In-House vs. Outsourced Medical Billing: Pros and Cons

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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