The Difference Between RCM Applications and Solutions (And Why it Matters)

Revenue cycle management applications are software designed to support hospital RCM operations. In contrast, RCM solutions augment RCM technology with account management and consulting.

What are the differences between RCM solutions and applications?
June 12, 2017

Revenue cycle management applications are software designed to support hospital RCM operations. In contrast, RCM solutions augment RCM technology with account management and consulting. 

Here's why this distinction matters: RCM applications can neither deliver nor utilize knowledge. They can guide the communication of knowledge, but they're incapable of analyzing situations, identifying the next best action and executing that action. 

Sure, many applications include some sort of machine learning logic. However, such technology, for the most part, is limited to making helpful recommendations as to which steps an accounts receivable department should take after a workers' compensation provider denies a claim. 

RCM solutions are typically better choices than RCM applications because only humans can navigate complex situations, especially when those situations are a result of complicated legal conditions. In addition, regulations can render relatively new, capable software obsolete.

"93% of hospitals CFOs want to get rid of technology that isn't producing an ROI."

Hospitals Replacing RCM Applications 

Last year, Black Book surveyed more than 5,000 health care professionals who were using RCM software. The researchers discovered that 85 percent of participants were either assessing their RCM applications' capabilities or considering replacing those systems altogether. 

The purpose of those assessments was to determine whether or not existing RCM technologies could help them manage value-based reimbursement. In fact, 93 percent of CFOs working in health organizations maintained they want to get rid of RCM, financial and coding technology that isn't producing a return on investment. 

One of the findings noted that 71 percent of care providers "have not selected end-to-end technology vendors to move towards value-based reimbursements." As a result, many hospitals are turning towards outsourced RCM consultants to guide them through the transition of value-based care. 

Doug Brown, managing partner at Black Book, noted that hospital leaders are trying to transform how they approach the revenue cycle:

"As reimbursements come under pressure and costs keep rising, provider CFOs will face unparalleled pressure over the next year to preserve financial solvency, increase productivities in care delivery, implement regulatory mandates and reduce RCM expenses associated with getting paid."

How can RCM solutions help those CFOs reach their goals?

What Makes an RCM Solution?

Identifying how RCM solutions will help hospitals transition to value-based care partly involves assessing how they work. 

The typical RCM solution consists of consultants, legal experts, coding specialists and proprietary technology. The latter exists across vendor operations: The hospitals never see the systems themselves. The solution itself is a comprehensive service offered by an RCM partner. 

A solution is, in its own way, an infrastructure. Just as a series of highways, tunnels and roads make up a city's transportation infrastructure, an RCM solution consists of the resources required to navigate complex billing issues. 

For example, acquiring reimbursement from auto carriers is a common pain point in hospital billing departments. This is due to the fact that each state has its own laws regarding who is the prime payer after an accident.

Digging deeper into the issue, there are 12 states in the U.S. with no-fault auto insurance laws. Under no-fault laws, auto-carriers are always the prime payers when drivers are injured during accidents in no-fault states, regardless of whether those drivers were at fault.

However, what happens when a driver from a fault state is in an accident in a no-fault state? In this instance, the driver's auto carrier may deny a claim as the prime payer. 

RCM solutions are designed to handle such circumstances. They draw on the understanding of partner-side experts who are knowledgeable of how state laws affect auto carrier and workers' compensation reimbursement. This knowledge can be incredibly valuable, especially during times of transition.