Don’t just outsource medical billing…
Outsource is a dirty word! It sounds like you’re faxing your patient information to some foreign company with zero oversight or control and who cares. Find a partner. Find a company / a firm /a team who you trust to be a true custodian of your dollars.
Everyone says they’re a good biller with great customer service. If they don’t say that…how are they selling you exactly? We put our money where our mouth is. We don’t write off without your permission unless you bill more than your contract. Period. Not our money. We don’t get to make it disappear. Does your team stand by their work like that?
OK, end plug.
Onto the numbers…
Is outsourcing medical billing cheaper?
Depends on a few things. How much you make, how much you pay, and opportunity cost, which is the amorphous/subjective/BS area no one can guarantee you squat on.
1) When does it make sense to outsource medical billing?
Read the below (#2) for some precursory math, but on the low end, your annual cost for a biller should be 50K. According to the Google machine, the average medical billing charges 7%…which means I’m about to raise my rates…wtf. I can’t say I’m seeing any reliable sources so I’m going to go off what I know and say 5-6% is average. So if you’re doing over a million in receipts, you should be thinking about doing it in-house by the numbers alone. We’ll talk about opportunity cost below (#3).
Regarding rates, if you’re paying under 5%, you should ask about how much work is done off-shore and how their communication obligations work (e.g., are they going to commit to a monthly meeting with reports or wait weeks on emails and never share your numbers with you). Most of the time with low rates you get low quality work and a real pretty voice that shows up once a month to chat with you. If you’re paying over 7% I guess come talk to us because we’re idiots and we don’t charge enough because we’re the best and we’re charging less.
2) How much to pay for a medical biller:
Average medical billing salary in the US is like 39K. 90th percentile is 47K. Not to get political, but it’s hard to get anyone to care about their job for barely enough to raise a family. As of just a few years ago, only 11% of small businesses pay for health insurance! It costs like $700+ for a decent premium on the market, therefore, subtract 8.5K from the 39K the average medical biller makes. So, with all due respect, all the great billers out there just might be looking for more, which is what they deserve.
We are proud to pay in the 99th percentile, cover 100% of insurance, offer a month off and a whole bunch of other goofy stuff because we love Tony Hsieh. The point is, it is hard to attract talent in this micro-industry because the talented seek more than what the industry average offers. It is also hard for a practice to offer an attractive role. The numbers just don’t work. That’s where a good billing company can help.
3) Is a medical billing company worth it?
Speaking of good medical billing companies. Yes, they’re worth it.
Here’s the math. A competent Dir of Medical Billing is going to cost 120-160K in the US. This is a professional who can do the work, manage the work, produce strategic analysis and tactical execution, as well as people movement. The average in-house biller can handle 1 Mil in receipts a year effectively (if that). So you’re going to pay 12-26% (120-160K as a percentage of 1 Mil) for what could be 5-7%? Didn’t think so.
Don’t want to pay six figures for a biller who operates like a financial officer (which is what you want, let’s be honest…they’re running your income stream aren’t they?) Cool. Hire cheap. Your biller is one person with no accountability and no oversight. You’re not doing it, don’t lie to yourself…and your manager doesn’t get it nor does their previous experience at “half-billing count”…and your spouse doesn’t get it either so don’t force them into learning it because it sucks and they’ll hate it as well as eventually you for making them try. The hope is – you may get someone fantastic who is a self-starter and can hold themselves accountable. The reality is – that ain’t most people in this industry or any other.
The real question is how much are you willing to lose? No way we can put a number on how much money will be tied to mistakes from bad billing…no one can. So what are you willing to risk? But don’t just think about how much you have to lose in dollars. What about operational cost? What about training? What about retraining? What about oversight? Thus is opportunity cost.
Get an expert. With oversight. With transparency. With structure. At a cost aligned with your revenue. You make money = they make money = married interests + redundancy. Or take a chance and lose who knows how much because you went the “cost-effective” (euphemism for cheap here) route…oh and tick your significant other off because you stuck them with firing the mistake you made…or worse…you made them try to bill for you. Shame on you…