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Most outsourcing services list “end to end” services as part of the menu offerings. Dwelling deep we find that it is a just a collection of various processes of revenue cycle management priced separately, and delivered in a discrete manner. Individual services bundled together at the contract level and split at the service level are not the same as partaking in a clients business risk and reflecting a true business partnership, unless fees paid for services reflects the risk and contingent nature of the contract, with the end practice.

Demystifying the “end to end services” model

The outsourcing of Revenue Cycle Management to offshore service providers started around the late 90s to early 2000s. The predominantly “paper & manual” industry began the journey sending data entry functions like patient demography and charge entry, to offshore locations. With time other data processes like payment posting and managing denials followed. Once stable and reliable “voice over data” technologies emerged, billing companies began moving AR follow up offshore.

The mid 2000s saw the HL7 interfaces and transaction set standardizations that allowed offshore entities to work real time on transmission rejections and claims status. Eligibility checks and benefits verification followed soon once technology enabled such data to be presented in real time.

The offshore industry had by then gained expertise and experience in almost all processes of the Revenue Cycle Business. The tentative and measured start with basic processes and the advancement of technology drove the order and quantum of outsourcing these as discrete processes.

Contracts were written to reflect this sequence of scope addition to the offshore outsourcing pie. Compensation was almost always based on time and work basis. Fee per transaction processed or per unit of measure was the most common whilst some businesses that had good productivity metrics built chose the per FTE model. Service Level Agreements were built in to ensure adherence to high quality levels and measurements thereof. These SLAs were almost always directed at Turn Around Times and Transactional Quality measured as errors per total transactions processed or derivatives of such.

A good guess is that even today about 90% of the business is sticking to this decade old method.

What is wrong with this?

This all worked well when the industry was nascent and finding its way towards optimal cost points. The initial savings was an attractive enough driver of this model. There are two inherent flaws in this model even though it has worked well so far

1. This compensates the service provider even for transactional errors or mistakes committed by the service provider and the practice or the medical billing company bears the cost of error.

2. This was not reflecting the type of performance contracts the medical billing company was signing up with the practices (end clients) which were success based and as a percent of reimbursement.

Implications

Whilst the SLAs forced the service providers to meet a minimum quality level, it did not directly help meet the actual objectives of the end client viz. reimbursement. Meeting SLAs was not resulting in the desired level of reimbursement. The offshore company was driving at production and quality whilst the billing company was chasing reimbursements with no clear correlation that their two distinct objectives were correlated.

Sampling of the QA process was not enough to prevent faulty claims from slipping through to the insurance company

There was less reason for the outsourced company to push for productivity gains, process reengineering or even introduce automation.

In fact, since the contracts were paid on transactional volumes, in some cases the offshore entity gained by higher volume of denials and AR follow up. And by repeat working of AR, good money was being thrown at wasteful repeats.

Misnomer

Companies began to offer their services under the “end to end” umbrella which encompassed all possible outsourced processes. Those it was “end to end” in letter it wasn’t in spirit. It was still discrete processes measured separately and compensated individually.

This led to some level of dissonance in the “true value of engagement” and the “nature of partnership”. The customer continued to pay for process gaps, errors and was also carrying the full risk of nonperformance with the only recourse being firing the vendor.

A true partnership is one that reflects the same performance guarantees that the medical billing company agrees with the practice. That is to measure and evaluate on reimbursements, denial rates, aging, AR days, liquidation rate and collection percentages. These are real SLA measures with a bearing on outcomes.

Quintessence services its customers on a “true end to end” basis – not only are the services cover the entire gamut of revenue cycle management, but our contracts reflect the contingent nature of the business. We are fused with our customers in the solution process by our shared goals.

This kind of engagement nurture innovation, encourages both parties to work together to find effective solutions and promote development of technology aids to bolster outcomes.

We believe partnerships in which the outcomes are the shared goals will sustain, reinforce and prosper. We get paid when you get paid is not the maxim of our customers but ours also.

Nirmal Kumar Rajachandran is Chief Executive Officer and Co-founder of Quintessence. His focus has been on mastering the RCM business; which has endowed him with a rare depth of business understanding and a penchant for designing solutions around every customer’s business needs. The knowledge transfer processes set by him, are still a template for industry-best practices, and are even adopted by many competitors. Nirmal’s inputs in the management of large marquee relationships has helped our customers meet their outsourcing goals, 100% of the time.