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One of the questions you need to ask when looking for ways to manage your practice more efficiently is whether you should try to perform routine tasks like billing and collections, generating statements, and processing payroll by hiring extra office staff or outsourcing these tasks to vendors.
There are four basic factors to consider when deciding whether or not to outsource a function like billing, says Elizabeth Woodcock, FACMPE, an Atlanta-based health care consultant and a member of the American College of Medical Practice Executives. They are:
1. Control. "Do the physicians have the ability to control the quality of the outsourcing product or service?" asks Woodcock. This is especially important with billing, a process for which physicians are responsible whether it is managed in-house or at an outside billing service.
2. Performance. Will the quality of the outsourcing service be equal to or better than what’s being done in-house? For something like billing, one way to measure the performance of an outside service against in-house staff is to compare the two based on three critical indicators: accounts receivable over 120 days, days in accounts receivable, and adjusted collection rate. All other things being equal, if the vendor does better at these tasks than your current in-house staff, you may want to contract out your billing function.
3. Communication. How well does the contractor understand your practice, anticipate problems, and respond to your questions? What has been the experience of other practices that have used the contractor’s services?
4. Cost. Is the cost of the product or service at least equal to — and preferably less than — the cost of managing the product or service in-house? Typically, billing costs range from an average of around 4% of revenue for surgery practices to 8% for primary care and most specialists.
According to the Medical Group Management Association (MGMA) in Englewood, CO, just 13% of all medical groups outsource their billing function. Of the groups with superior record of accounts receivable performance, only 3.23% use an outside billing service, notes the MGMA.