Is outsourcing medical billing to vendor companies a wise option? Many practices deliberate it and after careful evaluations conclude it is indeed a sensible alternative to setting it up in-house. Here’s why they trust the viability of the outsourcing option, most of the physicians want to stay patient-care focused and do not want an additional burden of overseeing a billing division within their practice.
Many physicians opined that though outsourcing does weaken their control over collections, the advantages far outweigh these drawbacks. First, the maintenance of an in house billing division cost a fortune according to a leading practitioner Dr. Evert Smith who after a quick cost comparative analysis on his little notepad determined the following based on his practice that he shares with two other physicians.
Their practice of three physicians would require two medical billing specialists to file 70 insurance claims per day (@ 20 business days a month = 1400 claims) the annual would be 16,800 claims. An average amount billed per claim averages to $ 150 and the annual value of claims filed would be $ 252, 0000.
Here is a table of the cost that the practice would be spending to run the in-house billing division estimated by the doctor.
Billing Operational Cost: The practice with three doctors needed two medical billing staffers, with an average salary of $ 42,000 for each employee, the cost to the practice would be $ 84,000. Health insurance for both employees would add to $ 8,000, and federal and state taxes would cost another $ 12,000. The cost for training them on updated software would cost $ 2,000. In addition, miscellaneous cost that would include office space, paper & stationary and other hardware would cost $ 16,000 approximately.
Outsourced: A billing service would need 8 hours per week, which would average at $ 15 an hour, plus the equipment for follow-ups with the practice, an approximate cost will add to $ 6,000.
Software & Hardware Cost: The best of billing software would cost the clinic $ 7,000, and if the service was outsourced, the practice would need a computer and printer to communicate or print documents forwarded by the billing company, the relative cost would just be around $ 500.
Outsourced: The outsource company would also need the same application costing $ 7,000, however the work output would be tenfold handling multiple practice accounts.
Claim Processing Cost: It would cost the practice $ 300 per month for processing the claims (@ $ 100 per practitioner) the annual cost $ 3,600.
Outsource: The billing service company charge 6% to 7% of the amount collected as their fee.
Average billing amount collections: Depending on the specialty of the practice, an in-house billing department collects 60% of what is billed.
Outsourced: The billing company on the other hand collects 8% to 10% more of what the practice collects.
In spite of the cost factor that favors outsourcing as a preferred option, practices based on their needs and analysis must choose a service that is proven for efficiency in billing and coding. There are countless billing companies that promise the stars and deliver dust. Caution in choosing a billing company that saves you cost, and fulfills your needs should be the sole criteria.
