Pros and Cons of Outsourcing Your Medical Billing

Advantages and Disadvantages for a Small Medical Practice

Medical billing can be a demanding and challenging task for small medical practices. For this reason, many physicians or practice managers make a choice to outsource their medical office billing to a professional medical billing company.

There are advantages to outsourcing medical billing. It saves time and money and eliminates the burden of concentrating on too many aspects of the medical office.  There are also disadvantages, including loss of control of the work being performed. Consider all of the advantages and disadvantages of outsourcing your medical billing before making a decision.

Pro 1: Outsourcing Allows More Focus on Patient Care

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Spend more time focusing on what you do best - concentrating on patient satisfaction and providing quality care to your patients. This is specifically advantageous for smaller physician groups that cannot afford a large medical office staff. Physicians cannot be efficient at providing excellent patient care if they are bogged down by the financial side of the running a practice.

Pro 2: Outsourcing Reduces Billing Errors

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Experienced, professional medical billers can ensure that your claims are accurately submitted in a timely manner. The sole purpose of the medical billing company is to provide medical billing services. It is their responsibility to ensure that the billers they hire undergo thorough training and are equipped with the knowledge to properly submit medical claims. Not only will this reduce the number of denied and rejected claims due to billing errors, but will also provide feedback to assist in maximizing reimbursements on future claims.

Pro 3: Outsourcing Saves Money

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By outsourcing your medical billing, you could save thousands of dollars in annual salaries and benefits; office supplies and furniture; and purchasing, upgrading and maintaining billing software and computer equipment. Medical billing companies charge a flat rate per claim or a percentage of the reimbursement on each claim. Either way, it is less costly than what you would pay for a medical billing staff to provide the same exceptional services that are provided by outsourcing companies.

Pro 4: Outsourcing Improves Cash Flow

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What happens when your medical biller calls out or goes on vacation? Sometimes claims have to wait until they come back to work in order to be submitted. Billing interruptions ultimately affect the timeliness of reimbursements and your cash flow. Using a medical billing service allows a continuous, steady flow of claims going out and cash coming in. A steady cash flow is important for your bottom line and the success of the medical office.

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The ability to offer excellent customer service is what all medical professionals want to provide to their patients. However, it can be quite difficult to juggle the demands of treating patients and handling billing issues. The medical receptionist is responsible for greeting patients and answering the telephone. Reducing the burden placed on your front office staff by outsourcing can increase productivity, efficiency, and employee morale. It can also increase patient satisfaction by improving patient flow. Your patients will be happy because they will receive uninterrupted courteous and professional assistance for their billing questions or issues.

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Pro 6: Outsourcing Ensures Billing Compliance

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Health care is an ever-changing industry and insurance companies are partly to blame. One reason that makes medical billing a challenge is keeping up with the changes in Medicare, Medicaid, and third-party payers. It is a full-time job to make sure that the medical office is following the proper protocol required by each payer. Medical billing companies must stay up-to-date on the latest changes in regulations and requirements in order to maintain compliance and ensure the submission of clean claims.

Pro 7: Outsourcing Increases Revenue

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With the reduction in overhead costs, the timely submission of medical claims and the increased reimbursements, a higher profit is another advantage outsourcing can provide to the medical office. This allows the medical office the ability to provide the best quality services using the best technology and products and the best staff. Patients are becoming more knowledgeable about health care and are making choices based on what provider can offer them the best services. For this reason competition in health care has grown quickly over time and to stay in business health care professionals must maintain a competitive advantage.

Con 1: No Control Over Employees

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Medical office managers may be hesitant about not having direct control of the medical billing staff. Medical office managers are responsible for a number of functions in the medical office including the revenue cycle, finance management, and accounts receivables. Not having the ability to directly supervise the work puts medical office managers in a vulnerable position. They have to trust that the work is being performed accurately, efficiently and in a timely manner.

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Patient satisfaction can sometimes suffer due to outsourcing. Patients like having the ability to walk into their doctor's office to make their payments, set up payment arrangements or discuss the specifics of their bill. It is easier to build a relationship with customers with the more personal feel that in-house billing offers. Patients are less likely to be satisfied by the service they receive when they can only discuss important matters over the phone.

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Secure Medical Records
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Outsourcing your medical billing can present a possible problem with HIPAA privacy and security. Although violations of HIPAA privacy and security can occur with in-house billing, it can present an even greater risk when medical billing is outsourced. Whether intentional or accidental, unauthorized disclosure of PHI is considered a violation of HIPAA. The more people that have access to private and confidential patient information, the greater the risk for a breach.

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Con 4: Possible Hidden Costs

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Hidden costs can be incurred in preparing for your medical office to switch from in-house billing to outsourcing. There are other costs as well. To prepare for the work arrangement between the medical office and the outsource company, there may be much time spent coordinating the contract and costs occurred for legal fees. There is also the possibility that you may need to hire at least one person to act as a liaison or contact between the medical office and the outsource company.

Con 5: No Flexibility

All business practices are under the control of the outsourcing company. Depending on the demands of your medical office, having control of everyday business practices gives the medical office manager some flexibility. Based on the changing conditions of the medical office, a manager has no flexibility for requesting overtime to increase productivity, changing employees work hours to suit the needs of the patients, and the openings and closings on holidays. This could be the difference between high or low performance for a certain month.

Con 6: Limitations

Limitations may exist within some outsourcing companies. The services they provide may be limited due to the lack of access to information and a lack of communication between the medical office and the outsourcing company. In-house billing staff has easier access to medical records and other patient information. An effective communication process needs to be developed during the contracting phase to ensure that the outsourcing company receives the proper information they need to be successful in billing your medical claims. 

Con 7: Contractual Misunderstandings

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Everything seems to be going as well during the coordination stages but then things start going in a downward spiral. Both parties have interpreted the contract differently.

This scenario is common among many agreements. Legal lingo can cause contractual misunderstandings between the medical office and the outsourcing company. No contract will be perfect and it may be necessary to make adjustments to the contract length, terms and conditions, and expectations of both parties.

Both advantages and disadvantages exist for outsourcing your medical office billing. Be sure to weigh all options before making your decision.

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