Healthcare IT companies are eying a bigger slice of the US revenue cycle management (RCM) market as the healthcare industry there moves away from the traditional fee-for-service model to alternative payment models (APMs).
“Many regulatory changes have taken place in the recent past relating to bundle payments and value-based payment models. Health providers believe that this switch to APMs will drive the need for tighter clinical and financial integration,” says Sundar Subramanian, senior vice president and global delivery head of healthcare, Cognizant.
RCM is the process that healthcare facilities in the US use to manage claims processing and receivables, generate health records, and code medical procedures. These functions were initially outsourced to US companies specialising in RCM services, soon followed by those in India and other English-speaking countries including the Philippines.
While larger hospitals are likely to have the resources to implement a new payment model, smaller hospitals may have to outsource their RCM services to vendors to help navigate these industry changes. “While most providers have not yet adopted an alternative payment model, it is only a matter of time before this becomes mainstream. The healthcare industry has the opportunity to leverage the efficiencies and economies of scale offered by RCM outsourcers so that healthcare companies can focus on their primary objective—patient care. This will pave the way for greater RCM outsourcing in the future,” says Subramanian. “As APMs continue to take shape, a handful of RCM vendors stand to gain a significant new source of business, thereby creating more opportunities for outsourcing, newer engagement models (business process-as-a-service or BPaaS) and next-gen RCM solutions.”
The healthcare industry in the US accounts for about 16% of the country’s GDP and is expected to cross 20% over the next few years. The US market census has projected hospital care to $1.1 trillion by 2016, of which the outsourced RCM services market is estimated at $8-9 billion. Barely 10% of the RCM services are conducted at offshore locations currently. “Most of the offshore work in the healthcare RCM space is done out of India currently and this is expected to continue as our knowledge base has gotten stronger,” says Gopi Natarajan, CEO and founder, Omega Healthcare.
Devendra Saharia, founder and CEO, AGS Health, says cost pressures are high for healthcare organisations in the US and they continue to look for ways to bring more efficiencies. “India-based RCM companies are positioned really well to leverage this opportunity. We don’t anticipate any major changes in the market opportunity due to the elections.”
Agrees Natarajan, who says that the opportunities in this market will not change as a result of the US elections. “The dynamics of outsourcing in the healthcare RCM space is purely driven by economics, business opportunities and value addition,” he says. The healthcare RCM industry is seldom affected by any national dynamics because the RCM space is only driven by people seeking medical attention. “The outsourcing industry in the RCM space has been growing rapidly by 30-35% over the last few years and will continue on that track,’’ adds Natarajan.
At the same time, Indian companies need to invest in the upgrading the skills of their employees. This will require them to work closely with clients and get trained appropriately and in a timely manner. If companies do not do this, the quality of work will suffer and other countries such as the Philippines will slowly chip away at India’s market share, warns Natarajan.
That Indian companies will need to invest in their people, processes and technology is something that every stakeholder acknowledges. “If they are able to build strong people practices, develop robust and scalable processes and technologies, they will gain sustainable competitive advantage. Having strong US healthcare domain will be critical for ensuring good quality for the customers,” says Namit Agarwal, president, Healthcare-MathLogic, an emerging big data analytics company.
The US healthcare market has been a key focus area for MathLogic since inception. MathLogic has been working with providers, payers and consumer healthcare portals across a variety of applications ranging from comparative analysis of treatments, impact of policy changes on health market, algorithmic rating of healthcare providers, claims analytics and value based care.
Recently, Reventics, a Colorado-based clinically oriented organisation, partnered with Mathlogic, for setting up a centre of excellence (COE) for clinical analytics in Hyderabad. The centre will help to expand the value-based care (VBC) market. It is projected that 50-70% of insurance payments by private and government payers will switch over to VBC models by 2019.
Says Agarwal: “We have developed capabilities to deal with massive amounts of data in compliance with the special requirements of the healthcare industry. The approach is optimising processes, using analytics to derive insights and deploying a technological framework for delivering efficient solutions.”