Medical billing and revenue cycle management are the most complicated yet crucial parts of managing a healthcare practice. Therefore, it is imperative to ensure effective management of these processes. Here Outsourced medical billing plays a crucial role in maintaining the billing process in a better way. Due to the high stakes, healthcare providers must evaluate whether there is a need to outsource medical billing to a professional or whether they are well equipped to manage an in-house team of experts.
Let’s take a deeper look at the pros and cons of managing medical billing in-house, as compared to outsourced medical billing services.
What is Outsourced Medical Billing?
Outsourcing Medical billing refers to hiring an outsourced medical billing company to handle all the billing processes, whether claim submissions or collections.
Pros of Outsourced Medical Billing
Outsourced Medical Billing Save Costs
In sharp contrast to a healthcare business taking on the additional task of handling bills along with providing healthcare, a third-party outsourced medical billing company exclusively deals with healthcare billing. This enables it to practice economies of scale as it churns out maximum revenue by processing a greater number of bills at a cheaper rate. Moreover, the cost of billing technology, training, and maintenance required to practice in-house medical billing are all eliminated, which significantly helps healthcare practices decrease costs.
According to a Medical Practice Insider study, by outsourcing to one of the medical billing companies, healthcare practices can save up to 40% of total costs compared to in-house billing services.
Outsourced Medical Billing Has Expertise Plus Less Margin of Error
Because the expertise of these billing providers is to handle medical bills particularly, experts will be carrying out their full-time jobs in this domain. Their experience and expertise eliminate risks of potential errors or neglect. By handling billing operations daily, denial trends, new updates, or any reimbursement issues are identified way quicker than an in-house medical biller.
Along with the negligible margin of error, outsourced medical billing companies are aware of all regulations and legal insurance protocols. So, in the case of any discrepancy, they can present their case better and maximize returns.
More Efficiency
Providing healthcare services to patients is already an extremely hectic task. So the burden of handling medical bills should not be added because it compromises the quality of healthcare provided to patients.
Small businesses with limited staff members should not overburden their employees with such tiring yet necessary administrative work along with their primary responsibilities. Hiring an outsourced medical billing service provider not only speeds up the process but also relieves the in-house workers so they can give more time to patients.
Better Technology
These billing companies often have access to the latest billing software which helps streamline the billing process and guarantees accuracy. They also have the resources and expertise to safeguard data against cyberattacks.
Features like solid firewalls, and data backups with fiber-optic connections protect the confidential details of patients.
Cons of Outsourced Medical Billing
Communication Barrier
By handing the patient’s billing records access to a third party, a communication barrier is set up where a patient’s bill-related queries can only be answered by the outsourced medical billing service provider through a proper communication protocol. Naturally, many patients may feel uncomfortable with the idea of sharing their confidential details with an external body.
Moreover, this compromises patients’ satisfaction because it complicates a simple communication route.
Lack of Control and Flexibility
There is no way to set specific time-bound goals by giving up control and oversight. There may be a need for more flexibility, especially with three-way communication, where workflow might be interrupted.
In-House Medical Billing
In-House Medical Billing refers to the management of the billing process within the medical practice, by hiring professional billers and coders as full-time employees.
Pros of In-house Medical Billing
Maintaining Control
To run your medical practice successfully, having every domain under supervision is always beneficial. Direct control over the financial operations ensures greater transparency and accuracy as compared to outsourced medical billing.
Easy Access
Imagine if there is a discrepancy in a patient’s bill where he is charged extra for procedures he never received. With in-house medical billing, communicating with the doctor and the administrative staff would require a few minutes of walking instead of the typical wait of 3-4 business days in case of outsourced medical billing. Having billing services on-site ensures immediate access to the billing staff and the patient’s medical records. This proximity restricts any communication barrier and quickens the problem-solving process.
Return on Investment
Suppose you have invested in efficient billing technology and trained medical billers. In that case, abandoning the already established in-house billing service is not worth the hassle. Your time and resources are valuable, so they should be used to the fullest to get the best returns.
Maintaining Patient Confidentiality
One of the primary rights of a patient is the confidentiality of their medical history. In-house billing makes sure that the details of patients are protected without the involvement of an external outsourced medical billing company.
Cons of In-house Medical Billing
High Cost
If you own a relatively smaller clinic, you are likely already trying to catch up with electricity bills, maintenance, machinery costs, and a million other expenses. Bearing an additional brunt of in-house billing services is not worthwhile, especially in today’s economy.
Purchasing effective billing software, training employees, providing salaries and benefits to those employees, and keeping the system updated – all of this makes the billing services expensive. Any changes to the billing software would require more money and time. On the contrary, outsourced medical billing providers only charge a small percentage of your monthly collections.
Dependency on a Smaller Number of Employees
A single employee going on leave is generally not an issue with drastic consequences, but there is already a very limited team of medical billers in this particular service. Even one person’s time off can stall operations and restrict cash flow. On the contrary, outsourced medical billing services are not dependent on a few individuals. This increased dependency on a smaller number of employees can, thus, threaten efficiency and revenue gain.
Liabilities
One employee handling hundreds of individual medical bills might make neglect inevitable, leading to encounter forms being ignored, superbills being discarded, or claim denials being unappealed. The most recent data shows that 80% of US medical bills contain errors.
There is a constant need to avoid any security violations that could lead to embezzlement cases due to gross neglect. Thus, the in-house medical billers are huge liabilities as compared to outsourced medical billing and must be held fully accountable with thorough supervision.
Time-consuming and Resource-intensive
The primary purpose of your practice is to tend to patients. Shifting the focus to handling billing tasks (like managing partial payments and denials, collecting co-pays and deductibles, and keeping the billing technology up to date) requires time and resources that could be invested in patient care. This might compromise the quality of your service.
According to the American Medical Association (AMA), physicians spend an average of nearly 15 hours per week on billing-related tasks, significantly detracting from patient care. Thus, your expertise must be optimized by utilizing outsourced medical billing services to run a successful healthcare business.
Key Differences Between In-House and Outsourced Medical Billing
Cost
In-house medical billing services would encompass salaries, training, hardware, software, office space, and supplies, and even claim rejections due to errors. All of these costs are ever-changing and might increase depending on workload. On the other hand, outsourced medical billers have fixed fees or percentages (of the collected amount) and access to advanced technology without purchasing it.
However, even in outsourced medical billing, there might be hidden costs in membership fees, legal fees, or even fine print charges. But, overall, due to the reduction in errors and better accuracy, outsourcing might be relatively a better investment,
Control
In-house medical billing happens at the healthcare center, so it is easier to maintain direct control over all financial operations. However, with outsourced medical billing, control has to be given up entirely to an external party where the patients’ details are handed to them.
Compliance
When it comes to in-house medical billing, it takes more work to ensure compliance with the ever-changing compliance regulations. It requires continuous training and regular updates for the billing staff, which is very time and resource-intensive.
On the other hand, professional outsourced medical billing companies often have dedicated compliance teams that ensure there is never a risk of non-compliance, as they monitor the changes regularly and carefully.
Data Security
An advantage of an in-house medical billing service is that the patient’s confidentiality remains intact. However, to protect this data from sophisticated cyberattacks, there might be a need to invest in advanced security protocols and carefully monitor all data.
On the other hand, while some patients might be uncomfortable with sharing their data with outsourced medical billing companies, their data would be much better protected there because such professionals mostly have access to better safeguards against cyber attacks, being monitored by a dedicated IT team.
Reimbursement Time
Although communication is much easier at in-house medical billing services, errors or delays are inevitable when a handful of employees handle the individual financial records of hundreds of patients. And so, in-house medical billing services can be significantly slower in claim processing and thus, reimbursement times are longer.
However, in case of outsourced medical billing services, the employees have specialized jobs to handle medical bills. So, the margin of error is very low, causing the process to fasten and shorten the reimbursement times.
Experience & Expertise
Although the in-house medical billing services staff might have personalized knowledge of the patients, they need extensive training to carry out their tasks. Along with this, they need to be regularly updated about the changes within the industry.
Outsourced medical billing service providers hire employees who are exclusively trained for this job and have extensive experience across medical fields. They are well aware of all billing codes and regulations; thus, there is more productivity and fewer delays.
Conclusion
While it cannot explicitly be stated that one billing service is better than the other, it cannot be denied that outsourced medical billing services are way more hassle-free and cost-effective.
There is a reason why the global outsourced medical billing market size is predicted to reach 19.7 billion by 2026,’ expanding at an annual growth rate of 11.8%’ (according to a study by Grand View Research). However, the decision should be reached by thoroughly evaluating your business conditions.
