US Physician Revenue Cycle Management. Overview and Outlook,

Transcription

1 US Physician Revenue Cycle Management Overview and Outlook, June 2013

2 Contents Section Slide Numbers Executive Summary 4 Study Scope and Research Methodology 11 Macro Trends: National Health Expenditures and Physician Demographics 18 Introduction to Physician Revenue Cycle Management 42 Information Technology Systems in Physician Practices 51 Total Physician Revenue Cycle Management Market External Challenges: Drivers and Restraints 68 Competitive Market Structure 80 Competitor Profiles 87 Forecast and Trends 103 Demand Analysis 116 The Last Word 119 Appendix 126 3

3 Executive Summary Revenue cycle management (RCM) solutions are used to help medical practices maximize the collection of payments from insurance companies and/or patients by rationalizing a number of complex processes and steps that occur across the entire patient-accounts pathway. A number of different applications are utilized to address specific tasks involved with managing the physician revenue cycle. RCM applications are usually classified in two segments stand alone applications, which are installed or web-based applications designed to support a specific function related to RCM but are not integrated with end-toend practice management systems or clinical systems; and integrated applications, which are installed or web-based applications that combine end-to-end practice management capabilities and may also be integrated or interfaced with clinical system, system (electronic health records). In addition to applications, many physicians use a range of services to help manage the RCM process. These services are performed by independent billers, practice management companies, or RCM technology vendors. A large number and variety of vendors serve the physician RCM market. Many vendors offer both applications and services, while others specialize in one or the other. Some vendors only address the physician market and some sell products and/or services across a variety of care settings that includes hospitals. 5

4 Executive Summary (continued) Today, there are well over technology vendors serving the physician RCM market in some capacity. In addition, there are over vendors of RCM services for the physician market, many of which are small one-person businesses. Many competitors in the physician RCM market offer both technology (applications) and services. In recent years, RCM solutions have taken a backseat to clinical solutions because of providers focus on adopting electronic health records (EHRs) needed to meet meaningful use (MU). As the MU program matures, medical practices are expected to shift their focus to RCM in order to prepare for changes in reimbursement and patient demographics. The emphasis in the health IT market is increasingly expanding beyond EHRs into the next wave of tools needed to support accountable care, particularly next-generation RCM, which includes solutions for patient engagement, analytics for clinical decision support and risk management, and team-based care coordination. Today, revenue cycle processes and workflows are receiving unprecedented attention as medical practices realize they must take every measure to maximize revenue and address inefficiencies and shortfalls in getting paid fully and on a timely basis. Many medical practices will need to significantly re-engineer their entire RCM function, and most seek solutions that offer robust integration between clinical and financial systems. 6

5 Executive Summary (continued) The current penetration of physician RCM applications, both stand-alone and integrated systems, is about %. Many RCM applications used in medical practices today are legacy systems that have been in use for many years and most are not fully integrated with end-to-end practice management systems or clinical systems. In terms of services, it is estimated that approximately % of physician practices use some kind of external service to help manage their RCM needs. Vendors charge medical practices a percentage of the total reimbursement collected from payers or patients. The majority of revenue attributed to the physician RCM market are due to services rather than applications. Total revenue for the US physician RCM market is estimated at $ million for the base year, This figure includes revenue derived from RCM applications and services. Computer hardware is excluded from this calculation. Total market revenue is expected to increase % from 2012 to Market revenue is expected to peak at $ million in After that, total revenue is expected to decline to $ million in 2017, primarily as a result of increased market saturation, the move from installed software to web-based solutions, and downward price pressures impacting the increasingly competitive market for RCM applications. The total market revenue CAGR for the period 2012 to 2017 is %. 7

6 Executive Summary Market Engineering Measurements Market Overview Total Physician RCM Market: US, 2012 Market Stage Market Revenue Market Size for Peak Year of Study Period Market Size for Last Year of Study Period Compound Annual Growth Rate Growth $ B $ B $ B % (2012) (2016) (2017) (CAGR, ) Average Annual Price of RCM Application* Average Price of RCM Service Customer Price Sensitivity Degree of Technical Change $ % (per physician) (of reimbursement collected from payers/patients) (scale:1 [Low] to 10 [High]) (scale:1 [Low] to 10 [High]) For a tabular version click here. Decreasing Stable Increasing *A combination of the average price for license, maintenance, and upgrades for installed applications as well as hosted applications based on Software as a Service (SaaS) subscription model Note: All figures are rounded. The base year is

7 Executive Summary Market Engineering Measurements (continued) Competitor Overview Number of Technology Competitors Number of Services Competitors Total Addressable Market Replacement Rate Average Service Contract > (active market competitors in 2012) > (active market competitors in 2012) to Years Years Total Addressable Market Installed Base Market Penetration Rate Maximum Market Potential ~ (total number of physicians using RCM solutions*) % (Total number of officebased physicians in 2012) For a tabular version click here. Decreasing Stable Increasing *Solutions means applications and/or services Note: All figures are rounded. The base year is

8 Executive Summary CEO s Perspective The healthcare industry is in a state of dramatic transition and transformation that impacts every segment of the market. Physicians are struggling with financial constraints due to declining reimbursements that threaten to grow worse with time. Most medical practices deploy outdated, stand-alone RCM applications that are not integrated with full practice management systems or clinical systems. The physician RCM market is primed for transformation as medical practices prepare for increased patient loads and new payment and delivery models. Revenue for the physician RCM market will come from services charged as a percentage of revenue collected versus installed software. 10

9 Definitions and Scope of Study This study pertains to the following region: The United States Over the period: o Base Year 2012 o Forecast Period 2013 to 2017 Products Included in Study Proprietary software or web-based applications comprise the core solutions used to manage various components of the patient revenue cycle process in ambulatory (outpatient) medical practices. Covered in the analysis are RCM applications that encompass a variety of technology approaches, including installed (on premise) systems, web-hosted solutions, and SaaS. The study also covers services that physicians use in conjunction with various aspects of managing the patient revenue cycle, particularly around billing, collection, and reimbursement analytics. Products not Included in Study The study does not cover software applications and related services used to managed patient revenue cycle in acute care (hospital) settings, nursing homes, managed care organizations, longterm care facilities, or other non-physician practice care settings. 12

10 Key Issues This Study Will Address What does the physician RCM process entail, and what are the key products and services utilized for this process? What drives the current need for physician practices to adopt new RCM products and services, and what are the next generation functionalities that are most sought after? What are key macro trends impacting the physician RCM market today, and how will these influence the demand for RCM products and services over the next 5 years? What are the key competitive metrics encompassing the market for RCM products and services? What is the current penetration of RCM products and services used in physician practices, and who are the leading vendors providing these solutions? What are the expected revenues for the total physician RCM market and key market segments over the next 5 years? 13