Billing Service or Billing In-House?

Jerrie K. Weith, FHFMA, Director of Health Care Services

In any business, including medical practices, the billing for services provided can be performed by employees in-house or can be outsourced to external experts.  Each alternative has its own pros and cons.  A primary upside to a billing service is that the service has experts who do nothing but manage and process accounts receivable.  A major downside is the loss of daily control over how the accounts are managed.  To decide which way you should go, consider these ideas: 

Billing Service

• Agreement is on a contingency basis - a percentage of the net collections to your A/R (collections less refunds). The net collections are all collections, including those you collect in your office.
• There may also be “user” fees that allow your employees to access the system the billing company uses. Some billing services also pass through the clearinghouse fees to the practices they serve.
• You don’t worry about staffing. When someone is on vacation at the billing service, your accounts should still be worked.
• Experts are handling your accounts. The staff is specifically trained in billing, claims filing, posting, account follow-up, payer requirements.
• There is little practice investment required. All of the software and hardware is owned by the billing service and it’s their responsibility to maintain it.
• While you won’t have daily responsibility for your A/R, you are still responsible as the practice owner to monitor the results as if your own staff were performing the tasks. Work with your billing service to develop a useful dashboard that helps you check results at-a-glance. 

In-House

• In-house billing requires significant one-time investment, including software, hardware and training.
• In addition to one-time investments, there are on-going cost considerations such as supplies, reference materials, space and tools for the staff, postage, clearinghouse fees, system support.
• Staffing requires investment and reinvestment as well. Investing in quality people and providing the training and tools necessary to gain positive results.
• One major benefit is daily control over how your accounts are worked and when.
• You also assume ultimate responsibility for overseeing the results of the A/R, but it may be a little easier. You would still have a dashboard to help you monitor results and trends. 

Normally, high-volume-low-dollar specialties such as primary care utilize billing services because of the sheer numbers of transactions.  Low-volume-high-dollar specialties such as neurosurgery tend to do billing in-house.  

It’s a big decision to make as cash is the lifeblood of every organization, including medical practices.  Perform a quick financial comparison of the two options.  And then ask yourself “will I be comfortable with losing control if I use a billing service?” or “will I have the patience to deal with the staffing issues if I bring it in-house?”  Everyone’s answer is different.