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Is Outsourcing Medical Billing a Good Idea? The Data Say It Is

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Traditional medical practices handled their billing in-house. However, entrepreneurs now offer billing services that can take away the hassle of dealing with your own billing. Is the service worth the price, or is it better to do things the old-fashioned way?

The data is pretty clear; it is better to outsource medical billing than take care of it in-house. Let’s look at some of the reasons why.

Reasons to Outsource Your Medical Billing


Lower Costs


Billing companies enjoy what is referred to as an economy of scale. As production companies produce more units, their costs per unit go down. A private practice might have a lot of billing claims to make, but a billing company has many times more. This allows them to handle each bill at a small fraction of the cost for a private practice. The billing company can pass these savings onto your private practice.


A recent demonstration of the advantages of outsourcing your billing is worth taking a look at. Assuming industry average, a hypothetical private practice was evaluated with in-house billing and with billing outsourcing. The practice had three primary care physicians, two medical billing specialists and filed 80 insurance claims per day with an average of $125 for each claim.


The cost of the billing department turned out to be $118,000 per year for an in-house billing department, whereas outsourcing their billing meant an expense of only $4,000. Furthermore, the software and hardware costs of in-house billing equaled $7,500, while outsourcing put them at a mere $500.


The advantage in cost is clear from this example. Outsourcing your billing can drastically reduce the costs to your business.


Make Fixed Expenses Variable


If you need to hire your own billing department, the main expense will be the salaries of your employees. You must pay these salaries whether business is slow or booming. In other words, they are a fixed cost. Billing companies, on the other hand, charge a percentage of the cost of the bill, which means when you file fewer claims, you pay less money.


Get Paid Faster


A billing company’s expertise is in the field of billing, it is not a side project that they handle out of necessity. They can take care of bills quickly, handle rejections immediately and re-bill with errors corrected. Billing services make sure that claims are electronic and are set up to receive ERAs.


Take the Stress off Your Employees


Submitting your own bills is not just a matter of paperwork, which can be onerous enough, it also means correcting errors, monitoring the process, and doing fee reviews to make sure reimbursement is coming in at the appropriate rate. All of this in a practice that is supposed to be about providing medical care to patients. By outsourcing your billing, you remove these headaches from your office.


Focus on What You Do Best


No one goes to medical school to spend their lives filling out paperwork and arguing with insurance companies. What you do best is provide quality healthcare to patients. By allowing a billing company to do their job for you, you free up time to spend with patients and reduce your need to hire non-medical staff.


Greater Consistency


In a small practice, you cannot afford to hire too many employees not directly involved in providing healthcare. However, employees get sick, take FMLA or go on vacation multiple times per year. What happens to your billing department when one employee goes on vacation and soon after another gets the flu? Can you afford to allow your bills to pile up? Can you afford to hire an extra employee or two to avoid disruptions in your billing department?


When you outsource your medical billing, you avoid having to make those tough choices. A billing company will process your bills consistently, on time, no matter how small your practice, no matter how many bills you have and no matter who from your practice is sick or on vacation at any one time.




Some believe that outsourcing your billing means giving up control of your practice, but this is entirely wrong. By outsourcing your bills, you achieve greater control and transparency. You can review compiled data or monitor the process at any time, according to your discretion. This gives you up-to-the-minute evaluations of how your practice is doing whenever you decide you need it.


Keep Up With Healthcare Changes


The healthcare industry is a changing industry. Billing companies are always on top of the changes in the industry. Furthermore, they are aware of changes that are set to come, so they can notify you in advance. Without a billing company, you would have to do this research on your own, which is more time spent away from patients.




A billing company focuses on the billing needs of its clients, while a private practice focuses on health care. This way, only the experts are performing each job, which keeps things running efficiently.




In addition to providing billing services, companies can also help your practice with its credentialing. Credentialing can be a long, involved, detail-driven process that saps man hours from your labor force. Turning this chore over to a billing company is yet another advantage to outsourcing your billing.


Payment Reminders


Sometimes a bill does not get paid on time. This is a headache for a small billing department, but for a billing company, it is part of their specialty. For example, a billing company will automatically send out payment reminders, which is yet another chore taken off your list, so you can concentrate on your practice.


Improved Returns


Typically, billing companies perform 15% better at collecting bills than do the billing departments of a private practice. This is a pure revenue increase for your practice. Unpaid bills are a cost of doing business in any industry, but a billing company can reduce this cost significantly.


Medical billing outsourcing is a field that is fully up to date for the 21st century. Companies can provide these services expeditiously and cheaply, and this means all sorts of benefits will accrue for your practice. If you want to take advantage of a hassle-free way to speed up and improve your billing, contact Med USA at (801) 352-9500 today and take the inconvenience out of your billing.

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