In-house vs. Outsourced Billing for Private Practice

Private Practices

At some point, almost every private practice owner faces the decision of whether or not to outsource their medical billing. The answer to this question largely depends upon the practice and the provider. While many physicians prefer to outsource their billing services, others would rather have more control over collections and do everything in-house. When considering the options, it is important to carefully assess the needs of your practice to determine which solution is best for you. The following are just a few factors to consider when making your decision:

Outsourced Billing

  • Less liability - Vendors are liable for coding mistakes. When a practice outsources billing and coding, the vendor is responsible for any mistakes their coders make.
  • Reduces administrative tasks - For providers that prefer not to manage day-to-day administrative and billing functions, outsourcing your billing services may be the best option. Many doctors are not interested in the business side of running a practice. They went into medicine to help patients, not become expert coders or billers.
  • Fewer billing errors - Outsourcing billing typically decreases the number of denied claims. It can also reduce the number of billing errors through the use of experienced billers and coders to perform the tasks.
  • Decreases overhead – Outsourcing can reduce overhead costs including time and money spent on salaries, benefits and employee training. Equipment, special software, and office space should also be considered.
  • Focus on patients - Another important factor is that outsourcing enables the practice to spend more time focusing on patient satisfaction because they are spending less time handling administrative functions.

In-house Billing

  • Allows more control – If you prefer to be involved in every aspect of the practice, an in-house billing solution may be the best option for you. An in-house billing department requires close attention to day-to-day billing operations. A major benefit is the ability to address and quickly resolve any problems or questions. In-house billing also allows for more control over your accounts receivable.
  • Onsite personnel - Some providers may prefer to have billers and coders onsite. Not only does it help with resolving issues more efficiently, but it is also beneficial to have their advice nearby.

There are advantages and disadvantages to both outsourced and in-house billing. A practice owner should perform a cost analysis and include all direct and incremental costs such as payroll, benefits, space, equipment, software, maintenance and service fees, training costs, compliance audits, and office supplies. Finally, it may be helpful to speak with your CPA or an outside consultant for assistance with the decision-making process and an attorney to review any contract or services agreement prior to signing.


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The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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