You’re Losing Money by Keeping Your Medical Billing In-house


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Physicians and other medical practices often find that their teams are overwhelmed by the medical billing process. And overwhelmed is an understatement. They’re frazzled! The process involves many functions including patient registration, superbill creation, claims generation and submission, monitoring claim adjudication, patient statement preparation, and statement follow-up to name a few. This is when many practices consider whether it is a sound business decision to outsource this process to medical billing companies

Today, we’re talking about some of the misconceptions that practices have about outsourcing medical billing services

Faulty Logic That Outsourcing Medical Billing Costs More Than Keeping It In-House

As a general perception, most practices believe that outsourcing their medical billing functions increases their operations costs. However, this is faulty logic. When you outsource, you will have access to specialized and experienced staff. This means access to a more efficient system that tracks your accounts receivable, creating the right setting for increased recoveries. This is what they do. This is ALL they do. Putting your medical billing into their hands saves time and frazzles.

Undertrained & Overwhelmed Staff

Your in-house under-trained staff can easily get overwhelmed by the billing process. This results in failing to bill and follow up on secondary billing. Most of the time, it is unintentional and happens. But why should your practice be penalized for that? Most practices prefer to keep overhead low and believe that keeping medical billing in-house will help them accomplish that. This just isn’t true. Instead of having your staff handle duties directly tied to your money while they’re already responsible for the daily office administrative tasks, it only delays your getting claims processed and money coming into your practice. A better idea would be to have a dedicated and specialized professional team handle the job.

No Checks and Balances

Do you feel you are constantly in crisis management mode? Stuff is always breaking; issues are always cropping up. The lack of exemplary systems (or processes) is why practices are often disorganized.

Small practices tend to have a lot of manual processes – more prominent companies invest millions of dollars in software integration and automation – they have the scale to justify the return on that investment. However, manual processes mean that all the checks and balances must be put in manually. And you know what checking and reconciliation are? It is mind-numbing, boring, and repetitive. It is also the reason why a lot of practices struggle with staying organized.

And then there is the Domino effect…one breaks somewhere and the dominoes start falling until it becomes a situation where money is not coming in, the front desk staff are not asking patients for payment balance because they don’t know how much to charge and everything is a big hot mess.

Lack of specialized expertise is another common reason medical practices cannot run smoothly. It is essential to make sound hiring decisions. If you notice the following issues affecting your office or facility, this is one of the contributing reasons:

  • Drop in patient satisfaction
  • Patient Balances are not being collected timely
  • Administrative tasks getting neglected
  • Increase in employee turnover
  • Too much time is spent on researching answers to questions on the Internet

Effective hiring can fulfill both short-term and long-term needs. Physicians nowadays are expected to do more than provide exceptional clinical services to save lives. Patients and their families hope you to help them with relevant paperwork and save money. Your clinical and office administrative services have become essential to developing long-lasting relationships with your patients.

Improper Fee Schedule

An improper fee schedule is expected in practices, yet most physicians and facilities fail to realize it. Many practices are underpaid without current coding codes and optimal pricing. Outsourcing to medical billing companies helps you keep up with the latest regulations. They will also guide you on the current rate for the services you offer

Breakdown of Costs - In-House Vs. Outsourcing

This cost breakdown of in-house billing versus outsourcing is based on a study completed by Physicians News Digest (Source). It provides you with critical insights into the work’s findings. It considers a practice with three practitioners and two in-house medical billing employees. The practice files 80 insurance claims per day to $20,000 per year. Each claim is billed at $125 on average, which amounts to $2.50 million in claims per year. It is assumed that the billing team has a high collection rate on claims.

A comparison of in-house and outsourced costs and collections is as follows:

1. Cost of Maintaining the Billing Team

The average salary of two medical billing staff comes to around $80,000. Some of the additional costs associated with maintaining an in-house team are as follows:

  • Healthcare costs: $9,000
  • Federal & state taxes: $12,000
  • Training Costs: $2,000

There will be an additional cost to the practice in the form of the resources required to support the team. This includes office space, paper, equipment, and miscellaneous expenses.

The study factored in five hours of weekly service time for managing the practice’s billing. This was billed at $15 per hour. The overall administrative costs came down to just $4,000 per year. This is only a fraction of what it would cost for the efficient processing and management of your medical billing compared to outsourcing.

2. Claim Processing Costs

A provider that submits 20,000 claims in a year will cost $300 a month in clearing house fees if $100 is charged per practitioner. The cost comes to around $3,600 per year.

When you outsource to medical billing companies, they typically charge a percentage of the collected amount. This percentage varies based on the specialty. The study takes 7% as the average for primary care practice.

3. Billing Amount Collection

The percentage of revenue collected by a practice depends on the specialty. The study took 60% as the industry average for the in-house bill collection rate. It was found that outsourcing can help a practice grow its collection rate by 5% to 15%. The average was found to be a 10% growth in collections.

Overall, the cost comparison between in-house and outsourced medical billing services favored the latter. The most important factor working in its favor is its ability to collect a higher percentage of the billed amount.

Faulty Logic That Outsourcing Is Less Secure Than In-House

Now that the myth of the cost benefits of in-house billing has been busted, there is another faulty logic about outsourcing – less data security. The fact is that outsourcing to licensed medical billing services makes your patient data more secure and safe than in-house billing.

More Secure Patient Data

The information on medical files is several times more valuable than other forms of digital data. A licensed and certified medical billing agency will follow practices and have systems in place that prevent any risk of a data breach at any level. Besides, the data is professionally backed-up to protect against any data loss.

Ensuring Billing Compliance

A medical billing company should be HIPAA compliant to provide its services. The Health Insurance Portability and Accountability Act (HIPAA) sets the standard for protecting sensitive patient data. Licensed medical billing companies will have physical, process, and network security measures to ensure compliance. Compliance will be deeply integrated into all their operations.

Such companies also keep up-to-date with the latest compliance standards and ensure adherence. They also hire only certified medical billing professionals. All these factors mean you will not have to worry about the safety and security of sensitive patient data on your medical files.


When you keep your medical billing process in-house, you are losing money and the quality of professional service. 

At Neolytix, we provide HIPAA-compliant medical billing services that can be customized to address your practice’s specific needs. We have years of experience providing our services to different medical practices. When you leave all your paperwork to us, you and your team can focus on your core services. Our services are driven by helping medical professionals get paid on time and patients get covered by their insurance. For more information about our services, call us at 224-365-8400 or email us using this Online Form.

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