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Hospital says revenue-cycle outsourcing backfired, costing roughly $1 million
Summary
Madelia Health officials told the EDA that an outsourced revenue-cycle arrangement with R1 failed to deliver promised savings and instead cost the hospital about $1,000,000; leadership described steps taken to rebuild internal capacity and reduce denials.
Gabe Walls told the EDA Madelia Health previously outsourced revenue-cycle operations to a vendor identified in the transcript as R1 (a spin-off from Cerner). He said the vendor "over promised and under delivered," and that the arrangement ultimately cost the hospital roughly $1,000,000 rather than saving the $500,000 that had been projected.
Walls said the hospital has since brought revenue-cycle work back in-house, hired experienced staff for billing and finance and is targeting a reduction in insurer denials. He estimated cutting the denial rate from about 40% to 30% could yield $1 million to $2 million in recoverable revenue.
