CareCloud Blog

In-House vs. Outsourced Medical Billing

The question of whether to outsource medical billing operations or keep the process in-house is one that weighs heavily on many doctors and practice managers. The right answer differs from practice to practice based on a multitude of factors: age of the business, size of local labor market, and state of practice finances, among other considerations.

Aside from clinical services, billing and revenue cycle management are the most important processes of your practice. Your cash flow depends on them, so the decision of how to handle these services shouldn’t be taken lightly. You should do thorough assessments of your practice’s cost, staffing, and volume metrics to determine what’s right for you.

In the preliminary stages of the decision-making process, however, you’ll need to take a generalized look at what most doctors and administrators consider to be the major advantages and disadvantages that the in-house and outsourcing options each present.

In-House Medical Billing

Pros

Retaining Control: Especially when trusted, long-term employees are executing medical coding and RCM duties, doctors and administrators appreciate having hands-on control of financial operations through in-house billing.

Return on Investment: Once a practice has invested in training medical billers and purchasing billing technology, moving to an outsourced solution means losing lots of time and money spent. When there’s a valid infrastructure in place, it’s worthwhile to just refine existing processes to generate the best ROI.

Close Proximity: Should issues arise, the accessibility of your in-house billing department is a major advantage, since all it takes to observe the billing process and address any problems is a walk across the office floor.

Cons

Higher Costs: It’s generally accepted that the expenses of paying billers’ salaries, covering employee benefits, and purchasing technology systems add up to more than is commonly paid out to a third-party billing solution.

Liabilities: Medical billing departments can be hotbeds for embezzlement, and general employee neglect (think ignored encounter forms, discarded superbills, and unappealed claim denials) can go largely unnoticed if managers don’t keep a stringent eye on billing operations.

Support Issues: If your billing department consists of only two or three staffers, your operations – and cash flow – can be majorly stalled when even just one employee gets sick, goes on vacation, takes a leave of absence or quits altogether.

Outsourced Medical Billing

Pros

Less Expensive: Especially if you’re starting up a new business or transitioning because of an employee’s resignation, outsourcing makes the most financial sense. Check out this hypothetical cost analysis on the topic from Physicians News Digest.

Transparency: A medical billing company should be able to supply you with comprehensive performance reports automatically or upon request. This capability grants you unparalleled visibility into your billing operations without requiring you to micromanage – or even oversee – any staffers.

Enhanced Consistency: Your outsourcer will be contractually obliged to perform certain services, such as appealing denials, for you with a certain level of success. Plus, you never have to worry about staffing, since it’s their job to support your needs year-round.

Cons

Hands-Off: While many consider it an advantage that outsourcing makes the management of billing someone else’s problem, it’s tough for more hands-on managers to relinquish control of the process to another entity.

Variable Cost: Most medical billing companies charge a percentage of collections, so the more you bring in, the more you’ll pay out. This can make it hard to budget your practice’s expected billing expenses, since costs differ widely between slow and busy months.

Hidden Fees: Read any outsourcing contract very carefully. Are there startup charges? Fees for things like printing statements or sending reports? What happens if you cancel your membership? Make sure the money you save by outsourcing isn’t offset by a multitude of “fine-print” charges.

How did you choose between in-house billing and outsourcing?

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  • Jacob Thomas

    I have just discovered your website and enjoy each article….

    Medical billing is becoming more popular because it saves doctors time and money dealing with insurance companies. Because medical billing is a specialized business, you have to find your customers and let them know you’re around. When you first start your business, you will likely spend most of your time marketing and building your client base..

    found one more site:http://www.medicalbillersandcoders.com/OutsourcedServices.aspx

  • Jacob Thomas

    I have just discovered your website and enjoy each article….

    Medical billing is becoming more popular because it saves doctors time and money dealing with insurance companies. Because medical billing is a specialized business, you have to find your customers and let them know you’re around. When you first start your business, you will likely spend most of your time marketing and building your client base..

    found one more site:http://www.medicalbillersandcoders.com/OutsourcedServices.aspx

  • Nice Blog, I enjoyed reading it thoroughly. Keep up the good work.

  • Nice Blog, I enjoyed reading it thoroughly. Keep up the good work.

  • Montebello Medical Billing and

    This article was very helpful. Right now, my partner and I are getting ready to have a meeting with a Chiropractor, and the main thing we want to present to him are the pros of outsourcing and the cons of in-house billing. I was able to gather some great information. This website gives really good information http://www.montebellobilling.com

  • Montebello Medical Billing and

    This article was very helpful. Right now, my partner and I are getting ready to have a meeting with a Chiropractor, and the main thing we want to present to him are the pros of outsourcing and the cons of in-house billing. I was able to gather some great information. This website gives really good information http://www.montebellobilling.com

  • vinay

    Hi I got 7 years of experience in medical billing. Any one can outsource me some billing operations.

    • Ayesha M. Mian

      email your CV to me at: admin@applemed.info

      • Harshit

        i m also looking for some outsource billing operations. please help me out how to start it, thanks

  • vinay

    Hi I got 7 years of experience in medical billing. Any one can outsource me some billing operations.

    • Ayesha M. Mian

      email your CV to me at: admin@applemed.info

      • Harshit

        i m also looking for some outsource billing operations. please help me out how to start it, thanks

  • This is a great article on the comparison of in house and outsourced medical billing process. Those who deal with such will surely find this as helpful. Thanks for sharing.

  • This is a great article on the comparison of in house and outsourced medical billing process. Those who deal with such will surely find this as helpful. Thanks for sharing.

  • Thank you for posting this article comparing in-house and medical billing. The information here are indeed helpful. Cheers!

  • Thank you for posting this article comparing in-house and medical billing. The information here are indeed helpful. Cheers!

  • Jose

    is it ture that when you go inhouse billing they take out more in fed taxes

  • Jose

    is it ture that when you go inhouse billing they take out more in fed taxes

  • Thanks Madelyn for sharing the post. Medical Billing has always required a specialized set of skills. Healthcare BPO company has become a necessity. Outsourcing medical billing services provides benefits like economies of scale, highly trained specialist, more focus on patient care, reduce billing errors and improves cash flow.

  • Thanks Madelyn for sharing the post. Medical Billing has always required a specialized set of skills. Healthcare BPO company has become a necessity. Outsourcing medical billing services provides benefits like economies of scale, highly trained specialist, more focus on patient care, reduce billing errors and improves cash flow.

  • Barry Elliot

    Benefit
    of outsourcing is that you become more focused toward your practices which
    result in higher of cash flow. And disadvantage is Billing companies will
    charge a nominal fee like percentage of collections as services charges , so
    the more you carry in, the more you’ll pay out.

  • Barry Elliot

    Benefit
    of outsourcing is that you become more focused toward your practices which
    result in higher of cash flow. And disadvantage is Billing companies will
    charge a nominal fee like percentage of collections as services charges , so
    the more you carry in, the more you’ll pay out.

  • Helen

    Nowadays, Medical billing is becoming more popular because it saves doctors time and money dealing with insurance companies.

  • Helen

    Nowadays, Medical billing is becoming more popular because it saves doctors time and money dealing with insurance companies.

  • splackers

    The outsourcing of medical billing is becoming more commonplace everyday thanks in part to the rise in digital records. We specialize in providing quality outsourced medical billers to some of the biggest companies in the US and in the last 6 months we have seen a huge uptick in demand.

  • splackers

    The outsourcing of medical billing is becoming more commonplace everyday thanks in part to the rise in digital records. We specialize in providing quality outsourced medical billers to some of the biggest companies in the US and in the last 6 months we have seen a huge uptick in demand.

  • Mary Nunez

    I don’t particularly agree with all of the information in this article. Please allow me a moment to explain my billing company to you. With my billing company, the practice is always in control. It is not my practice. I would not like it myself if I had to relinquish control of my practice as well. As far as return on investment, we use your system so everything you have invested on stays with you. However, please be aware that not every practice has the “ideal” PM software and there are many that do exactly what you want them to do. As far as support is concerned, once you outsource your billing, support should not be a problem. My company learns all of the billing software out there and then we are able to contact support if there is anything wrong. Usually my own IT department is very savvy and able to assist with all IT and support questions or at least direct us to who we need to talk to. We welcome “hands on” practices. The main reason you are outsourcing your billing is so that it no longer have to worry about your excessive overhead. Therefore, since your practice has been around that block a few times, we recommend we join forces and work together in order for the relationship to be fruitful. As far as payment is concerned, yes, you do pay differently one month to the other. However, it should not be as it is written in this article. If you are at a straight 7% payment on receivables, you know that 7% of whatever you are collecting whether it is better this month or not, is all you will be paying. Consider what you are paying too. With my company, your 7% pays not only for excellent billing but denial management, appeals, CAQH maintenance, contract renegotiations, patient billing and collections customer service workshops, a full team of billers and collectors working constantly on your billing without any distractions, and more. You can’t beat that! What hidden fees are you talking about? Your contract with my company is straight forward. You get what you agreed to on the contract at 7%. Nothing more; nothing less. If you pay on time, a penalty is not required. Thank you! Mary

  • Mary Nunez

    I don’t particularly agree with all of the information in this article. Please allow me a moment to explain my billing company to you. With my billing company, the practice is always in control. It is not my practice. I would not like it myself if I had to relinquish control of my practice as well. As far as return on investment, we use your system so everything you have invested on stays with you. However, please be aware that not every practice has the “ideal” PM software and there are many that do exactly what you want them to do. As far as support is concerned, once you outsource your billing, support should not be a problem. My company learns all of the billing software out there and then we are able to contact support if there is anything wrong. Usually my own IT department is very savvy and able to assist with all IT and support questions or at least direct us to who we need to talk to. We welcome “hands on” practices. The main reason you are outsourcing your billing is so that it no longer have to worry about your excessive overhead. Therefore, since your practice has been around that block a few times, we recommend we join forces and work together in order for the relationship to be fruitful. As far as payment is concerned, yes, you do pay differently one month to the other. However, it should not be as it is written in this article. If you are at a straight 7% payment on receivables, you know that 7% of whatever you are collecting whether it is better this month or not, is all you will be paying. Consider what you are paying too. With my company, your 7% pays not only for excellent billing but denial management, appeals, CAQH maintenance, contract renegotiations, patient billing and collections customer service workshops, a full team of billers and collectors working constantly on your billing without any distractions, and more. You can’t beat that! What hidden fees are you talking about? Your contract with my company is straight forward. You get what you agreed to on the contract at 7%. Nothing more; nothing less. If you pay on time, a penalty is not required. Thank you! Mary