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The pros and cons of outsourcing billing


Should your practice outsource its billing services?

Billing is a crucial part of every physician practice, no matter the size. To do it right requires dedicate billers and coders, and constant oversight of claims and reimbursements. Physicians may wonder when it’s time to outsource billing to a third party company. Dan Schulte, SVP of healthcare at HGS, a global business outsourcing company, offers some pros and cons for outsourcing.

Trigger events

If unsure whether to outsource billing, Schulte says physician practices can use the follow circumstances as guidelines:

  • Your patient accounting system is old and needs replacing.
  • You have chronic problems with credentialing issues.
  • You’re seeing constant change in reimbursement models.
  • You have weak net revenues and poor cash recoveries based on your expectations.

If any or all of those trigger events apply to a practice, it’s probably a good idea to outsource. While cost of outsourcing is a concern for many physicians, Schulte argues that not doing so is leaving more money on the table.

“The revenue cycle is a complex process and for those who think they have an absolutely clear understanding of all the issues, I have a surprise for them—there will be a rude awakening at some point that they did something wrong.”

Pros of outsourcing

The most significant point in favor of outsourcing billing is having “a trusted partnership…that a professional revenue cycle partner can bring,” Schulte says. This includes being able to give a practice clear direction to improve revenue and having a comprehensive knowledge of regulatory issues from the federal government and payers.

“A revenue cycle partner is making sure the demographic data’s correct, that the bill is correct, that it goes through the clearing house correct, that the payer receives it,” Schulte explains.

Additionally, he says that an outsourcing partner can offer helpful analytics that allow the practice to have a clear picture of what is happening with their accounts. “[They] can report back to you how accounts receivable is aging, if payers are misbehaving, how patients are responding to changes in reimbursement,” to name a few, he says.

They can also help physicians negotiate better contracts with payers if the analytics reveal that the current contract isn’t working for the physician.

While Schulte agrees that practices can “grow their own talent” by hiring and training billing and coding staff, he points out a significant barrier.

“People change jobs and careers. When you have a small staff working for you and one of them leaves, you have to start from scratch to replace them.”

In an outsourcing relationship, there’s always a team of people available to make sure your claims are handled.

When not to outsource

Not every situation allows for outsourcing, however. Some specialists may have more complex billing procedures that require clinical review, such as cardiothoracic surgeons, he says. “That’s not something that can be outsourced very easily because you need to have a high degree of knowledge of the discipline itself.”

And any other situation in which “an intimate relationship between case management and care planning for a particular patient requires a closer touch,” such as mental health services, that wouldn’t be a great fit for an outsourcing service.

How to select a good outsourcing partner

For practices that decide to outsource, Schulte offers the following tips for selecting the right partner.

  1. Proven expertise. The vendor should have a solid reputation and understanding of your needs as a practice.
  2. Solid references. Schulte recommends asking for recommendations for other practices like yours; then you’ll have evidence that the partnership works for your kind of model.
  3. Transparency. The vendor should provide clear information up front about the terms of the agreement, fee structure and implementation plans. There should be no hidden costs.
  4. Current technology. Ask for clarity that the vendor is using the most current technology to get the work done.

“Overall the final question is: Can the vendor do for you what really needs to be done? You’re not looking for their basic skills; you want them to deliver what you need,” Schulte says.

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Jennifer N. Lee, MD, FAAFP
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health