Should a physician outsource medical billing services?
T his is a very difficult decision for any physician and partially boils down to this or her own personal ideology and comfort level. Ho spital-based physicians will almost always be better off outsourcing because of the office related expenses that they would not otherwise incur. As the owner of medical billing service you may think I’m naturally biased towards outsourcing. I ca n assure you that this is not the case. Physi cians who are overly controlling, uncomfortable or mis-trusting toward billing services are nearly impossible to administer. I don’ t want anything to do with those types of physicians but I completely respect and understand their point of view. Setting all
ideology aside I would like to delve into the pros and cons of this difficult and complicated decision.
1. I am a physician who is very interested in the business aspect of medicine and I do not mind spending my valuable time managing the medical billing aspect of my practice.
Clearly, the best way to do your billing is to do it personally. Obviously, doing it yourself is probably not an option but if you’re willing to spend the time and have the interest I would recommend that you do your own billing. Keep in min d that most billing service owners and certainly our employees have limited medical backgrounds. Physicians w ho study CPT, regularly attend billing seminars and keep up to date on industry changes are the ultimate medical billing gurus in my view.
2. I am a ph ysician who has absolutely no time or interest in the medical billing aspect of my practice. I am completel y reliant upon my office manager and billing staff.
Unfortunately, most physicians are in this position. Even if they wer e interested in keeping up with all the changes and elements
of medical billing the practical reality is that there is absolutely no time. Let’s face it; ti me is your most valuable asset. It’s sort of like m owing your own lawn. You’d be way better off financially seeing patients for three hours on Saturday morning. I believe the followi ng information will dramatically help with your decision to outsource your billing or continue to do it yourself and with future decisions in the ever-changing business aspect of medicine.
The pros and cons of o utsourcing your medical billing services.
I would like to preface this article with a couple of obvious but important points. If you have a system of controls, keep an open mind about the competence of your office manager, you’ve got an excellent computer system, proper information systems and your office is doing a superb job at collecting your money, then by all means do not make any changes. Conversely if you’re plan ning to outsource your billing make sure you hire quality firm. I’ll spend some time at th e end of this article discussing this further.
Most leading experts agree that it costs about 4.5% of net collections to perform the billing function within a physician’s office. Incidentally, this is close to my actual cost as well.
Theoretically, a billing serv ice should be able collect more money than a physician’s office because it is our core competency. The question is how much more? This is why I focus on how to c hoose a billing service at the end of this article.
A. Lets just do th e math in a theore tical model.
We’ll base our numbers on a practi ce whose total gross receivables are $100,000 per month. Obviously, this is an overly simpli stic model designed to quantify the aggregate cost and or opportunity cost of the medical billing component only.
Current Aggregate Billing Expenses
Total gross revenue $100,000
Current billing expense $4,500
Net Revenue $95,500
Outsourced Billing Expense
Total gross revenue $100.000
Current billing service exp. $7,000
(7.0% net collections) —————
Net Revenue $93,000
Net cost increase with outsourcing = $2,500.00
As you can see in this,