Home-based care providers are facing another year of financial pressure. While operating margins improved slightly in 2024, experts warn that health systems could see setbacks in 2025 without careful cost control. Additionally, labor costs are down, but they’re still a pain point for many health care systems. Despite lower labor costs compared to 2022 peaks, Fitch Ratings analysts note that labor expenses still make up more than half of total spending for most health systems.  

These inconsistent challenges, along with reimbursement complexities and administrative burdens, continue to challenge providers striving to deliver quality care. In response, many providers are turning to outsourced revenue cycle management (RCM) as a strategic move to maintain financial stability.

1. Reducing Administrative Burdens 

RCM involves the management of billing, coding, and claims processing—tasks that require precision and expertise. For home health and hospice agencies, errors in these areas lead to denied claims, delayed reimbursements and increased overhead costs. Managing RCM in-house means devoting many internal resources that aren’t always available to compliance, technology updates, and payer negotiations.

By outsourcing, agencies offload these administrative responsibilities to specialists who focus solely on revenue cycle processes. This allows clinical staff to spend more time on patient care while ensuring claims are handled accurately and efficiently. Reducing the time spent correcting errors or appealing denials translates into a more predictable revenue stream.

Additionally, outsourcing reduces staffing challenges. Recruiting, training, and retaining qualified RCM professionals can be costly and time-consuming. Turnover in billing departments can create inconsistencies that lead to revenue losses. Partnering with an RCM provider ensures access to an experienced workforce without the ongoing effort of maintaining an in-house team. It also gives health systems more resources to invest in critical areas.  

2. Accelerating Reimbursements 

Home-based care providers often operate with narrow margins, making cash flow management critical. Slow reimbursements can disrupt operations, forcing providers to cut costs in ways that may impact care delivery. A dedicated RCM partner can help accelerate revenue collection by reducing claim processing times and minimizing denials.

Outsourced RCM teams leverage automation and analytics to identify potential errors before submission, ensuring claims are clean and compliant. This proactive approach reduces the likelihood of rejections and expedites the reimbursement process. Faster, more reliable payments enable providers to allocate resources where they are needed most. For example, salaries and related costs (benefits, wages, etc.) account for a large portion (58.7%) of Mayo Clinic’s total expenses. The health system attributed this increase to strategic hiring initiatives.

Outsourcing also allows providers to benefit from industry best practices. RCM partners handle billing for multiple organizations, giving them broad insight into payer trends, denial patterns and workflow efficiencies. They apply this knowledge to optimize claim processing and maximize reimbursements.

3. Decoding Regulatory Requirements 

Cost management aside, the health care industry is also subject to frequent regulatory updates, and keeping up with changes in reimbursement policies requires constant monitoring. Home-based care agencies must navigate payer-specific requirements, Medicare and Medicaid regulations and evolving compliance standards.

An experienced RCM provider stays ahead of these changes, implementing necessary adjustments without disruption. This reduces the risk of noncompliance and ensures agencies receive the maximum allowable reimbursement for services provided. Providers can focus on delivering patient-centered care rather than scrambling to adapt to new policies.

RCM firms also invest in compliance monitoring and reporting, ensuring providers meet documentation and coding standards. This reduces the likelihood of audits, penalties and revenue clawbacks from payers.

4. Refining Operational Costs 

Managing an in-house billing department comes with overhead costs, including salaries, training, software, and infrastructure. Smaller agencies may struggle to afford the necessary technology and expertise to keep RCM processes efficient. Outsourcing eliminates the need for ongoing investments in personnel and technology, shifting costs to a predictable service model.

Without effective RCM, hospitals are missing out on up to $22 million in additional revenue. GrandCare Health Services, a five-star agency serving over 500 patients and a popular post-acute provider with Southern California’s top hospitals, streamlined its RCM operations from a team of five to just one, leading to increased revenue. This reflects a broader industry trend, as many hospitals continue to overlook significant revenue opportunities due to inefficiencies in their RCM processes.

RCM partners offer scalable solutions that adapt to an agency’s needs, whether handling increased claim volumes during peak seasons or addressing payer mix fluctuations. This flexibility allows home-based care providers to maintain financial health without overextending resources.

Another essential benefit of outsourcing an RCM is it can provide better financial visibility. Many RCM partners offer personalized data management with detailed reporting and analytics, helping providers and in-home caregivers understand their financial health, track key performance indicators  and tailor their approach to each patient’s unique needs. With enhanced transparency, agencies can identify areas of improvement and drive long-term financial sustainability while improving the quality of care delivered.

5. Enhancing Focus on Patient Care 

Ultimately, outsourcing RCM is about redirecting focus. More than half (53%) of healthcare executives surveyed said that enhancing productivity and improving efficiencies were top priorities for 2025, allowing them to ensure providers can offer the best patient care. Home health and hospice agencies exist to provide compassionate, high-quality care—not to navigate the complexities of medical billing. By offloading revenue cycle tasks to dedicated experts, providers can spend more time with patients, improving outcomes and satisfaction.

Beyond financial stability, outsourcing RCM fosters operational efficiency. Administrative staff can shift their attention to improving patient experiences, managing staff schedules and enhancing service quality, which strengthens the alignment between operational priorities and patient care goals.

A Strategic Move for 2025 

Why invest in infrastructure, training, and innovative technologies for home-based care? It’s the path to a future where this model is the gold standard. This investment enables personalized, high-quality care while reducing costs. Home-based caregivers managing increasingly complex needs require compassion, empathy, advanced skills and they deserve the technological tools that bridge the gap between traditional healthcare and the home setting. Providers who adopt this strategy will be well-positioned for future success. 

When is it time to outsource your billing and revenue cycle management (RCM)? For home medical equipment (HME) providers, that can be a big step, especially if budgets are tight. But companies like Prochant, which provides end-to-end and focused billing solutions for the HME and home infusion markets, can help bring in the money by taking over some of your back office operations—or even the entire revenue cycle. HomeCare asked Joey Graham, chief revenue officer at Prochant, to help explain why outsourcing RCM can make a difference.

HomeCare: As we dive into 2023, why should outsourcing RCM be on HME providers’ to-do lists? What benefits can it bring to an organization?            
Graham: As we look at 2023, we’re facing some unprecedented challenges: record inflation, an increasingly difficult employment market, major supply chain disruptions, and the tail end of a global pandemic. Demand for HME is up, supply is waning and providers are backlogged. Now more than ever, providers are looking for opportunities to reduce and/or contain labor costs while improving key RCM metrics like days sales outstanding (DSO), 90+ A/R balances—that is, the percentage of open outstanding accounts receivable balance that is at least 90 days past the date they became billable—and collections rates.

The trick is setting this up while simultaneously creating scalable RCM infrastructure that is able to handle increasing patient volumes. Accomplishing this is significantly easier if you partner with the right RCM outsourcing vendor. If managing patient orders and referral expectations is taking all of their attention, providers need a strong RCM partner
they can turn to for front- and back-
office management.

HomeCare: How can outsourcing RCM impact staffing and retention?
Graham: When you outsource a large portion of your RCM work, you shift the risk associated with attrition to that vendor. This allows you to manage a smaller team. The RCM vendor in turn is better positioned to manage the attrition because they have a significantly larger RCM team, and the ability to fund bench resources who are available to step in quickly. Bench resources specifically are a luxury that most HME companies can’t even imagine—they are under-staffed and over-worked, so having extra people available is simply out of reach. Will attrition go away? Absolutely not, but it will be better managed and disruptions will be minimized.

HomeCare: Do people worry that outsourcing will actually cause them more work, such as having to go back and produce documentation? Is that actually the case?
Graham: It depends—the reality is, you need that documentation. If you’re not getting it up front and your process is that you won’t bill without it (a business decision), someone’s got to get it. It’s all about your front-office and intake process. Your RCM partner can help you streamline intake, as well as take over portions of the process for you. Intake is a process that can be outsourced. Regardless, an RCM partner has seen what works and what does not and can let you know what other successful providers have done to address this.

HomeCare: Is outsourcing billing all or nothing? What options might there be for smaller companies that aren’t ready or willing to give up some control?
Graham: While it depends on the specific RCM vendor you’re evaluating, in general it can be done strategically, parsing out the right work to the right partner. For example, you may have a handful of payers you want to keep in-house. You may have a patient-pay vendor you work with who manages your patient payment portal, payment plans and statements. And you may have an RCM vendor focused on your insurance payers. The work can be parsed by payer, branch or product line. For example, you may keep your high-end rehab in-house and leverage an RCM partner to work your respiratory and supply lines of business. We’re extremely flexible and meet providers where they’re comfortable. Around half of our growth comes from existing clients adding services; most companies start small and grow into an outsourcing relationship rather than going all in at once.

HomeCare: You’ve talked in the past about using key performance indicators (KPIs) to focus on problem areas and to keep tabs on how the business is going. What are some important KPIs HME organizations should be tracking? Yes, we’re very big on KPIs. Some of the most important to watch include:

• DSO
• 90+ A/R%
• Collections rate
• Write-off rate
• Denial rate
• Clean claim rate
• Open order days
• Hold days

It is recommended that all HME providers track these metrics monthly, following each month-end close. Create a KPI dashboard and trend them over time. Set goals and manage progress against them. If possible, drill down to identify payer, product and branch trends. Prochant has addressed this issue with our web-based RCM analytics platform, which is available to our clients at no additional cost.

HomeCare: How can an organization be sure that everything is secure?
Graham: Information security is a hot topic, with major data breaches occurring daily. In just the last couple of months, the following organizations have experienced major breaches: Twitter, Norton, Slack, LastPass, Uber, Medibank, Microsoft, American Airlines—the list goes on and on. These are multi-billion dollar enterprises that have invested significantly in data security.

This is an area where I feel providers need to look for outside help: help securing their own systems as well as only sharing data with vendors who can demonstrate they have the right policies and procedures in place. Anyone can say they’re “HIPAA certified.” This doesn’t mean anything. Look for partners who have a formal HIPAA certification. There are only a handful; the major ones are HITRUST and ISO 27001. This means they have gone through a formal certification process, similar to your accreditation procedures, to not only document but prove their compliance with stringent data security protocols.

Data security is a continuous process, and organizations with formal HIPAA certifications must invest heavily every year to maintain their certification and ensure they’re keeping up with the evolution of technology and cyber threats. Prochant is proudly HITRUST certified. To date, we are the only RCM partner for HME that has achieved this certification. This is a major reason why some of the largest organizations in HME have turned to us for RCM support.