Medical billing is one of the most time consuming and frustrating tasks that often diverts the attention of medical practitioners from their core expertise. Why? Because they often end up overseeing the billing themselves, or at the very least, being heavily involved in the process. This is like asking a Mathematician to perform the job of an Attorney when they don’t have a legal background. It just doesn’t make sense. It’s also very time consuming because the healthcare industry is changing rapidly and medical billing procedures have changed too (i.e. the change of ICD-9 to ICD-10), which means there’s a lot to keep up with.
So, one option would be to establish an in-house medical billing department in your practice. Or, you could outsource the entirety of your medical billing to experts. Let’s review the cost analysis of both options below. We think this information will help lead you to the right decision.
To compare the costs of in-house and outsourced medical billing we have taken some industry averages and incorporated them in order to analyze the costs of both options. The hypothetical practice scenario consists of:
- Three physicians
- Two medical billing experts
- 80 insurance claims/day
- $125 bill per claim:
Details of these calculations are given below so you can see how we calculated these results:
In-house: The billing staff expenses are based on approximate average costs in the US.
1 Medical billing employee = Salary + healthcare + state taxes + training cost
= $40,000 + $4500 + $6000 + $1000
Along with these expenses, we have included $15,000 for office space, office equipment and other related expenses.
Outsourced: We figured that on average 5 hours are required by a professional to handle the medical billing of a client and it costs approximately $15 per hour Some cases might require more attention and that could add up to $4000 annually.
In-house: On average a practice management software costs about $7000 per system annually and $500 for computer hardware.
Outsourced: We’re factoring in printing and other minor charges, so it let’s say about $500.
In-house: If you face on average of 20,000 claims per year then it would cost you $3600 annually.
Outsourced: Medical billing service providers mostly charge a percentage of the collected amount as their fees and on average it is 7%.
- Percentage Of Collected Amount
In-house: On average, only 60% amount of the actual bill is collected (if you have an in-house billing department).
Outsourced: It costs up to 15% if you outsource your medical billing.
If you’re looking to improve your revenue cycle and free up some time so you can focus more on your patients, based on these facts and figures, it’s clear outsourcing your medical billing is objectively the best choice.