Sue Perrotty, CEO of West Reading, Pa.-based Tower Health, told Becker's that health systems need to move away from the "we built it, we love it" mindset.
"You don't need to own something for it to work well," she said.
In July, Tower transitioned its revenue cycle operations to Ensemble Health Partners. About 675 Tower employees moved to Ensemble in the process. Ms. Perrotty said that revenue cycle is "one of the hardest business models to try to figure out, and we're subject to a whole other industry, the insurance industry, and all of the shifts a consumer might go through throughout their lifetime."
"We are never going to be the best in class at doing that because we want to invest in our clinical infrastructure," she said. "For revenue cycle, we wanted to partner with an organization where that's all they do, and Ensemble is the best in class at that."
Ms. Perrotty said Ensemble is "aggressive with their payers, consistently investing in new technologies and scaling in areas in which it is critical to actually win more revenue for the hospitals they serve."
Like Tower Health, Renton, Wash.-based Providence has outsourced some of its revenue cycle operations. In January, the health system completed the sale of its revenue cycle management company Acclara to R1 RCM. The closure of that sale in January also included a 10-year agreement for R1 to provide middle and back-end revenue cycle services for Providence.
CFO Greg Hoffman told Becker's that a decade ago, the system "probably had a mindset where we needed to do everything ourselves." Now, they think, "maybe others can do it better in partnership."
Mr. Hoffman said that over the past few years, they noticed that the underpayments and denials were going up over 50% in a two-year period of time, which led to the number of touches per claim going up over 50% over that same time period. They realized they didn't have the scale that a partner like R1 had.
"R1's technology platform was years ahead of our own and it was an opportunity to catch up and lean into that technology."
That mindset shift goes beyond revenue cycle. In April, Providence sold Labcorp some of its laboratory business assets that were operated by its California medical groups, including ambulatory lab draw stations and an ambulatory laboratory facility and other equipment.
"They were just more efficient, more cost effective for us," he said.