Despite industry-wide headwinds, large health systems are performing better — in both financial and quality metrics. Regional hospitals often struggle to compete, providing services on a smaller scale in a specific area, and with fewer resources at their disposal.
It’s not just that these smaller systems struggle to keep pace — they simply can’t get ahead. Regional systems often operate with thin margins, making it difficult to invest in necessary innovations. By contrast, larger health systems benefit from economies of scale and higher profitability. For example, Tenet Healthcare reported an operating margin of 12.2% in 2023, while many regional hospitals struggle to break even.
Strategic partnerships can help bridge this gap by providing access to resources and expertise that regional hospitals cannot afford independently. Hospitals with strategic partnerships often see improved financial performance and stability. To create value and remain competitive, regional health systems should seek outside expertise in areas where they lack resources and capabilities.
Regional hospitals face systemic challenges
Due to their limited scale and resourcing, regional hospitals often struggle with:
- Limited ability to recruit top talent: Attracting and retaining skilled professionals, especially in specialized areas like revenue cycle management, is challenging for regional hospitals. According to a report by the Commonwealth Fund, regional hospitals often lack the resources to compete with larger systems in attracting top talent. Moreover, multi-stakeholder collaboration and effective partnerships among healthcare providers and third parties were crucial in achieving health system goals.
- Constraints on innovation and technology investments: Thin margins and limited capital make it difficult for regional hospitals to invest in cutting-edge technology and innovation. McKinsey’s report on the future of US healthcare highlights that many regional hospitals are unable to allocate sufficient funds to technology initiatives due to financial constraints.
- Lack of integrated health networks: Unlike larger health systems, regional hospitals do not benefit from economies of scale, deeper reach, and better purchasing power. McKinsey’s analysis on regional health system strategies emphasizes the competitive disadvantage faced by smaller hospitals due to their limited scale.
An end-to-end RCM partnership can help regional systems get ahead
Partnering with specialized revenue cycle management experts can help regional health systems not only shore up their revenue cycle but also gain a competitive edge.
An end-to-end partnership allows hospitals to leverage external expertise and resources, letting providers focus on core operations and clinical outcomes.
- Access to top talent: Alignment with an RCM partner brings access to a large, skilled workforce. Ensemble employs an extensive workforce of industry-certified associates, enabling regional health systems to tap into talent and expertise that they would not normally be able to acquire on their own.
- Cutting-edge technology: Investing in advanced technologies is crucial for maintaining a competitive edge in healthcare. Ensemble invests millions into technology and innovation to benefit our entire client base, providing access to generative AI, automation and EHR standardization that can help regional hospitals stay competitive.
- Economies of scale: Similar to the advantages of participating in a group purchasing organization, partnering with an end-to-end RCM provider unlocks economies of scale. Ensemble leverages its size representing nearly $40 billion in annual net patient revenue to help change payer behavior and negotiate favorable contract rates and terms for its clients. Insights gained from transactional data across hundreds of hospitals also enables process optimization and technology development to solve issues at scale across organizations.
Partnership in practice
An RCM partner brings unique resources and expertise to the table, allowing for a more efficient and effective use of a hospital’s own capabilities. The right strategic partnership can drive results that improve performance system-wide, by:
- Improving patient experience: Our clients have seen a 27% reduction in patient registration wait times through streamlined patient communications, the delivery of comprehensive training and accelerated pre-service processes. Read more.
- Preventing lost revenue: Health systems partnering with Ensemble have prevented $80 million in revenue loss by addressing pre-billing errors and inaccuracies through our revenue cycle intelligence engine, EIQ®. Read more.
- Improving payer performance: A large health system resolved unpaid claims and achieved a 20% rate increase with a major payer through an effective out-of-network strategy and a robust approach to addressing contact language, payer performance and dispute resolution of outstanding AR. Read more.
- Reinvesting in patient care: By reducing first pass denial rates by 84% in just six months for a department within a large non-profit health system, Ensemble enabled the department to double patient treatment capacity. Read more.
These improvements — including reduced patient wait times, recovered revenue and enhanced payer performance — ultimately lead to a more efficient and profitable healthcare facility, regardless of size or location.
The bottom line
By partnering on the revenue cycle, regional health systems can achieve economies of scale, access top talent and implement cutting-edge technology. These partnerships enable regional hospitals to create strong market advantages and improve patient outcomes.
Because of this, regional health systems should consider strategic partnerships as a key component of their long-term efforts to remain competitive while facing challenging headwinds.
