COMMENTS
Respectfully disagree that outsourcing is good for a private physician owned practice.
My billing department (including workers' comp, insurance, self-pay and first-tier collections, charge posting, payment posting, coding compliance) hovers around 2%. My A/R is 28.4 days. We transmit claims and statements electronically, we do not fold, stuff, or post statements. Per statement charge is about 11 cents (plus staff time... back to that 2%). Electrons are cheap. Knowledgeable staff who can interact with patients in the office, priceless.
And, when was the last time your billing service offered to sit in for a sick receptionist, or answer the phone for a busy secretary?
I have worked both sides, in-house and my home office. I have to say I work harder on AR at my home office as there is less distractions and interuptions. I currently manage a billing office for a 5 provider office. I would be able to do a much better job for them working from home. I am constantly looking for opportunities for outsourcing and would jump on the opportunity. My AR 120 days over is 5% or less when working at home, in-house it is 15-18% as not enough time to work the AR and training others is more time too.
Efficiencies of a well run centralized billing department are hard to beat. Speaking generally, as a seasoned practice manager with (less preferable) experience running large billing departments, a knowledgeable billing company can be hard to compete with. Focus, multi-specialty algorithems, assembly models, equipment, space, software, knowledgeable oversight of less costly staff, information merge, business and contractual relationships, compliance, file maintenance... all influencing factors. At present time space limitations, a good contractual rate based on collections, and an exclusion for worker's comp enable this practice to outsource effectively.
Most of my clients agreee that outsourcing to a 3rd party for collections is not only more efficient anc cost effective....it provides them with something they cannot provide themselves.....THIRD PARTY INTERVENTION.
Outsourcing billing certainly needs to be considered on a case by case basis. For instance, a practice that needs their billing personnel to do other tasks in the office usually necessitates billing to be done in the office. Beyond that, there are many factors to consider in using a knowledgable, experienced billing service:
does the service have experience in my specialty, location?
does the service INTEGRATE into my practice?
Do they offer a PM for our staff to use for scheduling, running our own adhoc reports (beyond reports that the service does for you)?
Do they really work to make my practice better, offering industry information and advice where it would help?
Will the service have coordination staff that will work daily with my staff to make sure the whole billing process is seemless?
Does the service have ample team members assigned to my practice's billing?
Are the billing service's customer service staff going to ASSIST our patients in working through tough billing and insurance issues instead of just trying to collect the quick buck?
Does the billing service share vital knowledge they've learned from billing for so many other practices (obviously not sensitive data)? How can this knowledge help my practice?
How much money would my practice save by not needing PM software?
How much will my practice save on Electronic Claims Processing, ERAs, statement processing? Are there other areas that the service can offer economies of scale?
Can the billing service offer technologies that I cannot get from my current vendor?
Will my practice save money by not needing as much office space, light, heat, power, etc?
How much would my practice save by needing much less IT infrastructure?
How much technology experience does the billing service have? Do they have software/hardware engineers on staff?
Does the service have backup power (battery backup AND generator power) necessary to keep operations going when there is a power outage at the billing service's site?
As you can see, there is a lot to ask yourself in considering whether to outsource. Outsourcing is not for everyone, but everyone should thoroughly consider it.
Outsourcing offers many distinct and clear financial advantages to healthcare providers, especially when the company's management team is fully capable and highly knowledgeable in all aspects of receivables management. The outsourcing company must have demonstrated its abilities with comparable specialties. However, the practice should keep in mind medical billing is concept that can be used and effectively implemented with most specialties.
Medical practices considering outsourcing should analyze and compare the financial advantages of outsourcing verses keeping in-house. In general, the practice pays for results based upon revenues generated so there is an incentive for the billing company to performing at peak levels on a consistent basis.
Finally make sure the vendor is sophisticated and has an establish record of achievements. This can be determined by asking the billing company which key financial measuring ratios it uses in assessing success. They should include such key ratios as days in A/R (DAR), average days revenue outstanding (ADRO) and assorted delinquency ratios.
I think another important factor would be to consider the specialty. We consult with hundreds of doctors every year and the outsourcing question comes up with most smaller practices.
Primary care groups with a high volume of claims but low revenue per claim would be much more suited for outsourcing than a surgical practice. If you have a low claim volume but high dollars per claim, then you might need to negotiate a fee in the 3%-4% range. We have done studies for with 5-10,11-15, 16-20, and greater than 21 providers and found that the cost of in-house billing is between 1.5%-3.5% of revenue with the 1.5% number achieved in the greater than 21 provider category.
Hope this helps. We do not perform billing but I did own a billing company in the past and know that not every practice is suited for outsourcing.
Best,
Andrew Eriksen
Physician Practice Specialists
I think it would be appropriate to say that there is still a significant place for outsourcing but that it is situation dependent. As with everything, you have to do a thorough evaluation of your needs before making any decision.
Lauren Butker
Physician Job Network
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I think that outsourcing billing is a good business practice, particularly for large medical practices. It leaves them free to focus on their practice's core competencies, while still getting quality work done.
Before you determine if you need to outsource, how do you determine if your current billing staff to physician ratio is correct.
Is there a formula?