Recovering consultant Andrew Tsang is back with another opus exploring why healthcare’s revenue cycle management bundle is currently mispriced.
Every great unbundling starts with a great bundle. The term “unbundling” was first coined in a 2010 Tumblr post that applied the concept to Craigslist, a patchwork homepage of loosely related categories waiting to be peeled off as specialized startups.
- AirBnB eventually took housing, Indeed took jobs, and dating apps took personals. Investors were standing by with checkbooks in hand every time.
RCM is a horribly great bundle. It’s a $300B monster of a dozen-or-so steps that exists to process the disagreement when payors and providers can’t agree on what care is worth.
- Tsang maps these steps out in what might be our favorite visual of the year.
- In healthcare, RCM is the market that’s practically calling for investors to break it into its component parts (prior auth, clinical documentation, denials), but Tsang makes the case that the idea is misguided.
Craigslist categories aren’t linked like RCM. You don’t need a new love interest to get a new couch, and you don’t need a new couch to get a new love interest. Although it couldn’t hurt.
- That said, optimize coding and the patient’s bill goes up: higher-acuity codes mean bigger claims mean bigger coinsurance, a $1,600 patient responsibility becoming $2,200 on the same procedure.
- Optimize collections and patients defer future care. Every optimization at one station ripples through the others.
Hospital execs know this. They’re not buying best-of-breed point solutions, they’re consolidating onto platforms that cover the full claim lifecycle, and vendors are following suit.
- Tsang argues that vendors would rather acquire RCM wedges than build them, and you don’t have to look much further than Waystar or Smarter Technologies for evidence that he’s probably right.
The Takeaway
Tsang makes a compelling case that the RCM vendors that survive ten years in this market aren’t the ones reducing the claims disagreement. They’re the ones owning the channel for it.
