● FutureOutlook
● EssentialGuidance
● Conclusion
SITUATION OVERVIEW
IT usage in hospitals, physician practices, and other healthcare
provider organizations has historically lagged that of other U.S.
industries. But the combination of pressure from consumers, health
plans, and the government and increasingly stringent compliance and
regulatory reporting requirements has accelerated the adoption of IT.
IT is now viewed by healthcare industry leaders as a critical
component of strategies designed to increase operating efficiency,
improve care quality, and reduce operating expenses. Although the
total industry IT spend in the United States remains well below that of
other industries where IT use is far more mature, the compound annual
growth rate (CAGR) for healthcare IT spending currently ranks among
the highest of U.S. industries.
RCM functions were among the first business processes to be
automated in hospitals. The earliest software products designed for
hospital billing date back to the late 1960s. Today, virtually 100% of
U.S. hospitals have automated many aspects of the RCM process, most
through the acquisition of third-party packaged software.
RCM is one of the most critical, and costly, applications for hospitals
to operate. Despite its maturity, it remains one of the most dynamic
and support-intensive components of a hospital's applications
portfolio. The ongoing introduction of new services and the use of new
devices, treatments, medications, and diagnostic procedures must be
reflected in the hospital's billing master files. The regulatory,
legislative, and reimbursement environments are also in a constant
state of flux. Together, these factors necessitate a high level of staffing
by both the hospital's IT department and the vendor to ensure that the
software is compatible with changes in these services, changes that are
essential to ensure that charges are captured, validated, posted, billed,
and paid correctly.
But while virtually 100% of U.S. hospitals have automated core RCM
processes, current implementations often fall short of providing
optimal support for many critical intricacies of the billing and
receivables management functions. This has led to increased demand
for analytic software tools that enhance specific process components.
These analytic tools focus on three critical RCM process components.
The first type of product is generally referred to as contract
management tools. These tools are designed to analyze outgoing third-
party insurance claims to ensure that they are priced in accordance
with the contract payment terms negotiated between the hospital and
'2008 Health Industry Insights, an IDC Company #HI210391
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