PROS AND CONS OF Outsourced Medical Billing

Posted by Jeremy West on May 3, 2019 11:54:08 AM


Running a private medical practice is a highly demanding job, especially with the current state of the U.S. healthcare system. MIPS and MACRA, value based care, ACOs, and patient satisfaction scores. Margins are slim up here in the northeast, where cost of living is high and reimbursement rates are.... ehh, so so.

Private practices have their work cut out for them as reimbursement rates are shrinking, operational costs are growing, and offices vary widely in terms of size, resources, and needs. Not to mention the powerhouse healthcare machines raking in profits while small local businesses struggle to keep the doors open.

One of the most important decisions an office has to make is whether to manage the revenue cycle in-house or to outsource their medical billing to a third party. There are pros and cons to each option, so this should be carefully evaluated by you and your team.

Before we list the pros and cons of each option below, I want to address cost considerations. This is always the first thing people ask about and deserves the most attention.

I've seen a lot of articles referencing cost analyses showing that outsourcing is cheaper (like this article here). The reality is this is a bit misleading. We cannot blanket statement say one is cheaper than the other because there are too many variables.

  • How many providers do you have?
  • What specialty?
  • What's the payer mix like?
  • Do you provide services buying and billing for high ticket biologics?
  • Are there a lot of coding intricacies?
  • Do you see patients at multiple sites?
  • What is your claim volume?
  • What is the local payer landscape like?

Time, space, hiring full time billers, offering benefits, and ongoing training is a lot of money... but on the other hand, the higher your revenue the bigger the check you write to a billing company if paying a percentage of collections.

The bottom line is this: to maximize your margins, you need to really consider the strategy you utilize. Your billing situation can literally make or break your whole business, it's important to have a well thought out plan.

Keep in mind, these things can be both pros and cons. An RCM company that isn't the right fit can be disasterous, where as a great RCM company can make all the difference. Here is a few things to consider depending on how you choose to address the needs of your practice:


  1. Outsourcing Allows More Focus on Patient Care

When you outsource your billing department, your staff at the office can focus more on patient experience/satisfaction and customer service. This is important as we transition to a value based care model.

  1. Outsourcing Reduces Billing Errors

An RCM company focuses solely on billing and may be better equipped to diligently navigate the intricacies of your local payers.

  1. Outsourcing can save money

Again, in theory. But, for many practices, outsourcing saves money in several ways. You don't have to pay for full time employees, benefits, physical space, computers/phones, ongoing training and so on and so forth.

  1. Outsourcing can improve Patient Satisfaction

Many office staff in private practices wear multiple hats in the office. Secretaries are often doing check in/out, answering phones, processing referrals, completing auths, etc. Having a third party that is dedicated to addressing the financial aspect of your patient's experience can provide prompt answers to questions.


  1. No control over staff

A bad fit with an RCM company can be disasterous. Evaluating each option to see what is the best fist is a must. You have little or no say in who they hire and who is tasked with handling your account. Many RCM companies are under staffed and work off volume. Buyer beware.

  1. Outsourcing can reduce patient satisfaction

Yes, like many of these considerations, this can be a pro or con depending on the company you hire. Who at the RCM company is dealing with your patients? Are they rude, abrasive, or condescending? They are a direct reflection on you and your practice. If they are not helpful to your patients, you will definitely hear about it.

  1. HIPAA Privacy and Security Breaches

Yes, the medical field is highly regulated because we are storing, transferring, and using highly sensitive information. Many private practices do a spotty job at securing their networks and data, but you certainly don't want a security breach to happen with your RCM partner. Important to ask a lot of questions about the security measures they take in protecting the data of your patients.

  1. Hidden Costs

There are many costs you may have to consider depending on the software you use and clearinghouse, amongst other things. Here's an often missed example: I have a neuro practice that outsourced their billing. They were paying a percentage of collections that was negotiated before signing the contract. However, they neglected to carve out percentages of buy and bill drugs like Botox and Dysport. A fee of 5% on a $200 office visit isn't much to pay, but 5% of a drug that costs $2500+ is a hard pill to swallow. Especially when acquisition cost and reimbursement are pretty much in line. Other specialties that utilize buy and bill drugs can significantly be affected if they aren't paying attention.

Are you leaning towards outsourcing your billing? Are you in the fence and need to talk to a professional that will shoot you straight and help you decide what is the best option for you? If so, contact us to schedule an exploratory call with our team.

Topics: Revenue Cycle Management, Expert Advice, Medical Billing, Outsourced Billing

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