At the end of June, executives at CapSite, a healthcare technology research and advisory firm based in Burlington, Vt., released their firm’s 2012 U.S. Revenue Cycle Management (RCM) Study. The study, the most recent in a series of CapSite strategic industry reports focused on the RCM market, surveyed 390 executives at 362 different U.S. hospital organizations, on vendor market share, preference, and other issues in the American RCM market. Among the respondents, 22 percent were CFOs, 38 percent were “other c-suite” executives, 21 percent were patient accounting or revenue cycle managers, 11 percent were CEOs, and 8 percent were IT directors.
Among the key findings:
> Twenty-one percent of respondents expected to be replacing their core RCM solution within the next 24 months; 63 percent were not planning to do so; and 16 percent were unsure whether they would or not.
> In response to the question, “In preparation for ICD-10 and HIPAA 5010, are you planning to replace your core patient accounting system in the next 24 months?” 21 percent said yes, a percentage equal to those who had said so in 2010.
> In response to the question, “Are you expecting to upgrade your current core RCM solution to address healthcare financial regulatory changes?” 53 percent of respondents answered yes, 38 percent said no, and 9 percent were unsure.
> Meanwhile, in response to the question, “Do you believe there will be a need for bolt-on RCM solutions once you have replaced or upgraded your core RCM?” 19 percent of respondents said yes, 37 percent said no, and 44 percent were unsure.
> Significantly, when that very same question was asked in 2010, the responses were quite different, with 46 percent of respondents agreeing that there would be a need for bolt-on RCM solutions after upgrading their core patient accounting systems, and 54 saying there would not be such a need (“unsure” was not an option as a response two years ago).
Gino Johnson, senior vice president and general manager at CapSite, spoke recently with HCI Editor-in-Chief Mark Hagland regarding these and other findings in the study. Below are excerpts from that interview.
What would you consider the most important findings in this study?
There are probably three things. We see some key indicators around the revenue cycle management market changing. You have a core set of providers and then a set of bolt-on RCM providers. And what we asked was, what is the direction in the market around the intent to replace those core revenue cycle management solutions? And what is the sentiment around the demand and need for those bolt-on or niche solutions going forward? And we see some real changes in those areas. There have been a number of core RCM solution vendors, and for years, they’ve been trying to crowd out those bolt-on solutions. And we do see clear evidence that fewer organizations see a need for those bolt-on solutions going forward, especially after they have upgraded or replaced their core solutions.
Another really is, as you look at the market for EHR [electronic health record]and for revenue cycle, we see, not surprisingly, that there’s an increasing preference for having your revenue cycle in your EHR. And whether it’s that old adage of “one throat to choke,” or they’re trying to manage fewer relationships, we clearly see that they’re trying to have the same vendor do both.
And also, respondents are more aware now of the need for interoperability because of ACO [accountable care organization] development and other work, yes?
Absolutely. I think it’s all three elements together.
How quickly will those trends evolve forward?
I don’t think it’s going to be quick. I think the reality will be that there may be a desire to move towards a simplified vendor world, but I don’t think it’s going to be quick, because the bolt-on vendors are generally smaller companies and are more nimble, and as they’ve done for several years now, they’re going to continue to innovate and address issues that core RCM vendors haven’t addressed. And the largest use of those bolt-on vendors is in academic medical center settings. And I believe that there’s going to continue to be a market for them. But in the smaller-bed end of the market, you’ll start to see that shift.
The third really big takeaway for us is that there’s going to be a fair amount of activity here. When you combine the 21 percent whose organizations will replace, and then among the 79 percent that won’t replace, one-third will make an upgrade, that’s a fair amount of activity that will take place in the next 24 months in response to the ICD-10 transition, healthcare reform, accountable care, and other regulatory issues. And they’re dealing with meaningful use as well. And so it’s overwhelming.
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