Should You Hire a Professional Medical Billing Service?

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Are you seriously thinking about eliminating you in-house medical billing? Are asking yourself would it be cost effective to do so? Well let me give you a breakdown of just how much it really costs to run an in-house billing department.

The following analysis can help illustrate how savings can be obtained through outsourcing you medical billing. Assume that a medical practice is billing $1,000,000 per year and needs three billing clerks to handle this level of activity. Medical billing companies typically charge 5% to 9% of gross billings for this type of service; therefore, the cost of billing for this particular practice would range between $50,000 and $90,000. If one billing clerk earns between $22,000 and $25,000 yearly salary, three clerks would cost the practice between $66,000 and $75,000. This figure represents the base cost of payroll. Payroll taxes, which include the employer’s share of social security, and federal and state unemployment taxes, add approximately ten percent to the base cost. Fringe benefits, which include pension and profit sharing plans, medical insurance, disability insurance, educational reimbursement, sick pay and personal time, can add another ten to thirty percent to payroll cost in sum, the cost of payroll could jump to a range of $79,200 to $105,000 when these additional charges are added.

Other Expenses – What about other expenses? In-house billing clerks need space in which to work. Assume the billing clerks occupy an area that is 150 square feet of space. If your practice is leasing space for $15 per square foot, you are paying an additional rent of $2250 just for those employees. This includes only the base cost. Usaully there are add-for increases included in property taxes and maintenance services. Additional costs include utilities and office supplies. Postage is an expense, which is commonly overlooked. Some medical billing services, but not all, include this in the cost. These expenses increase the cost of doing business and reduce your bottom line.

Finally, when you have an individual performing an in-house function, that person needs supervision. If you hire an office manager to supervise your billing staff you must still monitor the office manager. This will take away from the time you have to see patients. Outsourcing the billing function allows the practitioner to be more focused on the core business – providing superior patient care.

Using an outside medical billing service may not be the answer for everyone. But before you dismiss the idea of outsourcing completely, it’s a good idea to sit down and figure out how much it is actually costing you to do the billing in-house. You may be in for a surprise.

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