Outsource Medical Billing services- Should a Physician Outsource Medical Billing Services

Should a physician outsource medical billing services? This is a very difficult decision for any physician and partially boils down to this or her own personal ideology and comfort level. Hospital-based physicians will almost always be better off outsourcing because of the office related expenses that they would not otherwise incur. As the owner of medical billing service you may think I'm naturally biased towards outsourcing. I can assure you that this is not the case. Physicians who are overly controlling, uncomfortable or mis-trusting toward billing services are nearly impossible to administer. I don't want anything to do with those types of physicians but I completely respect and understand their point of view. Setting all ideology aside I would like to delve into the pros and cons of this difficult and complicated decision. 1. I am a physician who is very interested in the business aspect of medicine and I do not mind spending my valuable time managing the medical billing aspect of my practice. Clearly, the best way to do your billing is to do it personally. Obviously, doing it yourself is probably not an option but if you're willing to spend the time and have the interest I would recommend that you do your own billing. Keep in mind that most billing service owners and certainly our employees have limited medical backgrounds. Physicians who study CPT, regularly attend billing seminars and keep up to date on industry changes are the ultimate medical billing gurus in my view. 2. I am a physician who has absolutely no time or interest in the medical billing aspect of my practice. I am completely reliant upon my office manager and billing staff. Unfortunately, most physicians are in this position. Even if they were interested in keeping up with all the changes and elements of medical billing the practical reality is that there is absolutely no time. Let's face it; time is your most valuable asset. It's sort of like mowing your own lawn. You'd be way better off financially seeing patients for three hours on Saturday morning. I believe the following information will dramatically help with your decision to outsource your billing or continue to do it yourself and with future decisions in the ever-changing business aspect of medicine. The pros and cons of outsourcing your medical billing services. I would like to preface this article with a couple of obvious but important points. If you have a system of controls, keep an open mind about the competence of your office manager, you've got an excellent computer system, proper information systems and your office is doing a superb job at collecting your money, then by all means do not make any changes. Conversely if you're planning to outsource your billing make sure you hire quality firm. I'll spend some time at the end of this article discussing this further. Most leading experts agree that it costs about 4.5% of net collections to perform the billing function within a physician's office. Incidentally, this is close to my actual cost as well. Theoretically, a billing service should be able collect more money than a physician's office because it is our core competency. The question is how much more? This is why I focus on how to choose a billing service at the end of this article. The numbers A. Lets just do the math in a theoretical model. We'll base our numbers on a practice whose total gross receivables are $100,000 per month. Obviously, this is an overly simplistic model designed to quantify the aggregate cost and or opportunity cost of the medical billing component only. Current Aggregate Billing Expenses In-house expense Total gross revenue $100,000 Current billing expense $4,500 (4.5%) --------------- Net Revenue $95,500 Outsourced Billing Expense Total gross revenue $100.000 Current billing service exp. $7,000 (7.0% net collections) --------------- Net Revenue $93,000 Net cost increase with outsourcing = $2,500.00 As you can see in this," all things being equal" theoretical model your practice would incur a $2,500 decrease in net revenue with the implementation of a billing outsource strategy. Keep in mind that this model does not address other less tangible issues such as your reduced payroll, computer expenses, ect. In reality the net cost could be substantially less than $2,500. Many physicians will perceive this as a small price to pay while others will consider it to be cost prohibitive. 5% theoretical increase in gross revenue with outsourced billing Total gross revenue $105,000 (5% increase) Billing service expense $7,350 (7% net collections) ---------------- Net revenue $97,650 $95,500 - $97,650 = $2,150.00 increase in net revenue. As you can see from this model with a 5% increase in collections your net revenue will increase $2,150.00 with the added expense of the billing service. Keep in mind that a 5% increase in gross collections is actually quite conservative and should easily be obtainable by quality billing service. Intangibles B. A billing service should be able to provide you with a substantial reduction in your day-to-day aggravations such as practice management software issues, fewer employees, hassle of hiring competent employees, less health insurance, less training, ECT..ect. Conversely you will however lose some control over your practice. If the billing service does not collect more money your expenses will increase. It's up to you to determine whether or not the increased expense is offset by decreased aggravation. security C. A billing service should be able to increase your security levels by creating a system of checks and balances. As a former police officer I can assure you that crime statistics indicate most embezzlement/fraud/theft occurs from within. During an investigation a store manager for Sears and Roebuck Co. once told me," our customers take it out piecemeal but our employees take it out in wheel barrels" This logic also applies to a doctor's office. A billing service can provide an extra layer of protection because there is a system of independent checks and balances. Typically billing services are fairly large businesses with strict internal controls. My organization Medi-Bill Inc. Operates internally similar to a banking institution with the way we handle funds. It is highly unlikely that the ownership of a reputable medical billing firm would risk the consequences of committing fraud against a client. Conversely, the issue once again boils down to control. Many physicians are understandably quite unsettled at having their checks and correspondence mailed directly to the billing service. Further compounding this dilemma is," what will happen to the checks and correspondence after the billing service agreement is terminated?"(Again, we will discuss alternatives to this at the end of the article) Technology D. State-of-the-art practice management software is an extremely expensive investment. If you've already invested in a high quality computer system I do not believe outsourcing your billing would make much sense financially unless your computer vendor is charging outrageous support fees. If you're considering purchasing a computer system or a medical record management system my favorite vendor who we've been working with for over 15 years is Office Management Solutions (OMS) based in Tampa Florida. The owner's name is John Peake and he is by far the most honest and reputable computer vendor I have ever worked with. OMS can be reached at 813-963-5582 or www.oms-online.com. If you need to update your system, purchase a new system or your support fees are getting out of hand this may be an opportune time to consider outsourcing your medical billing services. .