Frequently Asked Questions

I just did an analysis to determine what I am paying right now for my billing staff.  It turned out to be just under 6% of my overhead.  How do I justify paying your company 8%?  If my practice generates $1,000,000.00 and I am presently spending $60,000.00, how can I justify the increase to my overhead of an additional $20,000.00?

There are so many justifications so I’ll divide the answer into two parts: actual costs and intangible savings.

You may be estimating your present expenses based on what it cost your practice to do billing in the past 12 months.  The costs associated with billing will not be the same in the next 12 months.  You must consider all the billing-related expenses that could (and most likely will) increase.  You give staff raises, the cost of benefits increases, stamps, statements, CMS-1500 forms goes up, software and hardware support fees go up, you may need to upgrade either hardware and/or software just to name a few.  You may also need to increase the size of your staff if your practice grows and/or takes on additional providers.  If that happens all costs increase with the addition of the staff.

With a billing service contract, your expenses are fixed for the duration of the contract.  The billing services add the necessary staff and take the hit on all the cost increases while your practice continues to pay the same commission rate. 

Most of our clients have been paying the same 8% since they contracted with our billing service; some as many as 6 to 9 years ago.

Another cost you must consider is the fact that in-house staff gets paid the same salary and benefits and your costs remain fixed (computers, phone, etc) whether or not your practice is generating the same money month to month.  For example, if you take off two weeks during July and your gross charges decrease by 50% (let’s say from $100,000.00 to $50,000.00), the following month (e.g., August) your net receipts will decrease by 50% as well.  With in-house billing, your overhead expenses remain the same.

With a billing service, since the commission is based on posted collections for the previous 30 days, your August bill will decrease by the same percentage as your gross charges decreased.  So instead of paying your usual $8,000.00 commission, your August bill would be closer to $4,000.00.  That is a significant savings.  Most solo practitioners take an average of 4 to 6 weeks of vacation.  In larger groups, the total weeks of vacation is multiplied by the number of providers so the savings is substantial.

Sometimes the decrease in gross charges is based on season or weather; not just vacations.  So keep in mind all the low productivity times and consider all the savings you realize by paying only on actual money posted without having to support a stagnant staff.

The intangible savings must be considered with the same microscope as actual expenses.

Here are a few important issues you must consider:

1. How much money did you lose by billing errors?  (Charges entered incorrectly, timely filing limits missed, misuse of modifiers, etc.)

2. How many write-offs were made that should have been appealed and/or sent for review?

3. How much money is sitting in your Accounts Receivables that cannot be collected?

4. How much money is lost due to bad debt because of inconsistent patients statements being sent or delay in patient statements due to slow claims processing?

There are so many sources of lost revenues in your practice.  Our billing service knows that most of the clients we service have seen a significant increase in their revenues without seeing any more patients directly the result of quality and timely billing and follow-up.

Other intangible benefits are saving realized by a reduction in the resources required to recruit, train, maintain, and monitor staff.  With small unemployment rates in many areas of the country, finding quality, qualified and dependable staff is difficult.

The costs associated with staff turnover is estimated to be between $25,000.00 to $50,000.00 in lost practice revenues as well as the costs of replacing or adding staff to the practice.

Many practices are also out of space.  Outsourcing frees up space for additional exam rooms that may now be taken up by staff desks, filing cabinets, computer stations, and additional equipment. 

Phone lines are not tied up with patients inquiring about claims status or owed balances leaving phone lines open for patient care and scheduling.

 

Inga's answer...