Outsourcing Your Billing: Weighing Your Options


Medical billing is an essential function of any medical practice and greatly impacts the sustainability of a physician’s business. The question is whether outsourcing to a medical billing company is the right move for your business. The answer is, it depends.

Obviously there are true benefits to maintaining an in-house billing department. Namely overseeing staff, access to reports and patient files as you see fit and the ability to implement changes to systems. This is all accurate if you are truly managing.

As a physician you are extremely busy treating patients. Managing the day-to-day functions of an office can be quite cumbersome and time consuming. Having an office manager or clinical director can be an asset so long as they possess the skills necessary to oversee these functions, remembering that you still maintain oversight of their job function.

There are some downfalls to keeping your billing in-house that you should consider. One important point to ponder is the experience level and ease of access to multiple people with various backgrounds to help with answering questions and skills necessary to recoup monies owed. At a reputable billing company, there will be many employees with varied backgrounds providing a more comprehensive solution to your billing. Their experience and expertise should not be understated and can definitely impact correct initial claims submission and ability to recoup money even in the face of denials. A good medical billing company can also be a great asset to the physician informing them of the latest medical news in addition to changes in proper coding and documentation policies.

Training and ongoing education can also pose an obstacle with in-house billing. Most physicians do not find it necessary or do not want to spend the money to make sure their billing and coding staff are trained properly and stay up-to-date with the constant changes with government and commercial payers. Some even hire uncertified staff with the belief that billing is easy and is as simple as just entering some codes and sending out claims. I often ask physicians if they would hire just anyone off the street to do their taxes, and of course they wouldn’t. Then why would you not make sure those doing the coding and billing are certified, experienced, fully trained in applying the correct codes and are aggressive and knowledgeable in fighting claim denials? The formula is simple, hire the best and you will see higher revenue. You will also be less likely to come under scrutiny from audits or worse, investigations!

Financially speaking, there are some big differences between in-house billing and outsourcing. In-house costs are fixed in that they remain the same from month to month regardless of practice revenue. You are responsible for employee taxes, insurance, training, employee turnover, office space, software and the real time investment, management. A medical billing company is usually paid on a percentage basis and the fee for their service fluctuates with your practice revenue. In this case, the billing company is especially motivated to make sure all money is collected as they are paid based on that figure. They carry the burden of training, turnover, taxes, insurance, software maintenance and staying educated with all aspects of billing and coding.

Addressing control, a good medical billing company will provide you access to your patient billing records so that you can manage and oversee all of your practice billing. They should generate detailed reports showing where your money is at all times and the status on collecting monies still outstanding. Their staff should also handle patient balances with care and skill as billing can impact patient retention and referrals.

In a financial example, let’s assume it costs a medical office $69,000 a year (include all the fixed costs mentioned above) for the first billing employee and $61,000 a year for each additional employee. If your practice is generating $1,000,000 annually with 3 billing staff, it would cost 16% of total collections to maintain an in-house billing department. If a billing company is charging you 8%, you can see that there is a great discrepancy in the financial value between the two scenarios.

So, do you outsource or keep it in-house? If you are good at managing, keep your staff fully trained and don’t mind paying a little more, keeping your billing in-house may be the right solution. If you are losing money, don’t have the time or want the headache of managing billing staff and want to spend less, then outsourcing may be the right fit for your organization. If your choice is outsourcing, make sure you do your homework and pick the best company (not necessarily the cheapest one) as no two companies are alike.