Who can Benefit from Medical Billing Process Outsourcing

All segments of the healthcare sector that provide patient diagnosis, care, and support can benefit from medical billing process outsourcing provided by third parties. Although outsourcing is not a magic bullet for every practice, it can be the right solution for many, as healthcare professionals, specialist groups, small private practices, hospitals, and large enterprises have found.

Physicians and Healthcare Professionals

Physicians, specialist doctors, dentists, physical therapists, OB-GYNs, and other healthcare professionals who run their own practice can greatly benefit from a partnership with the right medical billing process outsourcing provider. A competent vendor can give the physician access to billing experts that can be expensive to hire in-house. It can reduce the time doctors spend on tedious but necessary admin work. Even if you are very hands-on about running your business, billing and collections are labor-intensive tasks that can take precious time away from what you do best: patient care. By offloading part or all billing functions to a third party, doctors can spend more time with their patients while ensuring that revenue targets are met.

The medical billing process outsourcing company may offer a complete billing solution like end-to-end revenue cycle management or discrete services like electronic and paper claims processing, medical billing software and integration, patient registration, electronic scheduling, pre-collection and collection, billing performance analysis, financial reporting, IT support, and call center services. Besides claims processing, billing companies can also help with operations management (practice administration, data analytics), financials (reporting, benchmarking, payer negotiations) and risk mitigation (ICD-10 preparation, coding education, compliance monitoring).

Medical billing process outsourcing is recommended for practice owners that do not want or are unable to manage an admin team. To maximize the cost benefits of outsourcing, many practice owners negotiate a lower collection percentage as the volume of collections increases.

Medical Groups

A medical group is a network of primary care providers (doctors or specialists) that work under one administrative team. Billing services for a medical group can be performed in-house or by a third party. Some physician groups prefer to work with a medical billing company to leverage economies of scale. Because the provider distributes expenses across multiple clients, they can pass on the savings to physician groups with lower rates. Medical billing providers hire the best medical billing and coding professionals who can optimize revenue flow for the group practice, but the client pays less for the high-quality service than if it were to build its own team of expert billers and coders.

Another benefit of hiring a dedicated medical billing process outsourcing provider is ICD-10 expertise. The ICD-10 rollout in October 2015 will be one of the biggest changes in the healthcare industry in years. Payer denials and increased cycle times are expected, but physician groups can insulate themselves from the negative impacts of the transition by working with a third party billing specialist. Medical billing companies were one of the first in the industry to prepare for ICD-10, and they can provide shared knowledge to the client to ensure a smooth transition.

Diagnostic Laboratories

Some medical billing companies specialize in providing services to diagnostic and testing laboratories, imaging centers, urgent care centers, and outpatient surgery centers. Niche billing firms provide claims processing, revenue cycle management services, and software solutions to manage accounts receivables effectively, improve billing compliance, and increase revenues while lowering overall billing costs. Many medical billing specialists have decades of experience in a particular healthcare segment, keeping them agile and responsive to ever-changing healthcare regulations. They use best-in-class technologies and processes, and employ certified medical billing staff that has in-depth knowledge about this segment.


Hospitals and large healthcare organizations typically have more complicated billing systems in place than private practices. Hospitals have their own unique challenges, such as shrinking profit margins, new regulations that can increase audit risk and negatively impact collections, and internal billing errors that can lead to 25 to 30 percent revenue losses. Even a slight billing error rate of 5 percent can drastically increase the total cost of the billing function. Hospital administrators and CFOs work with third party billing companies to address these issues and allow medical professionals to focus on patient care.

Besides providing more efficient claims processing, billing companies provide consultancy services, and short- and long-term solutions to resolve accounts receivables issues. Consultancy services include:

Coding and audit. Audit services help hospitals improve coding accuracy, reduce risk and improve revenues.
Billing process evaluation. Third parties identify gaps in internal billing and collections systems and provide resources to correct the issues.
Operations support. Billing companies can provide the services of executive-level managers as well as support personnel to develop a plan to reduce hospital operational costs.

Growth management. Medical billing companies provide support and resources for expanding hospitals and healthcare organizations. Consultants identify expansion options and the best growth strategy tailored to the organization’s goals.

Sourcefit Philippines Outsourcing Blog: Medical Billing Process Outsourcing

Other Healthcare Organizations

For large healthcare organizations that struggle with financial underperformance issues, a medical billing specialist can uncover neglected cash flow opportunities through revenue cycle management. These specific areas can be difficult to identify within the institution, but an objective third party can provide fresh perspective to reveal opportunities for improvement. Medical billing providers use custom solutions to maximize revenue from collections and address challenges like missed charge capture, Medicare secondary billing, and digital transformation.

A company specializing in Medicare secondary billing (a labor-intensive process for low-value claims) can help a hospital increase collections by providing a dedicated team of Medicare billing specialists to handle this activity. Billing companies can increase self-pay receivables by executing self-pay processes that encourage patients to pay their outstanding balances. Medical billing companies can also ease a company’s transition from legacy systems to new billing and accounting systems.

Rise of Medical Billing Process Outsourcing

Medical billing process outsourcing dates back to the 1950s, according to the Healthcare Billing and Management Association (HBMA), a U.S.-based organization representing third-party billers. In the 1980s, outsourced medical billing was common in smaller private practices with less than five doctors. The decision to outsource depended mostly on the appetite for risk of the practice owner or manager and willingness to entrust private information to an outside billing specialist.

Today, outsourced medical billing is considered as good an alternative as in-house billing for many healthcare organizations. For some, outsourcing is the only way to provide quality patient care while controlling operating costs and meeting collection targets. For others, outsourced medical billing is a way to gain technological, staffing, and process expertise. Third party billing companies make it their business to keep up to date on trends and regulatory changes that deeply impact the industry, allowing them to transfer shared information to their clients.

External and Internal Outsourcing Drivers

The healthcare industry in the United States is currently undergoing a major transformation due to ICD-10 implementation in October 2015. Transitioning to ICD-10 (which increases the number of medical codes) is expected to increase the number of denied insurance claims as well as revenue cycle times.

Frequent audits are also putting pressure on private practices and hospitals, as the focus shifts from encounter-based to value-based reimbursements, where the amount of reimbursement is tied to healthcare outcomes and not just to frequency of visits. Another external driver of the rise of medical billing outsourcing is the EMR Stimulus incentive bill, which provides funding to practices that will adopt meaningful use of electronic medical and health records. Along with the massive investment in new systems, investment in revenue cycle management (RCM) systems and outsourced services are expected.

Some healthcare organizations are better able to cope with these changes than others. Besides external challenges, practices face increasing billing and reimbursement costs, shrinking profits, inefficient in-house billing processes, and difficulty hiring skilled medical billing professionals due to talent shortage or lack of resources. These internal issues are driving the growth of the healthcare outsourcing market as well.

Revenue Cycle and other Drivers

Revenue cycle management is one of the most popular functions for practices and hospitals to outsource, mainly because it is a complex activity that can be difficult to manage effectively in-house. Post-intervention activities like billing and coding, in particular, are labor-intensive and require specialized training. Ideally, they should be performed in a low-cost environment to be financially practical. Outsourced medical billing has thus become a very attractive strategy for healthcare companies.

Many firms outsource only a portion of their RCM to local or onshore third parties to manage outsourcing relationships more effectively and safeguard their reputation. However, the ICD-10 implementation has raised staffing requirements considerably, forcing companies to work with offshore medical billing firms that can provide billing services and skilled billing professionals at very low rates. On the provider side, there is a trend towards consolidated revenue cycle management services. Many large healthcare organizations are seeking comprehensive solutions for strategic reasons and not merely to reduce cost. These companies are looking for fully integrated solutions that include low, midlevel and high-value services like consultancy and strategic planning.

Getting Started on Medical Billing Process Outsourcing to the Philippines

Learn more about outsourcing in the Philippines, outsourced staff leasing and the Philippines as an outsourcing destination.

Sourcefit Philippines Outsourcing Blog: Who can Benefit from Medical Billing Process Outsourcing



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