Staffing vs Outsourcing: When to Partner with RCM Companies?

Managing finances in the healthcare industry is becoming nothing short of a nightmare. Healthcare providers today face unprecedented challenges in managing their revenue cycles. You might ask which challenges have the most impact? Well, staffing shortages reaching critical levels, and the continuous climb of the operational costs are the two biggest hurdles.

This crisis has become so troublesome and difficult to handle that many providers are now thinking whether their current approach to revenue cycle management (RCM) is truly sustainable or not. As a solution, a lot of healthcare practices now prefer outsourcing their operations. In fact, 32% of the providers in the US are now exploring RCM companies for outsourcing.

However, a natural question arises here. Is outsourcing really beneficial? Or in-house teams are still a better option. Well, that’s what we are going to find out in this blog. So, let’s start.

Healthcare Staffing Crisis: By the Numbers

Do you know 63% of healthcare providers report significant staffing gaps in their RCM departments?

The healthcare industry employs over 17 million people, making it the largest employment sector in the United States. However, this massive workforce is experiencing unprecedented strain. The Bureau of Labor Statistics data shows that healthcare employment has struggled to recover to pre-pandemic levels, with some sectors still facing significant shortfalls.

The following are some recent  statistics related to staff turnover in the healthcare industry and workforce demographics:

Turnover Statistics

• Front office support staff: 40% turnover rate
• Overall healthcare administration:3% turnover
• Hospital turnover average:7% (2024)
• Revenue cycle specialists: 11-40% range

Workforce Demographics

• The average RN age is less than 43.4 years
• Less than 17% physicians are under the age of 40
• 7% of healthcare workers plan to leave within 2 years
• 41% of nurses intend to change jobs

These stats might not feel like a big hurdle at the start. However, when compounded over time, these challenges create a cascading effect on revenue cycle performance. Let us explain this a bit more using an analogy. When practices are understaffed, they face longer processing times, increased error rates, and reduced collection efficiency. This impact is amplified in highly specialized areas such as anesthesia billing services, where complex coding rules, time-based charges, and strict compliance standards require a higher level of precision and expertise to avoid costly delays.

In-House vs. Outsourced RCM Costs

Analyzing the surface-level expenses is not enough to gauge which is better between in-house teams and specialized RCM companies. So, in this section, we will create a detailed breakdown of the expenses and perform a cost-to-benefit analysis.

The industry standard for cost-to-collect ranges from 3% to 4% of total patient service revenue, but this figure varies significantly based on organizational size, complexity, and efficiency levels.

Healthcare organizations lose an estimated $125 billion annually due to billing mistakes alone. So, accuracy is of paramount importance.

Detailed Cost Breakdown Analysis

However, cost savings represent only part of the equation. Collection efficiency often improves significantly with outsourcing. Industry data shows that in-house operations typically achieve 60% collection rates

Pricing Models for RCM Services

An important thing that you must know about RCM companies is that they offer many different types of pricing models. These models are carefully designed not only to boost the profit of the companies themselves but also to accommodate different practice needs. Following are some of the most frequently used pricing models:

Strategic Advantages and Potential Drawbacks

Benefits of RCM Outsourcing

• Access to Expertise: Professional RCM companies employ specialists with deep knowledge of complex billing scenarios, including specialized areas like anesthesia coding and reimbursement optimization.
• Better Technology: Leading RRCM companies invest millions in cutting-edge automation, AI, and analytics platforms that most individual practices cannot afford independently.
• Scalability: Outsourced solutions can rapidly scale up or down based on patient volume fluctuations without the complexity of hiring or laying off staff.
• Compliance: The credible companies (not the shady ones) maintain dedicated compliance teams that stay current with constantly evolving healthcare regulations and payer requirements.

Potential Challenges

• Less Control: You may feel that you have less control over the daily operations and patient interactions. You will have to keep strong communication with your billing company.
• Security Concerns: Sharing patient information with external parties requires robust security protocols and may raise compliance complexity.
• Dependency: Reliance on external providers creates potential business continuity risks if vendor relationships change or service quality declines.

Wrapping Up

That’s it. In this blog, we have tried our best to provide you with all the necessary information that you need to choose between in-house teams and outsourcing. Based on our experience, research, and data, outsourcing your billing and RCM operations is the better choice in almost every case.

The choice between staffing and outsourcing isn't permanent. You can try to check if outsourcing works for you or not. Usually, the results start to appear within three months. If you are not satisfied within three months, you can always switch back.