Benefits and Drawbacks to Outsourcing

Written by on November 1, 2017 in Practice tips - No comments

With soaring expenses and decreased reimbursements, small medical practices must try to stop the financial bleeding wherever possible. Because of this, many groups have looked into shared billing to cut down on expenses or outsourcing billing to a third party professional billing company outside of the practice.

Since billing can be demanding on staff time and challenging with new coding, the option to outsource office billing just seems to make sense.

The thing is, choosing to relinquish billing is not simply a “no-brainer”.  There are disadvantages as well as benefits in making this decision, which we will review now.

Benefits to Outsourcing

1.   Billing Compliance Assured

Billing companies keep abreast of Medicare, Medicaid and insurance company regulations.  This is a difficult task for medical practices as rules are constantly changing.  By outsourcing the billing, claim submissions are sent within a proper framework, making rejections less likely.

2.   Increased  Cash-flow

Proper and timely submission of insurance claims leads to increased reimbursements and a boost to revenues. Improved services and products then become more affordable for the practice to offer patients. You don’t have to worry about office billers out sick or on vacation for claims to be submitted.

3.  Practice-Patient Relationships Improved

There is nothing worse than patients feeling ignored.  When billing issues and collecting money while simultaneously signing in patients harry the medical receptionist and answering phones, it is less likely that patients will get the attention that they want.

By removing the billing and money collection, patients can be greeted in a warm, friendly manner and get their questions answered.  Efficiency rises and patients are happier.

4. Avoiding Billing Mistakes

Because billing companies have the sole job of charging and submitting claims, they ensure that their personnel go through a complete and comprehensive training program, complete with terminology and proper coding. This decreases denied claims and increases reimbursements received.

5. Decreased Expenses

By outsourcing, you are saving the cost of:

  • Purchasing billing software
  • Salaries for billing managers and extra staff
  • Benefits for extra staff members
  • Purchasing additional, dedicated computers for billing
  • Training for updated regulation


1.   Security Breaches and Lack of Compliance

While security breaches can certainly occur in the office, especially if patient information is on a laptop, the real concern is HIPAA violations, compromising patient privacy and breaching security when a third party is involved.

Unauthorized disclosure of patient information is an HIPAA violation.  Make sure that patients give consent to send information to outside billing agencies to minimize this risk and also get a signed consent from the billing agency that they will adhere to all the HIPAA guidelines.  Doing so will lessen your liability.  Just remember, the more people given access to personal patient information, the higher the risk that HIPAA guidelines and security can be compromised.

2.   Loss of Control

With billing and accounts being outsourced, practice managers often become less aware of account receivables, accurate billing and corrections or amendments to payments. Managers and staff must assume that:

  • Billing is performed in a timely, efficient manner
  • There is follow up with insurance companies
  • Patients are billed the amount that they are responsible for
  • Coding is correct
  • Correct procedures are listed

Staff may only become aware of a problem when either receivables take a nosedive or patients start complaining about inaccurate bills (which takes us to the next drawback)

3.   Patient Complaints

No one wants to get a bad reputation, especially when the fault lies elsewhere.  The worst is when patients contact insurance companies, claiming that the bills are fraudulent.  This opens a can of worms with insurance companies or government officials going through months of records.

Almost as bad is when patients complain to the office that a mistake has been made and despite repeated, failed attempts at reaching the billers, the problem is not corrected, which compounds the problem. Patients get frustrated and angry when problems can only be rectified by phone.

Such a situation happened to me when by mistake (I’m assuming that it was a computer entry mistake), the EOB showed that the insurance company was billed by my primary for an initial comprehensive examination and a repeat examination. (Only one exam was done on only one visit and one body!)  I was then sent a bill for the remaining balance.  Contacting the outsourced billing office was futile and many phone messages went unanswered.

Each month I called the primary office and was told by staff that a corrected bill would be sent.  Lo and behold, the following month, the same bill was sent.  This went on for 6 months.  Complaining in person, the physician and office staff informed me that no further bills would be sent, that they could not correct the problem and that the office would just take a write-off on the inaccurate bill.  Not only is this frustrating and unsatisfactory for all concerned, it is a loss of revenue if it is compounded throughout the day over multiple patients.

Having the ability to discuss bills with office staff directly, removes frustration and strengthens patient-staff relationships.

4.   Restrictions

Outsourced billing companies may face restricted access to patient encounters, which causes incorrect or insufficient bills to be sent to the appropriate parties. This is further

Worsened by loss of communication between the company and the medical practice. Formulating a process for communication from the beginning thwarts such problems.

5. Added Expenses

The goal of outsourced billing is to save money and cut down on office expenses. However, you may need to hire an additional member of the office staff to liaise between the medical practice and the billing company.  Further salary burdens, add to your office bottom line. Additional expenses may be incurred initially when the transition is made between in-office billing and preparing records for outsourced access.

There are a myriad of responsibilities placed on office staff these days like involvement with patient portals and electronic health records, social media and phone calls, in addition to patient engagement.

Eliminating medical billing from the list of daily burdens saves time and money. Drawbacks include the loss of financial involvement in services rendered.

Whichever way you decide to go, consider all the benefits and drawbacks before you decide which is best for you.

Have some thoughts on this topic?  Share your experiences with us all by submitting your comments.

By Barbara Hales, M.D. 

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