10 Advantages of Medical Billing Outsourcing

advantages of medical billing outsourcing

Medical billing outsourcing is the practice of transferring a healthcare organization’s revenue cycle management (RCM) to a medical billing service provider. This third-party may either handle a portion or the entire process of the RCM. While the medical provider generates the claim data, the billing company provides technology, staff and other resources. The goal of the medical billing provider is to reduce operational costs and increase collections and revenues, but the advantages of medical billing outsourcing can be numerous.

RCM is one of the most outsourced functions. According to a report conducted by Grand Review Research, the global medical billing outsourcing market size was valued at USD 11.1 billion in 2021 and is expected to grow from 2022 to 2030 at a compound annual growth rate (CAGR) of 12.0%.

Medical billing outsourcing is beneficial to the healthcare industry for many reasons:

1. Medical billing outsourcing increases revenues.

According to an industry poll, many healthcare organizations that outsource medical billing improve the profitability of their practice. About 80 percent of hospitals with more than 200 beds reported that RCM outsourcing was responsible for 5.3 percent of their revenue increases. On that token, 78 percent of those with less than 200 beds said outsourcing was responsible for 6.2 percent of their revenue increases.

While the cost of outsourced medical can be higher than the cost of running an internal billing department, the increase in collections and revenue makes up for the high initial spending. Practices can further maximize savings by working with an offshore billing firm in an emerging location. However, firms should carefully choose a billing company to ensure that quality, compliance, and performance are not sacrificed.

2. Medical billing outsourcing reduces costs.

An advantage of medical billing outsourcing is that it can reduce total costs by increasing collections and net revenue. For some practices, the cost of outsourcing can be higher than the cost of running an in-house billing department. However, the potential increase in collections through third-party services makes up for the initial investment.

By outsourcing RCM, you can also eliminate other expenses and complexities, such as costs associated with finding the right people and training billing staff.  Billing services can also cut costs through economies of scale. This means that the service provider spreads the cost across its client base, so each client can get lower rates for services.

3. Medical billing outsourcing can give you access to the latest RCM systems and technology.

For top-performing organizations, the use of efficient and sophisticated RCM or medical billing software is essential to increase practice collections and revenue. In fact, for practices with severe financial problems, using the right technology can make a difference between breaking even and bankruptcy. Some firms even use legacy RCM processes and systems that are so dated that the maintenance cost is greater than the benefits they provide.

A Black Book survey found that 21 percent of CFOs that outsourced medical billing services reported that their companies would have ended up in bankruptcy if they wouldn’t have benefited from the software upgrades offered by their outsourcing providers. These companies avoid the heavy cost of updating their legacy systems by using the service provider’s technology and resources.

However, medical billing outsourcing is not just for practices in dire financial straits. Most hospitals outsource some part of their RCM process, even those that are performing well. For example, one hospital worked with a third-party when they were in the process of replacing their 10-year-old RCM system. The client used internal applications as well as third-party applications to ease the transition. System upgrades are costly whether done in-house or outsourced to a third party, but outsourcing helps mitigate risk by allowing the provider to share accountability.

Sourcefit Philippines Outsourcing Blog: Advantages of Medical Billing Business Process Outsourcing

4. Medical billing outsourcing can help you address staffing issues.

Whether they can afford to keep RCM functions in-house or not, healthcare organizations are not immune to staffing issues.  They may have high employee turnover or lack of skilled talent. Although not required, medical billers and coders are encouraged to get certified to prove their competency. Billing staff assigned to ensure that documentation complies with federal regulations should also be certified. They must also attend industry seminars constantly, and interact with insurance carriers to make sure regulations are followed.

Medical billing outsourcing can be highly beneficial for small practices, since hiring and supporting certified and experienced billers can be even more costly for start-ups or small medical providers. Losing an experienced biller can also be costly, as it can reduce collections dramatically, and therefore revenues. Outsourcing providers can address these staffing difficulties in a cost-effective way. They can onboard experienced staff immediately to replace a worker on vacation, fill open positions quickly, and provide temporary or short-term billing personnel. They hire experienced billing professionals that can reduce cycle times and increase collections.

5. Medical billing outsourcing can help you improve focus on patient care.

Most healthcare professionals would rather spend their time with their patients than with tedious, time-consuming billing tasks. By outsourcing a portion of or the entire RCM process to a third party, practice owners and managers can free up time for other essential tasks, and doctors can focus on their patients. This is a very crucial advantage of medical billing outsourcing.

6. Medical billing outsourcing can help you reduce errors.

Internal billing errors can lead to 25-30 percent revenue losses. Even a seemingly low error of 5 percent can drastically increase the total cost of the billing function. Medical billing business  outsourcing providers have systems in place to ensure that claims processing errors are very minimal. Providers employ trained billing professionals to scrub or clean up claims before they are submitted to the insurance carrier. Accurate and complete forms reduce the number of denied or rejected claims significantly.

7. Medical billing outsourcing provides dedicated billing customer support.

Another laborious but necessary task is helping patients with their insurance and billing questions. Instead of hiring a full time employee to yield calls from patients, it can be more cost-effective to work with a third-party that provides dedicated billing support. Billing support can be offshored to call centers in emerging locations for the lowest rates.

8. Medical billing outsourcing offers specialized claims support.

Many third-party medical billing firms specialize in niche areas like Medicare secondary billing, motor vehicle accident claims, out of state Medicaid managements, and collections related to legal action. Top-performing practices understand that they have to cover all bases to maximize collections. An advantage of medical billing outsourcing is that it can boost revenue and profitability while allowing the practice to control other RCM processes internally.

9. Medical billing outsourcing delivers flexible solutions.

The demand for end-to-end RCM outsourcing is on the rise, but not all companies seek a comprehensive, bundled solution. The medical billing outsourcing industry is known for its flexible delivery and pricing models, and most vendors tailor their solutions to each company’s specific needs. This means that smaller practices can opt for transactional RCM services and pay only for the work performed instead of paying a percentage of collections. For example, some providers offer a fixed rate or subscription fee attached to each account, claim, CPT code, or location.

You can also outsource different billing tasks to more than one service provider and then deploy internal staff to perform other billing functions in the organization. With a flexible delivery model, you can leverage the expertise of a billing specialist while not ceding the entire control of your billing process. Of course, based on changing needs, you can later opt to re-bundle services from only one service provided in unison with your in-house staff.

10. Medical billing outsourcing improves patient satisfaction.

By having the latest technology and expertise at your service, as well as sufficient time to focus on your patients, you will be able to improve your patient’s satisfaction. Having readily access to consistent staff can also improve productivity, not to mention, affordable high quality medical billing. These advantages iof medical billing outsourcing can make a cutting-edge competitive difference as numerous practices have reported successful experiences.

To learn more about outsourcing, you can read our Top 8 Qualities of an Outsourcing Company in the Philippines article. We invite you to follow us on social media and to visit our website to learn more about our services.

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