Medical Billing: The Benefits of Outsourcing

May 9, 2011 - According to numerous surveys, doctors and hospital executives claim that payment collection for services rendered is quickly becoming one of the most important issues they face today. An overly complex system of rules, regulations and participants has forced many medical practitioners to invest considerable time and resources to payment collection. Managing the vast amount of paperwork related to billing, contacting patients regarding payment, and following up on unpaid claims from insurance companies has become one of the most distressing and time-consuming aspects of a physician’s daily routine.

In an effort to reduce the burden, medical practices and healthcare facilities ultimately make one of two choices: build internal medical billing capabilities at considerable expense or outsource billing related functions to a third party medical billing company.

Internal billing or in-house billing may appear to be an attractive alternative given the control issues associated with outsourcing, however close examination reveals limited results and higher costs in comparison to outsourced billing. These costs are not limited to the direct costs associated with staffing the internal billing organization and include costs related to management, turnover, training and growth.

Additionally the in-house billing model provides limited incentive for performance as salaries are paid regardless of payment received for services rendered or timely payment from date of service.

Outsourced billing on the other hand is typically the more attractive alternative given the direct incentive to perform as most outsourced billing companies are compensated as a percentage of collections. This payment scheme motivates the vendor who is 100 percent dedicated to the billing process to maximize reimbursement for the practice. Additionally, these fees are typically less than the cost of hiring staff given the economies of scale related to larger organization and the shared cost of technology.

In addition, as government and insurance carrier rules and requirements change
practices dedicate additional time and resources to staying abreast and adapting when required. Medical billing companies dedicate considerable resources to monitoring these changes and training their staff on how these changes will affect physician collections.

Lastly, third party medical billing companies typically provide practices a lower number of days in accounts receivable (the number of days required to convert billings into payment) in comparison to in-house billing staff.

This is achieved as a result of the scale and technology associated with larger organizations. For example, third party billing companies often employ claim scrubbing technology that reviews claims for known errors. Third party billing companies benefit from the knowledge of working for multiple practice and when errors are discovered in one practice, the knowledge from that error can be applied across the client base as a whole.

Outsourcing your medical billing to an outside professional medical service provider is often the most cost effect and highest income generating choice for practices. With Claim submission and payment collection in the hands of a well qualified vendor, physician practices have more time and resources to focus on patient care and business growth.


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