This article discusses how medical billing services are able to create significant savings in time and money for healthcare providersMedical Billing Services Save Training and Research Time
- Some readers might take the short view and think medical billing companies just enter data into a computer and send it off to a clearinghouse In reality medical billing is a detailed process requiring specialized skills and in-depth knowledge of medical practice management, insurance industry practices, and the regulatory framework around state and federal laws Professional medical billing companies invest countless hours in training and research to keep abreast of current codes, submission requirements, industry trends and the needs of their clientsSignificant expenditures are also made to ensure medical billing companies are up to date on the latest software In a constantly changing industry, software vendors are always finding new and better ways of supporting practice needs It's not practicable for small or medium sized practices to dedicate the time necessary to stay on top of the latest innovationsThese investments of time by professional medical billing services are often not considered by providers, but they eliminate endless hours otherwise spent in seminars, meetings with vendors, or on the phone with clearinghouses and carriers This time savings creates a valuable commodity for a practice seeking the edge necessary to keep up with a rigorous patient scheduleMedical Billing Services Save Operational Time
-Medical billing services are able to save operational time by leveraging the economy of scale and the efficiency of task specializationProfessional medical billing companies, by their very nature, create an economy of scale in maintaining a team of medical billing professionals to provide services across several practices This structure creates a well trained pool of resources to manage each practice's needs rather than just one individual overseeing all billing functions The team approach also removes interruptions to revenue flow that result from vacations, unexpected sick time and staff turnoverTask specialization among teams further heightens the efficiency of medical billing companies Through task specialization, a team of billers can accentuates individual skills and reduces distractions of other activitiesConsider a provider who sees an average of 30 patients per day, or a total of 150 encounters per week The time required to generate and submit 150 patient claims and follow up with insurance carriers with a high lever of accuracy can take up most of the time of an in-house biller But this is just the beginning That same individual will also need to follow up on denied or partially paid claims, researching why and resubmitting for further review Patient invoices require additional time- printing, stuffing and mailing- as well as posting payments, running reports and providing detailed analysis on the current state of the practice; all this just to meet the standard offering of professional medical billing companiesThrough task specialization, medical billing companies might offer each of its clients several billers submitting claims and reviewing insurance payments with the highest level of accuracy At the same time, the service might have other individuals or groups dedicated to managing patient invoices and questions across several practices with increased efficiency This approach maximizes the time available for each activity by specialists with a greater knowledge of their roles, and, again, guarantees minimal (if any) interruption during employee leave and staff changesMedical Billing Services Save Money
-Hiring and training new staff, employee benefits, vacation/sick leave, and staff turnover are just a few factors increasing the costs of managing an efficient in-house billing program Added to the operational overhead of day to day billing, software/hardware maintenance, clearinghouse fees, postage, and so on, the list of expenditures for practices is endlessGood medical billing companies will design their services around covering all of these costs and immediately do away with the problems they create To clearly demonstrate how medical billing services can save practices money, let's compare the core costs associated with in-house medical billing against working with a professional medical billing serviceCost of In-House Billing:
Our comparison begins with a typical practice with one or two providers Let's assume this practice has a dedicated, in-house biller receiving an annual salary of $30,000, or about $1450 per hour The chart below outlines the additional costs of having a full time employee in the office to handle all aspects of medical billing
Base Pay --------------------------$30,000
Medicare and Social Security ---------$2295
401K --------------------------------$1080
Disability -----------------------------$720
Healthcare --------------------------$5220
Time off -----------------------------$3270
Total labor for 1 in-house biller ------$42,585
Next, we'll need to consider materials and fees An average practice will probably upgrade computers and software every 3 years at a cost of about $6,000 Spread out over those three years, we'll assume an average annual software/hardware expenditure of $2000 Since our practice will send out its own patient statements, we'll need about $150 per month for postage, paper and envelopes, an annual cost of $1800 Clearinghouse fees for electronic claims will come to about $60 a month, or around $720 annually For the sake of simplicity, we'll forget for the moment that our biller will need a climate controlled workspace, lights, general office supplies and a deskHere's what our list of software/hardware, materials and fees looks like:
Software/Hardware -----------------$2000
Materials ---------------------------$1800
Clearinghouse Fees ------------------$720
Total ------------------------------$4520
Adding the two totals above (labor + materials & fees), the annual cost of medical billing services performed in-house by the practice comes to $47,105 per year Of course this number might not mean much until we put it in perspective against teaming with a professional medical billing service As we move forward, keep in mind this conservative estimate does not factor in those other costs mentioned above that are often hidden - ongoing training, unexpected leave and sudden staff changesCost of Professional Medical Billing Services:
To evaluate the cost of working with medical billing services, we'll assume our practice has contracted with a medical billing company for full service billing This includes all of those activities that would otherwise have been performed by the in-house staff above; claim generation/submission, insurance follow up, patient invoicing and support, detailed reporting, expert practice analysis, etc We'll also assume the practice has negotiated a rate of 8% of collections with its professional medical billing serviceNote: Calculating costs for medical billing services will vary slightly depending on the fee structure but will usually be based on either a percentage of collections or a fixed fee per claim For more information on fee structures, see Percentage vs Flat Fee Pricing by Medical Billing ServicesAssuming our provider visits 30 patients per day, 50 weeks out of the year, we'll have 7500 patient encounters per year If each encounter results in an average reimbursement of $60, our receivables come to a little over $450,000 per year At a rate of 8%, the annual cost for the professional service to manage all aspects of medical billing services for the practice would be $31,500 In comparison with in-house services that's a savings of $15,600 per year! Summary
In evaluating the benefits of outsourcing to a professional medical billing company practices should consider the overall savings in time and money, beyond just minimizing the hassles Medical billing companies provide knowledge, training, continuity of operations and a network of support leveraging task specialization and the economy of scale Medical billing companies are able to eliminate dependency on one or two costly staff members to maintain revenue flow for the entire practice
For more information on the benefits of outsourcing, contact Diversity Medical Billing Services Leverage maximum efficiency and economy through a well designed support structure and industry leading rates Diversity’s medical billing services ensure the stability of practice cash flow while attaining the highest reimbursements possible You can also learn about other ways to improve your billing with in-depth Medical Billing Articles and Information
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