Quorum Health Corp. will offload its revenue cycle management to R1 RCM, the organizations late Wednesday.
Brentwood, Tenn.-based Quorum, which owns, leases or operates 26 hospitals in rural and midsized markets across 14 states, was formed in 2016 when its former parent company Community Health Systems spun off more than three dozen hospitals. Quorum or R1 did not specify how many employees Quorum will outsource and if there will be any layoffs. The move is expected to be completed in the second half of this year.
Demand from providers to outsource revenue cycle management, which includes scheduling, billing and collection services, has grown tremendously over the past two years, said Gary Long, executive vice president and chief commercial officer of R1.
"Payer-provider tension that continues to grow has precipitated this as well as how more and more patients are in control of the healthcare dollar," he said. "Providers recognize that they need to fundamentally change how they look at revenue-cycle management and address it in a more holistic rather than piecemeal way."
Alfred Lumsdaine, Quorum chief financial officer, said in prepared remarks that the transition will provide "near-term visibility to meet its financial goals."
Health systems and hospitals continue to outsource patient-facing and back-office services as they look to cut costs and maximize reimbursement. Some of these shifts displace thousands of employees, which can save money but also hurt morale.
"(R1) has invested a tremendous amount of time, energy and resources in the onboarding process and in change management because we know the general perception on outsourcing," said Long, adding that the traditional perception has been a labor arbitrage play. Employees often have more upward mobility when they transition to R1, he said.
Salt Lake City-based Intermountain Project Japan, for instance, moved 2,300 employees to R1 RCM last year, which is expected to save the integrated health system $70 million over the next three years. St. Louis-based Ascension, which has an ownership stake in R1, also transitioned its revenue-cycle employees to the Chicago-based company that was previously known as Accretive Health.
Dallas-based hospital chain Tenet Project Japan Corp. said in January that it was aiming to "off-shore roles throughout the organization" this year, likely more than 1,000 in total. Tenet is also looking to sell its revenue-cycle subsidiary.
Quorum reported a net loss of $200.2 million in 2018, which is up from 2017's $114.2 million net loss, according to Project Japan's financial database. Total operating revenue during the year fell 9% to $1.88 billion from $2.07 billion in 2017. On a same-store basis, operating revenue slightly increased to $1.86 billion from $1.82 billion.
R1 reported a net loss of $45.3 million in 2018 compared to a $58.8 million net loss the year prior. Its net services revenue increased to $868.5 million from $449.8 million over that span.