What is revenue cycle management?

Revenue cycle management (RCM) is a process used in the healthcare industry to track patient revenue from the scheduling of an appointment to the final payment of all balances. It helps healthcare companies manage the complexities of merging their financial and clinical responsibilities by providing a uniform platform where they can get paid for the care they provide. In short, it ensures that healthcare organizations remain financially healthy and continue to provide valuable services to their patients.

Most healthcare organizations function on a delayed payment cycle where they realize revenue after the delivery of their clinical services. As a result, errors in billing are common. RCM is used throughout the patient care process to avoid errors resulting in a claim denial. RCM allows employees to gather relevant patient data, such as insurance eligibility and previous interactions. Moreover, it facilitates the process of a healthcare provider identifying the optimal treatment using the appropriate medical code. It helps the organization identify common issues in claim denials by running internal analytics and reaching out to insurance companies. Overall, RCM aims to reduce operational costs, increase patient revenue, and provide an improved patient-provider experience.

Healthcare revenue cycle management features by business model

Broadly speaking, the healthcare industry pursues two different business models. Fee-for-service, the traditional model, has providers charge for specific procedures and appointments independent of outcome. Value-based care, on the other hand, aligns quality of care and cost efficiency with revenue by paying providers for their ability to provide better outcomes at lower cost.

Revenue cycle management software platforms interact with clients slightly differently based on which model they pursue. In the fee-for-service model, RCM firms support organizations by documenting all patient interactions, submit claims, and track cases until final payment. In the value-based-care model, RCM companies optimized on value, not just volume.

Revenue cycle management market size

• Revenue cycle inefficiencies accounted for 15 percent of $2.7 trillion spent on healthcare in 2013, or about $400 billion, according to McKinsey & Company.
• 70% of providers reported it takes one month or longer on average to collect payment from a patient.

• The global healthcare revenue cycle management outsourcing market is expected to grow at 11.9% CAGR to 23 billion by 2023.

M&A activity for revenue cycle management companies

In 2016, revenue cycle management M&A consisted of 93 transactions worth nearly $15.7 billion. More recently, in July 2019, Bain Capital sold Waystar to EQT and CPPIB for $2.7B, making it one of the largest deals of the year.

Who are the revenue cycle management players?

To find RCM companies, we used Grata Search to identify 112 companies. These RCM companies are most closely linked to practice management, patient care, EHR, medical billing, and patient engagement.

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Revenue cycle management companies

Parathon

Parathon is a healthcare revenue cycle management data integrator. They are a middleware layer that integrates a wide range of legacy systems that have traditionally suffered from disintegration and misfit data models. With decades of experience in healthcare, Parathon manages financial aspects of care strategies, central business office operations, KPI and business analytics, highly complex third-party-payer contractual relationships, or the labyrinth of related transactions.

Alpha II

Alpha II is a healthcare software provider of medical coding, medical billing, claim scrubber, and revenue cycle management. Their product is delivered as a software-as-a-service to healthcare professionals, clearinghouses, and government entities - both directly and through software developers. The company's toolsets, data content, and rules engines easily integrate with other information systems to help their customers comply with the latest policies, standards, and directives.

MedData

MedData provides a managed service software solution that identifies all payer sources and the most appropriate coverage in the properly compliant order through a single touchpoint for patients, whether they’re insured, under-insured, or uninsured. It combines fast, streamlined coding & billing with dedicated, integrated patient account balance services to deliver a comprehensive solution for healthcare organizations.

Invoke360

Invoke 360 is a healthcare services company that provides end-to-end healthcare revenue cycle management services for Native American Health Service funded programs. The service helps increase regulatory compliance, minimize errors, enforce policies for greater accuracy, improve collections and billing efficiency, and accelerate cash recovery with fast turnaround times and high accuracy.

HCS

HCS Interactant is an integrated EHR and Revenue Cycle Management software solution for LTACH, Behavioral Health and Long Term Care Facilities. The web-based software provides 5 key offerings of revenue cycle management, financial administration, EMR, remote access solutions, and analytics. Their revenue cycle management offering provides a contract management and rules-based engine allows you to define payor-specific variables.

Virtual OfficeWare Healthcare Solutions

Virtual OfficeWare Healthcare Solutions is a service provider that delivers Electronic Health Records, Practice Management, and Revenue Cycle Management to ambulatory practices. The service partners with Centricity and provides RCM services targeted at improved patient billing, A/R, and insurance claim processes.

Clarus

Clarus RCM is a service provider of end-to-end revenue cycle management and coding to healthcare providers, payers, and intermediaries. Clarus leverages technology enabled solutions to help clients improve revenue and serves as a fully integrated extension of a healthcare provider’s business office.

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