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Gene Spirito, MBA

By: Gene Spirito, MBA on October 25th, 2021

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5 Problems with Outsourced Medical Billing Services

Medical Billing / RCM

How is the flow of revenue going in your health system? If you’ve been taking care of medical billing internally with your own staff, it’s possible that there is some room for improvement. There is no need to put up with outsourcing medical billing services problems when a solution is readily available.

After all, third-party billing companies are devoted to all things having to do with the revenue cycle, while your own staff may not be trained as well. Or, members of your team may simply lack the skills and experience that go into the billing effort.

To help determine if you’re ready to outsource medical billing, Medical Economics points out that one motivation is that you have been putting up with an archaic patient accounting system. 

If you now need to replace the system, this would be a good opportunity to look at your options for outsourcing the work instead. 

Another factor is problems that arise with credentialing. Some doctor’s offices note that the reimbursement models they work under keep changing. That makes it much harder to maintain a stable flow of revenue. 

Finally, suppose cash recoveries are much smaller than you had expected and net revenues are plunging. In that case, there may be something off in your billing that would lead you to partner with an external billing business with experience in healthcare.

Here is an overview of problems that can occur with outsourced medical billing services. But these may not really be problems for you, and could just represent the learning curve you and your staff will go through as you change your billing setup.

1. Specialists Often Need Billing Professionals With Advanced Knowledge

An ordinary family doctor will typically see a lot of bread and butter cases that do not require a lot of fancy codings, such as addressing an ear infection or diagnosing a sprain versus a hairline fracture. 

But specialty medical practices may be reluctant to work with outsiders for billing. As Medical Economics put it, “Some specialists may have more complex billing procedures that require clinical review, such as cardiothoracic surgeons.” The trick in such cases will be to verify that the third-party billing company has the knowledge and experience to work with your specialist bills.

2. You Need to Accept That You Have Less Direct Oversight of the Medical Billing Process

When a problem arises in a bill in your office, it’s simply a matter of walking down the hallway to correct the issue there on the spot. But when you arrange for this important work to be done through outsourcing, you will not have as much direct control over correcting problems. 

But is this really a problem? For many practices and clinics, it’s best to leave such chores to billing professionals who focus all their time on improving the flow of revenue.

3. Rather Than Relying on Your Personally Vetted Team, You Have to Trust a Third Party

Placing trust in someone else may not come easy to you and fellow stakeholders in your health system. But that’s not really a good excuse to avoid outsourcing your medical billing to a third party. 

The time you gain from freeing up staff from this chore can be put to better use, such as following up with patients and giving them a better experience overall, from setting an appointment to their encounter in the examination room.

4. Outsourcing Medical Billing Services Can Mean Accepting the Rules of the Billing Team Rather Than Your Own Way of Doing Things

Internally, you are free to set policies and rules concerning billing and expect your staff to adhere to them. This covers everything to how you correct billing errors to the timeframe you want these errors to be resolved.

But when working with an outsourced medical billing service, you will typically sign a contract with them, that will force you to work according to their rules and protocols. 

So if you need to adjust your billing system later, you’ll need to budget some time to make the changes. This is not a major sticking issue for most medical professionals, though. The convenience and efficiency of third-party medical billing professionals even out any qualms you might have bout doing things your way.

5. Costs Will Vary, Based on Income Earned Each Month

If you’re accustomed to nailing down every last cent owed to you for medical services, you’ll need to change your perspective to work successfully with the third party. 

360 Connect explained that “medical billing companies usually get paid a small percentage of your practice’s total revenue (usually between 5-10%).” Under such an arrangement, you may find it harder to budget for routine expenses each month. 

For example, you will pay a smaller fee to the biller in slow periods, but when your practice grows very busy, the medical billing company will command a larger amount. This is an accounting task, though. You can make the case that all of the time and effort your staff saves with third-party billers more than makes up for the fees they charge.

So it can be challenging to budget your monthly expenses. During slow months, you will obviously pay less to the medical biller, but you will pay more in busy months, 

Ready to Investigate Outsourced Medical Billing Services?

There are a lot of considerations when outsourcing a vital function of your business, especially when it has to do with how profitable you can become. Drawbacks of outsourcing can include your staff needing to adjust to the idea that they will have less oversight into billing management. 

You typically will pay a percentage of revenue to the third-party billing processor, which means you will expect fluctuating income. That can help you realize you will receive more money during busier periods to make up for the percentage taken out of your income during slower months.

For more insight into how your health system can prosper thanks to outsourcing medical billing, check out the Ultimate Guide to Medical Billing and Revenue Cycle Management Services today.

Key Takeaways

Key Takeaways

  • Health systems need to decide if they want to keep their billing in-house or work with a third-party revenue cycle management business.
  • Problems associated with 3rd party billing include reduced oversight into how bills are handled.
  • Sometimes, it’s better for your bottom line to outsource billing because you cannot easily do this work if a staff member calls in sick unexpectedly or otherwise is not going to be available.
  • Fixing problematic bills, such as using the wrong ICD-10 code, is easier when you outsource medical billing.


About Gene Spirito, MBA

Gene has been involved in sales and deploying well over 1,000 revenue cycle management and billing solutions for medical practices, groups, networks, and laboratories of every specialty. With more than 25 years’ experience, Gene has guided so many ADS clients toward the configuration that would work best for them such as services through MedicsRCM, or in-house automation with the MedicsCloud Suite. Gene has an undergraduate from Villanova University, and an MBA from Temple University. Not surprisingly, Gene’s an avid Wildcats fan (the VU basketball team).