In my last entry, I outlined the key benefits one should see from a strong medical billing service company. I also outlined the most frequent concerns that can stall the decision to outsource medical billing. In today’s entry, I will be talking about the first benefit I mentioned – ‘Scale’. By scale I mean that the medical billing company should have tens and hundreds of providers across whom large, necessary investments can be spread. If a $150,000 per year billing system administrator is required, then a medical billing company with 200 clients only needs each of its client to carry $750 per year of that person’s cost. If a practice of four providers employed this person, then each provider would need to carry $37,500 per year of that person’s cost; this is the value of scale. A medical practice can achieve significant advantages by leveraging the superior scale of a mid- to large-sized medical billing company.
A medical billing company should be deploying technologies and resources that a typical medical practice simply cannot afford or support. Examples of technologies and processes that lend themselves to scale include:
- A high-end billing system that offers sophisticated reporting and claim management/work flow capabilities. These systems will typically cost well into the hundreds of thousands of dollars.
- A pre-submission claim scrubber that applies the payers’ adjudication rules before the claims ever leave the medical insurance billing services four walls.
- A dedicated billing system manager that stays on top of the ever changing rules from payers concerning how claims need to be submitted. I am sure you have heard horror stories about claims going for weeks without being submitted. This is often caused by changes in a payer’s claim formatting rules. A dedicated billing system administrator stays on top of these each and every day.
- Sophisticated patient collection tools such as predictive dialers and utilization of a patient expected payment yield (i.e., the amount the patient owes times the likelihood they will pay).
- A well-defined and managed billing process that will not grind to halt because a single employee is lost and eliminates errors before they propagate through the system.
- A dedicated group of individuals that follow-up on claims that have not had a response from the payer within a reasonable time frame.
There are even more technology and process elements that lend themselves to scale. Without even including all of them, you can quickly see that the average medical practice simply cannot afford all of the technology and personnel required to effectively fight insurance companies for the money the doctors are owed. A significant amount of the cost associated with the technologies and process steps outlined above is fixed (for instance, the cost of the core medical billing system and the salary of the billing system administrator). Medical Billing Services spread these fixed costs across their entire client base, which can be hundreds of physicians. This is one of the reasons that small medical billing services are struggling to properly serve their physician clients – they typically cannot afford to deploy processes or technologies that are any more powerful than what an average medical practice can afford.
In conclusion, selecting a medical billing company that has the scale to deploy sophisticated technology and processes can provide the average medical practice a huge advantage in terms of their ability to do battle with the payers that are working hard to keep every penny they can.