Pros & Cons of Outsourced Medical Billing

One of the trickiest yet most important aspects of managing a medical business is medical billing. Steady cash flow is essential for survival, but handling multiple bills for several procedures is not child’s play. Even a minor mix-up could severely harm the clients or the revenue. 

The goal is to make medical billing efficient enough to keep patients happy while maximizing revenue. To ensure this, medical providers often resort to outsourcing medical bills. 

What is Outsourced Medical Billing

Outsourcing Medical billing refers to hiring a specialized third-party service provider to manage all the billing processes. 

The global outsourced medical billing market is predicted to reach 19.7 billion by 2026,’ expanding at an annual growth rate of 11.8%’ (according to a study by Grand View Research). 

This external company allows healthcare practitioners to concentrate on patient care rather than paperwork by handling administrative responsibilities, including payment posting, claim submission, and follow-up on denied claims.

A comprehensive evaluation of the patient’s present billing practices is the first step in the process. The outsourcing partner implements their system and takes over billing operations after learning about the particular needs of the medical practice. This ensures a smooth transition without the slightest disturbance to the medical business.

Pros

1. Saves costs

Third-party medical billing companies only focus on medical billing instead of balancing bills with providing medical care, as in the case of in-house billing. As a result, it may take advantage of economies of scale, generating maximum revenue by processing more bills at a lower cost.

Additionally, billing systems no longer need to conduct in-house medical billing. Training, maintenance, and technology costs are all cut down, which considerably lowers expenses for healthcare organizations.

A Medical Practice Insider analysis claims that outsourcing medical billing can result in cost savings of up to 40% compared to in-house billing services.

2. Expertise plus less margin of error

When medical bills are outsourced, they are handled by experts who have specialized in medical billing and work full-time jobs in this domain. Their thorough knowledge and proficiency remove any possibility of mistakes or carelessness. Unlike in-house medical billing, denial trends, new updates, and reimbursement issues are recognized far more quickly while conducting daily billing operations. 

Professional billers have a tiny margin of error and know all the rules and insurance protocols. If there is a case of any discrepancy, they can maximize returns by presenting the case better. 

3. More efficiency

Providing good-quality medical care to patients is a very demanding task in itself. Therefore, it is not appropriate to add the burden of managing medical bills because it will lower patients’ standard of care. 

Small-scale medical providers with a limited workforce should not overwork their staff members by assigning them tedious yet essential administrative work on top of their regular duties. Opting for medical billing services for small practices speeds up the billing procedures and alleviates the responsibilities of the provider’s staff members, allowing them to spend more time with the patients.

4. Enhanced Transparency

It is a common belief that outsourcing medical billing is equivalent to giving total strangers power over revenue cycle management. But the truth is that when you enter into a service agreement with a medical BPO, they must deliver positive results according to the metrics you set.

KPIs like denial rates, first-pass payments, and collection ratios can be used to assess transparency. As a result, outsourcing firms must provide statistics to support their decisions, enabling exceptional cash flow transparency.

5. Better technology

The most recent billing software is available to outsourced billing businesses, which helps streamline the billing process and ensure accuracy. They also possess the tools and knowledge to protect data from cyberattacks. 

Features like solid firewalls and fiber-optic data backups safeguard patient confidentiality. 

6. Highly Integrated Electronic Health Records (EHR)

If you have ever overseen medical billing, you know the enormous time commitment to just entering patient data into electronic health record (EHR) systems. This could quickly become a nightmare for any biller.

Some healthcare facilities are concerned about how difficult it will be to integrate off-site medical billing with their present EHR procedures and systems. However, if you choose a provider who makes the change for you or engages with a billing provider who has an in-depth understanding of the most popular EHR systems, you can quickly let go of this concern.

You can handle the technological problems that crop up with electronic health record systems when you outsource medical billing. 

Cons

1. Communication Barrier

Granting third-party access to patient billing records establishes a communication barrier, where a patient’s billing-related queries can only be addressed by the billing service provider following a proper communication protocol. It makes sense that many patients would find it awkward to divulge their private information to a third party.

Furthermore, this complicates a straightforward communication path, which lowers patient satisfaction.

2. Lack of control and flexibility

Giving up control and supervision does not grant the space to establish clear, time-bound goals. Greater flexibility is required, particularly with three-way communication, where productivity is interrupted. 

3. Sunk costs

Medical providers usually spend a lot of money and resources on training and educating their billing staff. The resources already used for staff training may result in sunk costs if the bills are suddenly outsourced to a third-party bill provider. 

Thus, it makes sense to contract with a software provider with a low operations learning curve. Employee training on the new system should be quick and straightforward.

Moreover, with outsourcing, there are many hidden costs, such as membership dues, legal fees, or even fine print. 

4. Security Concerns

Granting access to all patient records may leave a medical provider’s system vulnerable to malicious activity and cyberattacks. The external billing service provider must regularly update its software to ensure security and have training initiatives to prevent breaches of internal data. 

Ensuring data protection and confidentiality of patients is a requirement as per the HIPAA Laws. 

Bottomline

In conclusion, medical billing outsourcing has the potential to be both very beneficial and challenging for medical practices. Before making a choice, healthcare practitioners must carefully consider all aspects and analyze their requirements and objectives. 

By carefully considering these implications, medical providers can decide whether outsourcing the bills is the best option for streamlining their billing procedures.

The end goal will always be maintaining good patient care and improving productivity.