Dermatology billing is complex, time-consuming, and increasingly difficult to manage in-house. As billing requirements become more specialized, many practices are weighing whether to outsource to a dermatology billing company. This article explores the pros and cons of each approach to help providers make a more informed decision that supports both short- and long-term success.
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Here we break down the pros and cons of outsourced billing compared to in-house models, helping you make the best short- and long-term decision for your practice.
If you run a dermatology practice, you know that billing is one of the most complex, time-consuming, and error-prone parts of the job. You are not alone. Many dermatology providers are finding themselves asking: Should I continue managing my billing in-house, or is it time to consider dermatology outsource billing?
Outsourcing is not just a trend. It is an increasingly strategic move, especially as dermatology coding and billing becomes more specialized. With the right dermatology billing company, outsourcing can truly be a game-changer. But before making the switch, it is important to weigh both options.
Pro #1: Access to Specialized Expertise
Dermatology billing is not generic. From modifier usage to code bundling, dermatology has its own unique challenges. Practices that outsource to dermatology billing companies gain immediate access to a team trained specifically in dermatology revenue cycle management (RCM). They understand payer and coding rules, documentation requirements, and how to avoid common denials and payment delays. This level of expertise is difficult and expensive to maintain in-house, especially with high business office staff turnover rates.
Con #1: Less Direct Control
One of the most common concerns about outsourcing is the perceived loss of control. With an internal team, you can oversee every aspect of the billing process. When you outsource, you rely on another company to manage critical revenue functions. This can feel risky, especially if communication or transparency is lacking.
Pro #2: Improved Cash Flow and Fewer Errors
Specialized billing companies often boast faster turnaround times and cleaner claims, leading to faster and more accurate and complete payments. They have refined systems that reduce errors, lower denial rates, and ultimately speed up reimbursements. For dermatology practices, where even small errors can delay payments, this can dramatically improve cash flow and financial predictability, empowering smarter, faster growth investments.
Con #2: Transition Challenges
Switching from in-house billing to an outsourced model involves a learning curve. There can be data migration issues, process disruptions, or temporary delays during onboarding. Even with a strong partner, the transition takes planning and patience. But the right dermatology billing partner will make the transition easier and the process go smoother.
Pro #3: Reduced Overhead and More Time for Patient Care
Managing billing in-house means hiring, training, salaries, benefits, and software costs. It adds up quickly, especially when turnover occurs. By outsourcing, dermatology practices can often reduce overhead and eliminate ongoing staffing headaches and stresses. Freed from administrative burden, providers and office staff can focus more on patient care and growth efforts.
Con #3: Cost Perception
Some practices hesitate to outsource because of perceived cost. Billing companies usually charge a percentage of collections, which can feel expensive upfront. However, when comparing that fee to the true cost of in-house billing (including inefficiencies and missed/lost revenue), outsourcing is usually the more cost-effective option over time, with the benefits magnified for practices planning for or experiencing growth.
Pro #4: Scalability and Flexibility
As your practice grows, your billing needs will inevitably evolve. Outsourcing dermatology billing offers a level of scalability that in-house teams struggle to match. Whether your volume increases or fluctuates seasonally, an outsourced partner can adapt quickly without the need for finding, hiring, or retraining staff.
Con #4: Vendor Dependence
While outsourcing offers efficiency, it also introduces a reliance on a third party. If your billing company underperforms, changes management, or experiences internal issues, your revenue could be impacted. Vetting and maintaining a strong relationship with your billing partner is essential.
Pro #5: Enhanced Compliance and Security
Medical billing involves sensitive patient data and strict regulatory requirements under HIPAA and other healthcare laws. Dermatology billing companies invest heavily in secure systems and compliance protocols to safeguard data and ensure ongoing proper handling of claims. These investments often surpass what a small or mid-sized practice can implement on its own, reducing the risk of costly compliance violations. In addition, dermatology billing companies are more likely to have the people, processes, and resources needed to stay current and compliant with evolving rules and requirements.
Con #5: Possible Loss of Institutional Knowledge
In-house billing staff are often deeply familiar with the unique nuances of their practice, including specific provider preferences, long-time patients, and historical payer interactions. Outsourcing can lead to a loss of this institutional knowledge unless the partner takes deliberate steps to integrate your practice’s insights into their workflow. Practices may need to spend additional time ensuring this context is shared and retained. This further points to the need for strong collaboration and transparency with an outsourced billing partner.
Breaking It Down: Why Outsourced Dermatology Billing Makes Sense
Like other providers, dermatology practices are under more pressure to optimize their operations and secure revenue. Dermatology outsource billing is not just about cutting costs. It is about gaining access to expert resources, minimizing errors, improving collections, strengthening compliance, and positioning your practice for long-term growth and viability.
By comparing the advantages and potential drawbacks, it becomes clear that outsourcing is not a one-size-fits-all solution. However, for many dermatology providers, especially those looking to scale, reduce administrative overhead, save money on staff and the space and resources to support them, and improve revenue performance, the benefits of partnering with a specialized billing dermatology company clearly outweigh the risks. While there are upfront considerations and changes, the long-term benefits of outsourcing can give your practice the edge it needs in a competitive and complex environment.
In the end, the question is not just whether you can manage billing in-house, but whether you should. For many dermatology providers, the smarter path forward is clear: Outsourcing is the solution that makes the most sense.
Take the Next Step With PGM’s Dermatology Experts
PGM’s specialized dermatology billing service is built on decades of experience supporting the unique financial needs of dermatology practices. When you are ready to make a change, PGM offers the expertise, flexibility, and support required to help your practice survive and thrive. Our deep knowledge of procedure-specific coding and billing rules, evolving payer requirements, and dermatology-focused RCM means cleaner claims, fewer denials, faster reimbursement and collections, and stronger financial performance.
Whether you are a solo provider or part of a larger group, the PGM team acts as an extension of your staff to ensure accurate claims and maximize collections. To explore how outsourcing with PGM will support your dermatology practice, contact us today.