Many medical practices focus on cost when evaluating options. In many cases, the fees charged by a larger medical billing firm will be less than the cost of the in-house option. However, the real focus should be placed on the success of the billing process. Because of the amount of money involved in the average medical claim, even a slight 5% improvement in collections means exponentially more to the bottom line than a 5% reduction in billing fees. For the average provider:
5% improvement in collections equals $24,000+ in additional annual revenue.
5% reduction in billing fees equals $1000 in annual costs.
If you answer yes to most of the following questions, utilizing a billing firm will probably increase your bottom line.
Is your medical accounts receivable too high?
Are you experiencing an increased number of denied medical claims?
Are some of your charges and medical claims not making it to the appropriate payors?
Are you generally frustrated with the effectiveness of the billing / business office?
Is your net collection rate declining or less than 97%?
Is your days in AR ratio greater than 45 days?
Is your percentage of AR > 120 days more than 17.5%?
Does your staff lack a certified coder?
Do you know how your key benchmarks compare to your peers?
Are you spending too much time on the business / billing aspect of your business.
Do you have a difficult time keeping or hiring experienced billing staff?
Does your medical cash flow suffer when billing staff take vacations?
Are you concerned that your staff or office manager knows your income?
Are you completely dependent upon your office manager or staff?
Would you like to expand your practice?
Would you like to reduce personnel problems and issues?
Are you facing a major capital investment in new electronic health record / EHR software?
Are you concerned about meaningful use and new HIPAA requirements?
It’s been estimated that almost 60% of in-house billers do not review EOBs and the majority of in-house billers have never appealed a denied claim. Most outsourced billing service services review all EOB’s and must consider appealing every denial as its revenue is dependent upon your collections. Typically, in-house staff’s compensation is not directly tied to your collections.
Because of buying power, many internal medical billing offices can’t match the recent advancements in technology utilized by many larger medical billing firms. Likewise, larger revenue cycle firms have the advantage of utilizing staff that specialize and focus on the separate aspects of the medical billing process, compared to in-house staff that is typically responsible for all aspects of the billing process.
A focus on the billing cost instead of the results can actually be more costly for the practice.