The decision to alter the existing model of medical billing is not to be made lightly. Even the most ideal scenario that involves a switch to or from an in-house or outsourced billing model is likely to cause some short-term cash flow disruption. And we will not even consider the worst case scenario.
The first step is to assess whether or not their current medical billing system will yield the financial results they want. While financial analysis is not within what is covered in this article the doctor, accountant or financial professional must be able compare the current financial information with operating and revenue budgets. If the accuracy of the practice's financial records is maintained through prompt and accurate entries, the company's medical billing software should have the capability of producing useful management reports.
At the end of the day, a simple analysis of finances will provide insight into how the strength and weakness of the providers medical billing system. There are a few things to take into consideration when considering a medical billing model include the inherent advantages and disadvantages of both in outsourced and in-house health billing systems; experience with management of practices and approach as well as an in-house labor pool and operating expenses.
In-house versus Models Outsourced
Every medical billing model comes not without its own advantages and disadvantages. Take the in-house health care model of medical billing. About one-third of independent health clinics using an in-house medical billing system face cash flow problems that range from periodic to ongoing. The amount of action needed by a healthcare provider to address their cash flow problems could vary from a minor adjustment (adding hours of staffing) to an overhaul of the entire process (replacing employees or switching to an external Medical billing method).
The business with a poorly functioning in-house medical billing method has an obvious advantage over the one that has an outsourced (also called the third-party) Medical billing models. The reason is close proximity. A medical billing in-house model is close to walking distance. Providers have the chance to observe, analyze and respond to the process, evaluate the strengths and weaknesses of the system and take action before issues turn into full-blown problems.
Think about the service that uses an outsourced model of medical billing. The relatively low entry requirements for third party medical billing business have created a number of medical billing companies scattered across all over the United States. The provider's medical billing department is in a different geographic region, making the observation and assessment of patients impossible.
The importance of management reporting in a third-party health billing system is vital. It is essential for a provider to regularly look over charges, post-payments writing offs, and balances on account receivables in order to ensure that cash flow is effectively managed. A simple report like 30, 60 or 90 days of receivables can provide the provider with an insight into how they are able to ensure that their medical billing accounts receivables processes are managed by a third-party healthcare billing provider.
One common mistake made by many organizations using an outsourced model for medical billing is to assess the efficiency of the system in the short-term, i.e. from week to week or even month to month. Providers keep an informal idea of the cash flow by keeping track of the checks they have received this week and the prior week or whether they've made the same amount of deposits this month as they did last month. However, by the time that an unbalanced cash flow comes to the attention of the provider, a more serious issue may be on the horizon.
What is the reason for a slowdown in cash flow within the model of medical billing outsourcing? The most frequently cited reason is the lack of follow-up by this medical billing company. Why? Similar to any other type of business medical billing firms are most concerned with their cash flow.
A billing firm earns 99.99 percent of their revenue from the front end of their billing procedure, the process of data entry which generates claims. Companies that allocate almost all their staff for data entry are likely to have a shortage at the back in the process. This is the follow-up process for unpaid claims. Why? Each one hour spent on data input creates another one to two hours of follow-up. For the provider the billing company who ignores the issue does not allocate sufficient resources to the thorough monitoring of 30, 60, or 90 or 90 days in receivables may be the difference between getting a profit or losses at any given period of.
Praxis Management Experience and Management Style
Practice management experts can effectively identify and fix the issue in their billing procedure before the cash flow issue is out of hand. However those with less or no experience in practice management are more likely to allow their cash flow to get to the point of no return before even addressing or even acknowledging that a issue even exists.
If a business who has issues with billing decides to keep and improve their current billing system or to implement new billing procedures will depend to a large degree on their management style Some providers are unable to imagine the idea of having their billing staff in the dark or out of to be shot, while others have no problem turning their billing process over to an outside service.
Local Labor Pool
If a healthcare provider opts for an in-house or an outsourced billing option the success of the medical billing procedure is dependent on the individuals responsible for executing the medical billing process. In addition selecting office personnel to run an in-house model is the same as choosing a third party billing firm. No matter what model you choose the provider would like to conduct an interview with potential candidates or the account executive of a third party billing service to determine their experiences as well as motivation, team-oriented personalities, well-developed communications skills, responsiveness, dependability, etc.
Providers who have an in-house model will need to depend on their human resources and management abilities to find to train and keep in place qualified applicants locally from their labor pools. Providers operating in areas with a shortage of qualified workers or who don't want to be sucked into the management or human resource aspects are forced to choose other than an outsourcing model.
Health Billing Costs Related to Medical Care
As a business owner the main responsibility of the business owner is to maximize profits. An accountable business owner should scrutinize expenses and analyze the return on investment and reduce expenses. In an in-house model, the costs of the billing process can range in the range of Internet access that is used to transfer demands to office spaces used by the staff who bill.
The most efficient method to control the cost of billing is to consider the total of these expenses as a percentage of the company's profits. The accounting software used by the provider should allow him or her to categorize and track the billing related expenses. After the cost of billing are identified, divising the total cost by the total revenue will convert the cost into an amount of revenue.
The act of converting the charges related to billing into the percentage of revenue accomplishes three things: 1)) makes the business manager, provider or accountant on the same page with the costs associated with billing of the business practice;) can be used as a basis for a more thorough analysis of the practice's costs and revenue elements 3.) allows for a simple comparison between the impact on costs of in-house models and outsourcing models.
The cost of outsourcing a model is pretty straightforward. Because the costs of the majority of outsourced services are a proportion of the revenue generated by a company and the annualized price associated with the medical billing service's charges will be an approximate similar to the billing-related costs for this type of model.
If a service provider is contemplating an outsourcing model, it's important to be aware that this option isn't necessarily the answer for removing all billing related expenses and problems that these companies tend to promote. Sure, the billing service will be able to absorb some of the costs related to the process, but the service will require staff to serve as an intermediary between their office and the billing company, i.e. the person who transmits information to the billing service.
Costs could increase further for the practice If the billing service has to charge additional fees for additional services such as online access to data for the practice practices management software and management reports, as well as answering patient questions, etc. The price of the service could rise even more in the event that claims 30, 60, or 90 in receivables aren't properly processed to make it easier for adjudication.
Summary
In sum, the person who is providing the services must weigh the advantages and disadvantages of each option prior to making a choice. If the service provider is not proficient or skilled in analyzing financial data , they should seek the help that of an accountant another financial expert. The provider should be aware of the expenses and the inherent advantages and disadvantages of each billing system.
Service providers who use an in-house model must understand the actual cost of their processes. The process of determining the cost is does not just require accurate financial information and accounting, but also an objective assessment of the elements of the current system, i.e. technology and personnel. Why? Insufficient staffing, outdated technology or turnover, or inexperienced personnel could contribute to
Event date & time: 01.12.2021 at 01:00
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