By Nick Lamb

Home-based care providers are facing a perfect storm in 2025. Even with modest improvements in operating margins last year, financial stability remains elusive as administrative costs continue to climb at every level of the healthcare system. For example, industry data suggests that administrative overhead now makes up more than 40% of total hospital expenses, and home healthcare is no exception, seeing a 10% increase in home health costs.

Labor and drug costs are further straining the system. Analysts warn that providers risk significant financial setbacks without proactive cost control and strategic investments, particularly in areas like revenue cycle management (RCM). For home health and hospice agencies, reimbursement complexities and rising administrative costs pose formidable challenges. Many providers are turning to outsourced RCM as a strategic solution to combat these hurdles, improve revenue stability, streamline operations, and enhance patient care.

Focus on patients, not paperwork: Reducing administrative overload
Home health and hospice agencies often struggle under the weight of complex RCM. In-house RCM requires specialized expertise in billing, coding, claims processing, and compliance—where even minor errors can lead to denied claims, delayed payments, and ballooning administrative costs. Staying on top of ever-changing technology, payer negotiations, and regulatory compliance further strains already limited resources. This administrative burden takes clinicians away from patient care and impacts the bottom line.

Outsourcing RCM offers relief. By entrusting these intricate processes to specialized RCM providers, agencies free up their clinical teams to focus on what matters most: patient care—no more wrestling with billing errors or appealing denials. The result is a more predictable and consistent revenue stream. Additionally, partnering with an RCM provider eliminates the costly and time-consuming task of recruiting, training, and retaining qualified RCM staff in a system plagued by staffing shortages. This provides operational stability and allows agencies to redeploy internal resources to mission-critical areas.

Drive financial performance: Faster reimbursements, stronger cash flow
Home-based care providers know the challenge of operating with tight margins. Delayed reimbursements can create significant financial strain, impacting their ability to deliver the best care. Partnering with a dedicated RCM provider offers a solution. These specialists accelerate cash flow by streamlining the entire revenue cycle, from claim submission to payment receipt. Their expertise in automation and analytics allows them to catch potential errors early, preventing costly denials and ensuring compliance.

The result? Faster access to funds allows providers to focus on patients. Beyond just processing claims, RCM partners offer invaluable industry insights. By understanding payer trends and best practices, they optimize claims management strategies, maximizing reimbursements and strengthening the financial health of home-based care organizations.

Cutting costs without compromising performance
Home-based care agencies must carefully manage their resources to thrive in today's healthcare environment. Maintaining an in-house billing department can divert funds from core patient care activities. Staffing, training, software, and infrastructure costs can quickly escalate, especially for smaller organizations.

Outsourcing RCM allows agencies to shift billing responsibilities to specialized RCM providers, allowing agencies to reallocate their budgets to be reinvested in patient care, technology improvements, and other mission-critical areas. RCM partners offer scalable solutions, adapting to fluctuating claim volumes and payer mix changes, ensuring that agencies maintain financial health without overextending their internal resources.

Enhancing financial visibility and strategic planning
Beyond managing day-to-day billing tasks, outsourcing RCM enhances financial visibility. Many RCM partners offer personalized data analytics and detailed reporting, enabling providers to track key performance indicators (KPIs) and gain deeper insights into financial health.

With improved transparency, agencies can identify areas for revenue optimization, adjust operational strategies, and drive long-term financial sustainability. Data-driven insights also empower providers to make informed decisions that align financial performance with high-quality patient care.

2025 and beyond: The future of home-based care is RCM
Navigating the maze of healthcare regulations is a continuous challenge for home-based care agencies, and failure to keep up can lead to costly penalties and disruptions in revenue flow. Outsourcing RCM offers a proactive approach to compliance. Experienced RCM providers proactively monitor regulatory changes and implement necessary adjustments in real-time, minimizing the risk of non-compliance. This allows agencies to focus on providing quality care, knowing their revenue cycle is protected.

Ultimately, as we look ahead to the remainder of 2025 and beyond, the future of home-based care hinges on more than just keeping the doors open. It's about ensuring caregivers can truly focus on what they do best: caring for patients. By strategically outsourcing RCM, providers can reclaim that focus, building a more sustainable and compassionate model of care for the years to come.

About the author: An RCS pro with experience at both the provider and payer levels, Nick Lamb brings 20+ years of experience creating and running RCS operations for acute care facilities, non-Medicare post payment audits and retail pharmacy Benefit Managers. At Homecare Homebase, he leads operations for the Revenue Cycle Services team to ensure high performance for our customers. He earned a B.S. in Business Administration; Management Information from University of Texas at Dallas.