By 2 Minutes
Join me for a moment for story time:
Once upon a time, there lived a successful businesswoman who was having a conversation with her mentor, who was also an accomplished business leader. The younger businesswoman disclosed to her mentor that she was thinking about going back to business school in order to obtain a Master’s Degree in Business Administration. The younger woman relayed that most of her peers had this degree and she could learn a lot by getting one for herself.
The mentor scoffed as he questioned his protége’s line of thought. “Why would you go get a degree?”, the mentor asked. “Just hire someone with an MBA instead.”
This story is an analogy for a very common problem in business, including the ARM industry: Buy vs. Build. When does it make more sense to buy something than it does to build it yourself?
Healthcare companies are learning this lesson for themselves right now, as they seek to reduce expenses by divesting themselves of their revenue cycle management operations. What the healthcare companies have learned is that bill collecting is not a core competency for them and they would be better served to focus on what they do best: making sick people healthy.
The same question that healthcare companies are asking themselves is identical to what all companies must ask when deciding to buy or build: is this something that we’re really good at? If a company is really good at making cars, that doesn’t mean the company is an expert in manufacturing the paint that goes on those cars. The same can be said for companies in the ARM industry: companies that are great at collecting debts are likely not as proficient at designing a technology platform to facilitate that work.
Additionally, it can be very difficult to achieve economies of scale when building software.
For smaller companies, the costs of buying dramatically outweighs the costs associated with building and maintaining new software. The ultimate factor boils down to the return on investment: will the money spent on re-inventing the wheel lead — in this case — to higher collection rates. If the answer isn’t a resounding “YES,” then the answer should be clear.
By focusing on core competencies instead of ancillary products or services, a company can maximize its productivity and pay attention to what matters most, vastly accelerating the timeline to fully productive efforts.
You don’t see us in the software industry attempting to collect debts, right? Let us nerds work out the IT details so you can concentrate on your business.
