In order to determine if outsourcing makes sense a cost analysis should be done. Here are some things to consider when performing a cost analysis:

1. Billing Department/Staff costs – This would include the salaries of the employees working in the billing department. If there are employees with multiple functions (billing and front desk, etc) then estimate the amount of time spent on billing (50%, 75%) and take that percentage of their salary. It would also include healthcare costs (if supplied), payroll taxes, vacation time, sick time, disability, office space, and supplies (desk, printer, paper, ink, phone, postage, forms, etc). Basically anything that it is costing the office to have the employee in the building.

2. Software/Hardware costs – Practice Management Systems range anywhere from a few hundred dollars to several thousand. This cost also depends on if the provider purchases server software or if they ‘rent’ software monthly. If the software requires updates, or support those costs need to be considered as well. There is also the computer costs, as well as maintenance on the computers. The cost of any printers, scanners and/or photo copiers would also be considered. These items may still be required if outsourcing however the costs will go down because the usage goes down.

3. Claim Processing Costs – This would be clearinghouse fees, envelopes, postage for paper claims and patient statements, and any other costs associated with actually submitting the insurance claims.

Studies do show that on average the percentage of revenue collected when using an outside service is higher than the percentage of revenue collected in house. In our personal experience we have seen that the providers that switch from in house to using our service have seen increases in their revenue. In some cases it has been a very large increase and in one in particular it was 60 percent.

Studies also show that 25%-30% of medical office revenue is lost to improper billing. 59% of in house billers do not review EOBS and 55% of in house billers do not appeal denied claims. Our experience supports these studies. We find that most in house billers do not run or work regular aging reports and do not appeal denied claims. They simply send out the billing and accept whatever comes in. Most medical offices have a high turnover of staff and the providers are not involved with the billing so they are unaware of the amount of revenue being lost.

If considering outsourcing, a provider should look at all of the costs to billing in house, what their current average revenue is, and how much it would cost to outsource. They should also consider how much they are collecting of the amount being billed out to see if there appears to be an issue. If the in house billing system does not seem to be efficient or effective then outsourcing would be the best move.

Call Unify Medical Billing to discuss your needs.