With private equity merger and acquisition activity slowing considerably since its peak in 2021, PE sponsors are exploring alternative strategies to enhance the value of their portfolio companies while they wait for M&A activity to increase. Because of this, many PE-backed healthcare services businesses are enhancing their efforts to locate and recoup money that is leaking from their current revenue cycle.
The effectiveness of tightening the revenue cycle is directly influenced by the person hired to oversee this critical function. Whether that individual should be hired at the director, VP, or C-suite level is dependent on the maturity of existing processes and the goals of revenue cycle management outlined in the company’s value creation plan.
Learn more about what to expect from candidates at each of these levels below.
Director of Revenue Cycle
Due to budgetary considerations and restraints, it is common for employers to initially target their RCM leader at the director level. However, it is important to have an idea of what to expect, and what not to expect, from a candidate at this level in today’s talent market.
A director-level candidate brings a tactical approach, where they are both willing and able to put the work in alongside their RCM team. Their priority is to keep existing processes that have already been implemented running smoothly and efficiently, and to locate the cash that is leaking from them.
Candidates at the director level may lack the foundational experience of building and developing RCM processes from the ground up. Only select candidates have the experience of leading a system implementation, a key element of improving today’s RCM processes.
Healthcare services businesses that have already implemented and professionalized their RCM processes with a streamlined workflow are prime for a director of revenue cycle management. A director-level candidate’s ability to seamlessly enter an established environment and manage critical aspects of the RCM function effectively make them an ideal candidate for this business scenario. If existing RCM systems are not streamlined or if they require a significant overhaul, a director may not generate the best results and it is likely the company will require a candidate with executive experience.
VP of Revenue Cycle
Candidates at the VP level are more likely to bring a broad and strategic approach to RCM, making them ideal for healthcare platforms that require both a comprehensive RCM strategy and the development of an infrastructure that can be seamlessly scaled in tandem with a growing platform.
VP-level candidates can bring significant RCM transformation experience. This often includes the creation, or redesign, of entire appointment-to-pay cycles that require extensive process mapping and experience overseeing RCM system implementations as part of these transformations. The most in-demand VPs of revenue cycle have a key understanding of which key performance indicators to measure and ways to generate actionable reports that help inform executive business decisions. Not to mention, they have a track record of monitoring and implementing evolving industry best practices into a platform.
References for experienced VPs can speak to their capabilities of building impactful RCM teams, or how they collaborated with related business functions like managed care, or how they managed overseeing third-party service providers supporting the RCM function. If a change agent is needed, in addition to an RCM leader, a VP of revenue cycle is a great option.
Chief Revenue Officer
In scenarios where an RCM leader needs to bring an expansive skillset in addition to their experience—one capable of both developing and leading referral management, managed care, and RCM strategies, and improving the synergy among these critical functions—it is typically best to fill these open positions with a C-level executive. This hybrid leadership role, with its expanded scope of responsibility, has led to an increase in chief revenue officer (CRO) searches as of late, especially for multi-specialty healthcare organizations.
Recently, a healthcare platform specializing in several oral health categories, ranging from dentistry to oral surgery, orthodontics, endodontics, and periodontics, engaged a CRO candidate. A key reason they wanted a leader at the executive level was due to their need to capture as much per-patient revenue as possible—this was made possible through the development of a referral strategy that keeps their patients inside their platform for all of their oral health needs. Similarly, optometry and orthopedic platforms that cover a broad range of services are moving towards hiring CROs to simultaneously address similar objectives.
While the ideal CRO profile brings expertise in referral management, payor contracting, and RCM strategies, these executives also tend to have strong presentation and communication skills and they are effective at managing the board. They also bring a level of technical experience that enable them to manage specific aspects of the RCM infrastructure and they are adept at successfully collaborating with technical executives, like the chief information officer or the chief technology officer.
The Unique Goals of Revenue Cycle Management
Upon the careful evaluation of the healthcare platform, and after clearly defining the RCM objectives, a determination can be made as to which level of RCM leadership is needed—whether it be at the director, VP, or C-suite level. Whichever level is decided, it is important to know that the current demand for qualified candidates is high due to the increased attention being placed on RCM in PE-sponsored healthcare organizations. This increased demand, coupled with general wage inflation, has driven up salaries across all levels, with top CRO candidates commanding salaries comparable to their CFO counterparts.
A good revenue cycle leader will justify their worth fairly quickly, however, by capturing leaking revenue—in some recent instances this has resulted in millions of dollars generated for the bottom line. For organizations working with constrained budgets, innovative compensation packages can help. For example, variable compensation can be awarded as a financial incentive for meeting defined performance metrics, ensuring that a high-performing RCM leader is compensated for their ability to unlock additional earnings.
In navigating the dynamic landscape of revenue cycle management, the strategic choice of the right leader, tailored to the organization’s unique goals and challenges, stands as a decisive factor in unlocking financial potential and ensuring sustained success in the ever-evolving realm of PE-backed healthcare services.