Other Articles Published by: IMA Consulting
This issue of Insights will discuss considerations for the selection of an outsourced vendor responsible for a certain portion of your accounts receivable. Background The businesses need to enlist a vendor for help may stem from an isolated incident. Perhaps the extended loss of a key resource on your billing/follow-up team or departmental turnover has caused a spike in your receivable days. Challenges from the implementation of a new accounts receivable (A/R) system may have taken the energy and focus of your revenue cycle team.
Specialty billing requirements may be present and your efforts to train an internal resource have not realized the results you were hoping for. You may want to leverage a relationship and acquire the expertise a specialty group has built with other hospitals, maybe even your competition. Perhaps your recent attempts to attract a qualified candidate with the specialized background have failed.
With an increase in self-pay receivables due to the increasing use of high deductible insurance plans, self-pay statement costs are taking an ever increasing portion out of your budget. Your ability to add or replace billing or follow-up staff may be hindered by budget constraints.
Generating statements through your existing billing system and implementing outbound dialer technology can be very costly. Utilizing a vendor with statement generating capabilities and advanced predictive dialer technology may be a more cost effective solution. The bottom line is, for certain areas of your accounts receivable, an outside vendor may just be a better and more cost effective means of getting your receivables paid in a timely manner. So, how do you select the right partner to become an effective extension of your business office? Challenges When beginning an outsource vendor selection process, you should consider the following issues.
To start the process of selecting an outsource vendor, you need to define the specific scope of the work to be done. Communicating your request for help will require the development of a Request For Proposal (RFP).
Defining and segregating the outsource population from your normal follow-up accounts can be problematic. Accounts being worked simultaneously by both your hospital staff and the outsource agency is a risk. It is imperative that a unique identifier/code be used for the vendor accounts to ensure that duplication of efforts does not occur.
In order to manage the selection process, an internal group will need to be identified. Who should manage the selection process? What skills should that person have to be successful? Do you have the right person on your staff? What responsibilities and accountability should they have?
All outsource arrangements are dependent on data. Although the specific data requirements may vary greatly, the objective is the same, this information is utilized by your outsource vendor to create a parallel billing and follow-up system. Interfaces are needed to transmit large amounts of demographic and transactional information. Assessing the technical skill level of a potential outsource vendor will help determine the vendors proficiency with the facilities information system.
Considering your Information Systems Department policies and procedures, some organizations require information to be transmitted out to the vendor. In addition, system communications will be required to reach out to the vendor's network to retrieve response and transactional data files. HIPAA and data encryption requirements will need to be addressed and enforced. Automating the process and placing the proper alerts may require additional programming expertise within your organization.
The reconciliation process with an outsource vendor can present various challenges as well. A reconciliation process will require detailed information. Volume, timing and delivery challenges can occur when dealing with the transfer of large amounts of data between the facilities information system and the outsource vendor.
Is your revenue cycle environment conducive to supporting an outsourcing arrangement? Have you tried using outside vendors in the past with limited success? What caused that relationship to fail? Perhaps longstanding relationships with existing vendors may cloud your objectivity when selecting a vendor for new business. Insights
For a vendor relationship to be successful, there are key elements that a healthcare provider should address.
Identify and empower a dedicated, internal vendor evaluation team with the operational knowledge to evaluate the potential vendors and the capacity to handle the additional responsibility. Ultimately the point person of this internal evaluation team should have reconciliation and invoice approval responsibility, with the proper accountability checks and balances in place.
Assess the collection quality of your accounts before placement. Knowing the quality of the accounts that are being placed will help establish realistic expectations before you select a new outsource vendor. You must be realistic about the collectability of the placement. It is important to be open and honest in regards to the AR placed so that you put your vendor/partner in a position to be successful. An accurate collection assessment will also assist in goal development. Clear goals and expectations for the vendor need to be defined at the start of the relationship.
Create a vendor comparison tool to capture key elements from the RFP responses and summarize that data. In order to effectively analyze the RFP responses, consider including a weighted scoring system to rank the responses based on your priorities. Craft your RFP response requirements for ease of analysis and comparison. When creating the RFP document, keep the Vendor comparison tool in mind. Use the RFP Responses and your vendor comparison tool to compile a short list of potential candidates, use limited RFP timeframes to reduce the number of responses.
Leverage industry contacts to obtain quality candidates. Participation in industry forums and user groups can be great sources of information on vendor performance and availability as well. The information collected in this manner can be valuable. Gather as much detailed information as possible. If the feedback and reviews you receive are negative, do not rush to judgment. Remember, responsibility for a failed outsourcing arrangement does not always fall on the vendor.
Evaluate placement reconciliation procedures as part of your due diligence process. Rely on the vendor to supply source information used in the reconciliation process such as a patient listing or trial balance, however the outsource vendor should not be responsible for completing the reconciliation.
Once a short list of candidates has been selected, perform the necessary due diligence of background checks and site visits to clients of similar size and technology structure. Do not fall into the trap of using a vendor who has been successful in one aspect of the Revenue Cycle, relying on them to perform a service which they have not had success with. Approach current vendors with objectivity, especially if that vendor does not have experience in the area of the A/R management you are evaluating. Summary
Vendor selection should focus on the specific expertise of the vendor. Try to leverage the strength of the group by narrowing the placement scope to items within the vendor's field of expertise. Consider data requirement needs and ease of implementation, identify vendors who have credible references from organizations utilizing similar health information systems.
Evaluate the vendor's ability and track-record for developing two way interfaces which are completely automated. Just because a vendor excels in one area does not mean that they are experts in all revenue cycle processes. Goals should be set based on a realistic evaluation of the collection quality of the placement accounts.
An effective selection process will be the first step in a successful and mutually beneficial relationship for you and your outsourced vendor. We are pleased to have the opportunity to provide this information to you. For additional information and dialogue, please contact me at 484-840-1984.
Director IMA Consultingwww.ima-consulting.com
Home | About
Us | Magazine
and Webinars | Subscribe
| Renew |
us on social media