Industry Mergers Will Necessitate Expert Revenue Cycle Management

The Aetna/Humana acquisition brings together Humana’s growing Medicare Advantage business with Aetna’s diversified portfolio and commercial capabilities – creating a company that serves the most seniors in the Medicare Advantage program and the second-largest managed care company in the United States.

What is fueling this merger mania? It is rumored that other big mergers are in the works and could be announced soon.

One reason for this merger activity could be that profits in the health insurance industry are effectively capped due to the Affordable Care Act’s medical cost ratios, so national insurers think they need to get bigger or risk losing out. These large, diversified insurers are looking to expand their core health plan businesses and take new services to market.

How will this all affect providers and the medical billing companies that serve them?

You can bet that these mega insurance companies will squeeze their operating costs as tightly as possible to improve margins. Healthcare providers and medical billing companies will have to operate at their highest efficiency levels to maintain viable revenue cycles. The tough financial situation plaguing many healthcare providers today is only going to become more challenging in the future.

Many healthcare providers today are considering outsourcing large segments of their business office functions. The reasons for this vary, but the most common ones include outsourcing those portions of the revenue cycle, which are highly complicated or require advanced knowledge or certification. Another reason for outsourcing is that many facilities struggle with filling internal positions, which are difficult to fill because their local talent pool lacks the expertise or the facility cannot support the pay scale required for those positions. These are just a few of the issues faced by today’s healthcare CFOs and revenue cycle executives.

And, all of these issues will be exacerbated by insurance providers who may be looking to maximize their margins.

There is an immense pressure to maintain operational excellence while reducing full-time equivalent head counts, keeping capital budgets in check and meeting new reduced budget targets. That being said, outsourcing services offer extremely attractive financial alternatives for healthcare executives to help them manage costs vs. delivery of services.

Those providers, who are seriously considering outsourcing any part of their revenue cycle, need to select a credible partner. The concept of total revenue cycle outsourcing is seen as the “next frontier” in the outsourcing evolution. While not widespread in practice today, the possibility of outsourcing all of the revenue cycle is becoming a common topic of discussion among revenue cycle executives.

Billing has become very complicated; many times a biller needs to have several different realms of knowledge including coding claims, denial management, and medical expertise. Dealing with collections and denials, plus continually training staff and keeping up with industry changes, presents a huge resource strain for many providers and billing companies.

An experienced outsourcing partner that can provide end-to-end revenue cycle management can help you capture and retain all of the money you are entitled to, and make it possible to survive in the insurance industry’s merger mania environment.