In This Report

It is well-known that healthcare companies are facing extreme pressures to reduce the cost of healthcare while also improving the quality of care for patients. These goals are the central focus of a wide array of technology initiatives throughout the healthcare industry, both in terms of significant advancements in clinical solutions and continued efforts to streamline administrative costs. This report will focus primarily on the administrative components that encompass the all-inclusive process of creating, submitting, analyzing, and ultimately paying for patient medical bills - a very broad set of administrative services that are commonly referred to as healthcare revenue cycle management.

A recent study conducted by researchers at Harvard Medical School and Public Citizen estimated that 31% of the $1.3 trillion in U.S. outlays for healthcare in 2003 was devoted to administrative paperwork. This stunningly high percentage of "friction" and "transaction costs" persists and has given rise to a renewed focus on eliminating waste and reducing costs through the application of technology and outsourced services. However, like any compelling cause in the healthcare industry, these efforts have frequently been challenged by the fractured and contentious nature of the industry itself, as well as conflicting visions of new models that might be employed to solve the underlying problem. The result is a vast and disjointed sub-industry of "revenue cycle" vendors that fall across several dozen distinct business niches.

In an effort to understand how various companies are approaching the opportunity, TripleTree has interviewed several dozen private and public companies in the sector to evaluate their strategies and solicit input with regard to where emerging and established businesses are experiencing the most promising growth opportunities.

What we have discovered is a healthcare revenue cycle industry that contains several hundred companies, employing a wide range of business models and product and service offerings.

In the analysis that follows, we will examine the macro-economic drivers that are creating opportunities for revenue cycle vendors, illustrate the sector competitive landscape within both the provider and payer sides of the revenue cycle, and also explore several of the common business models that we see taking hold within various sub-sectors. We also highlight many of the "big picture" trends that are creating ripple effects across the entire industry.