas; you just do not know what you are going to get." For the most critical business process in the back office, most health center CEOs and CFOs do not want to take the gamble.

3. Operational Inefficiencies

In-house billing teams might struggle with the volume and complexity of billing tasks, leading to delays, errors, and, ultimately, a negative impact on revenue. Moreover, the subject, once considered taboo by health center executives, has become the status quo as the barriers to entry have subsided. While the financial benefits have long been known, concerns of lost jobs in the community and less control of the process previously deterred CEOs.

Most executives have found that their former billing employees are uniquely qualified to perform front desk operations, and the increased collections from outsourced services allow them to reinvest in their community and create more jobs.

Outsourcing Billing Operations: A Strategic Solution

Outsourcing billing operations to a third-party RCM company offers FQHCs a viable and effective alternative. Here's why:

Access to Expertise:

Third-party RCM companies specialize in healthcare billing and bring a wealth of knowledge and experience. Their teams are adept at handling the specific needs of FQHCs, ensuring compliance, and optimizing revenue.

CFOs who outsource their billing operations report gaining more control by receiving better data, reports, and analytics to help them manage the financial operations of their health center. By outsourcing to a reputable billing company, CFOs report they are freed from time-consuming tasks, headaches, and costs associated with having an in-house billing staff. Items like charge entry errors or payer reimbursement issues are more readily identified and can be addressed before they spiral out of control. Meanwhile, the quantity and quality of month-end reports give health center CEOs more data to assess the performance of providers, satellite locations, and overall operations.

Cost Efficiency and Scalability:

Outsourcing provides flexibility to scale operations up or down based on the FQHC's needs without the complications of hiring or laying off staff. Many CFOs have done their own calculations on the cost to collect revenue, which is reported to vary from 12% to 14% of revenue.

"Once we added up the labor costs, indirect costs, and bad debt expenses we accrued each year, our cost of collecting revenue was over 12%. We pay less for outsourced services and collect more," says one CEO. "It's a no-brainer."

The common theme amongst health centers that outsource is their reports of consistent cash flow. Health centers that have outsourced their revenue cycle operations report increased revenue that offsets any service fees that they pay to their vendor. One CEO reports that the initial research revealed prices between 8% to 10% of collected revenue which she felt seemed high.

"Our finance committee did the calculations, and at first, we felt we could not afford to outsource. Over the course of 20 months, we collected an extra $1,063,000 on less-charge revenue," she says. "My advice to other CEOs is that you can't afford not to outsource your billing operations."

No, Really. What's the Catch?

While outsourcing can seem daunting for some, it may seem too good to be true for others. But when done right, outsourcing revenue cycle management can be the breath of fresh air your FQHC needs. And in the same breath, it is important to understand the difference between outsourcing and offshoring.

While outsourcing among community health centers is on the rise, offshoring outside the United States is on the decline. The few health centers that have experienced challenges outsourcing report that their vendor either did not have prior FQHC experience or they offshored their billing operations outside the United States.

Offshoring, or the process of subcontracting labor from India or other parts of the world, is riddled with challenges. When health centers decide to offshore their revenue cycle operations they are hoping to gain a competitive advantage from lower labor costs. Most health centers report lackluster results from offshoring along with declines in quality. When billing duties are outsourced offshore, the capability of protecting patient information is significantly diminished.

Certain privacy laws also limit offshoring companies from accessing and verifying coding data from electronic health records. Most health centers feel that saving a few dollars is not worth putting a patient's sensitive health information at risk.

As one health center CEO put it, "We were offered an extremely low rate of 5%, which seemed too good to be true. It was."

The fragility of offshoring can also bring to light the discussion of cybersecurity and how RCM companies can play a role in protecting your FQHC. In part two of our "Protecting Revenue & Data" series, we take a deep dive into your FQHC's role in the world of cybersecurity and a third-party RCM company's role in having your back. Blog 2 of this series will be posted on Tuesday, June 25th.

Join us Tuesday, June 18th at 1:00 pm EST for our FREE On-Demand Webinar: Change Healthcare Crisis Webinar - How to get your revenue back on track.