What’s Your In-House Billing & Collections Team Costing Your Center?

The debate over whether a healthcare center such as a hospital or ASC should do its billing in-house, or outsource it to a specialist RCM (Revenue Collection Management) company is an ongoing one. It’s also one in which the arguments used are not always based on facts or logic.

The truth is that, when deciding on whether to go in-house or to outsource billing, a healthcare organization has to make sure it takes into account all the costs involved with both options, as well as where its billing and collecting department is currently. 


An organization can expect an increase of between 5% and 15% in the amount it collects by outsourcing its billing department

The True Cost of an in-House Billing and Collections Team

The costs involved with handling your own billing are in most cases much higher than you might initially think. Here’s a quick, basic breakdown that can be applied to most organizations. 


  1. Employee costs

The average salary of a trained and experienced medical billing staff member is somewhere between $40,000 and $48,000 a year. When benefits and other perks are added to it, the total cost is closer to $50,000 a year. Alongside median salary, health costs, federal and tax costs, there’s training and ancillary office space and equipment to consider. With outsourced billing, all of this extra cost falls away. 


  1. Cost of software and hardware

To do billing and collections in-house requires that you have the necessary software and hardware systems. These include an EHR (Electronic Health Record) system, billing software, and an IT system that, depending on its size, might need to be managed by third-party professionals. 


With all of these, there are three types of costs involved: the upfront purchasing cost, the ongoing maintenance cost of these systems, and the cost of eventually upgrading or replacing them.


  1. The ongoing cost of staff training

Making sure that your in-house medical billing and collections team is up to date with the latest billing and coding changes and regulatory and compliance requirements is a challenging and costly task. If you use a third-party RCM service, you don’t have to worry about it. Your professional outsourced team is then responsible for the ongoing training of their medical billing specialists.


  1. The cost of absenteeism and staff turnover

Particularly if your organization has a relatively small billing team, the disruption caused by one or two of them being sick or on leave can be significant. The same is true if your staff turnover is relatively high. This could mean that someone else (who might not have the necessary skills and/or experience) must take over those people’s work. That in turn could lead to coding errors and denied or rejected claims.


All of the above can have a huge impact on your organization’s revenue stream. By using a professional RCM team, you’ll set your staff free to focus on providing professional medical care instead of worrying about billing issues.


  1. The cost of reduced collection percentages

An organization can expect an increase of between 5% and 15% in the amount it collects by outsourcing its billing department. Another way to look at this is that running an in-house collections and billing department comes with a hidden cost of between 5% and 15% in terms of reduced collection percentages. Of course, these are of course averages, so it depends on the efficiency of your current billing team and which third-party RCM firm you’re comparing them with.


Figure your software and hardware costs and services and warranty costs per year.

Costs for your direct processing for EHR, Clearing House .

then figure the percentage of revenue collected by a practice including collections. this will give you an idea if it costs more to keep your practices in house or to have a Revenue cycle Management Service handle your practice needs.

Improve Your Billing with Professional RCM Services

At Ultimate Billing, we know how stressful billing and collections can be, especially when you’re slammed with patients. We’ll handle all the hard work for you, like communicating with insurance providers, so you don’t have to. Leave behind the days of phone tag and claim denials with help from our healthcare RCM services. 


If you’re ready to improve your organization’s billing, collections, and total revenue, set up a quick consultation with our team of experts. We’ll help you make the most of your numbers with a well-designed RCM process so you can run an efficient and profitable organization.


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Ultimate Billing exists to reduce the business burden of healthcare, allowing our clients to focus on patient care.

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