Outsourced Medical Billing vs. In-House Pros and Cons

Practices place patient care and experience as a top priority. However, the economics of healthcare have great importance, as well. Without consistent revenue cycle operations, organizations may face delays in reimbursement and more denials from payers. When challenges arise, practices may debate whether to move to outsourced medical billing or keep it in-house.

There are pros and cons to each. It’s critical to understand these as you plan for your practice's future.

Efficient and Accurate Medical Billing Protects Revenue Streams

Medical billing encompasses all the phases of the revenue cycle. Because it’s so complex, and payers have many rules to follow, it can become overwhelming. Delays in submitting claims can occur because of failures in charge capture, coding, or documentation.

Keeping your accounts receivable in good standing requires efficient processes that remain stable. Timely billing ensures you receive payment in full and fast. These workflows must also be accurate and error-free.

Mistakes are costly yet rampant. A review of billing practices concluded that errors were the result of:

• Lack of formal education
• Inadequate clinical documentation to support the bill
• The absence of feedback systems to correct billing errors

To preserve your revenue and continue to deliver care, efficiency and accuracy are integral. If your practice encounters problems, you’ll want to consider outsourced medical billing services vs. in-house.

The Pros and Cons of In-House Medical Billing

Traditionally, in-house operations have been the norm. There are advantages and disadvantages to this approach. Additionally, current trends around staff shortages are driving many practices away from in-house operations.

The pros of keeping medical billing within your organization include:

• You have complete control over the revenue cycle.
• Practices can answer questions from patients about bills, and the information is accessible.
• You can maintain best practices for security and compliance required when dealing with PHI (protected healthcare information).
• You can manage the amount of time staff contribute to medical billing processes.

These pros center around having a system that runs like clockwork with no surprises, and that’s far from reality.

The cons of in-house billing showcase the true challenges of this model. They include:

• Potentially higher human error rates
• Less than consistent coding practices
• Greater time lapses between patient encounters and billing if staff have to wear multiple hats
• Possible decreased patient satisfaction if bills take too long or are inaccurate
• Increased risk to your cash flow
• Backlogs related to accounts receivable

If any or all of these occur, your practice could face considerable obstacles to operating and expanding. These reasons often lead to practices evaluating outsourced medical billing.

The Pros and Cons of Outsourced Medical Billing

Is outsourcing right for your practice? In this framework, you would allow a third party to handle all the components of medical billing. It can come with many attractive benefits, such as:

• Less strain on internal resources so they can focus on patient care and strategic growth
• A reduction in errors and denial rates since certified coding experts are creating claims, which eliminates costs for resubmissions
• Cost savings potential in terms of not needing to hire full-time employees
• More consistent cash flow
• The ability to use new billing technology without the investment

All these pros often deliver a much healthier revenue cycle, which keeps financial performance in good standing.

There are cons to outsourced medical billing, too. Some practices may feel they lose control of the process. However, you’ll have clear visibility into medical billing operations with the right partner.

Another concern may be compliance and data security. The same rules of HIPAA bind third-party billing companies as you are. If this is a worry for you, ask questions about their processes.

A last con may be patient interaction with the third party about billing. You have the relationship with your patients, so you’ll need to explore how they would interact with them and ensure it will be a good experience.

Outsourced Medical Billing or In-House: How to Decide

In reviewing the pros and cons of each option, here are some things to consider when making your decision.

Analyzing Revenue Flow

In-house billing can slow down revenue flow because of the reasons discussed above. You may also be behind on patient collections. The longer it takes to get paid, the more you depend on reserves.

Outsourcing can accelerate time to payment and support patient collections. There will be an adjustment period to ramp up, but you could soon see improvements in these metrics.

Rethinking Staffing Models

Your staff has lots of demands on the business and care side of your practice. This workload can lead to burnout and more errors. It will place a burden on you to hire more billers and coders versus caregivers.

If you shift to outsourcing, you can eliminate the business strains. When revenue becomes stable, your hiring focus can be on care staff, allowing you to support more patients.

Considering the Patient Experience

Patients have higher expectations in their medical interactions. They want the process to be convenient and organized, and that starts with registration and eligibility. Using outdated paper practices impacts their experience. Additionally, they don’t want to be surprised about their financial responsibility.

Moving these functions to an experienced provider streamlines the processes and digitizes them. Patients will appreciate this. Also, they can deliver accurate information about coverage and what they’ll need to cover from the start.

Technology Opportunities

Automation and the use of AI have become vital to improving medical billing. The learning curve and expense can be prohibitive for some practices. By working with an experienced partner, they have these tools in place, which enables efficiency and accuracy at scale.

When assessing potential vendors, learn how they use advanced technology in workflows and the benefits it delivers. If choosing to keep billing in-house, you’ll need to budget for this and create a plan for deployment and training.

Outsourced Medical Billing vs. In-House: What Makes Sense for Your Practice?

After reviewing the pros and cons of outsourcing and in-house operations, you can make the best decision for your practice. Keep in mind that this choice will impact your future operations and growth.

If outsourcing is the best solution, you can begin your search by looking at medical billing company reviews here.