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Belle DuCharme, CDPMA
Instructor/Consultant
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Outsourcing Insurance Billing, Pros and Cons
By Belle DuCharme, CDPMA

The decision to outsource dental/medical billing or continue in-house often comes from heated questions:
 
My collections are dismal, can there be a better way?”
“Will outsourcing save me money or cost more?”
“I am producing but losing in write-offs – are these write-offs necessary?”

Dental Office Managers are often resistant to outsourcing dental/medical billing because it represents a considerable portion of their job description, but this is “old school” thinking. In the past, for lack of a better way to do things, insurance billing and patient billing were part of the dental business standard. The Office Manager position has traditionally been a juggling act of patient care and administrative duties. That was business as usual, but it doesn’t have to be that way anymore. 

By outsourcing dental/medical insurance billing and patient billing, you have created a different culture that is more patient centered than administration driven. Time is opened up to contact overdue and unscheduled patients, present treatment plans, or just spend more time getting to know your patients.

Think of the jobs you already outsource for your dental practice, such as lab work. Unless you have an in-house lab and a trusted, skilled lab technician, you are outsourcing your cast prosthetics such as crown and bridge, partials, dentures, etc. You probably also outsource your computer IT issues to someone with the skills and knowledge that you lack. 

Dental insurance billing is getting more and more complex, especially with the addition of having to bill medical insurance first on many policies. Aside from clinical services, billing and revenue cycle management are the most important systems of your practice. Your cash flow depends on them, so the decision of how to handle these services shouldn’t be taken lightly.

Let’s take a look at what most doctors and administrators consider to be the major advantages and disadvantages that in-house and outsourcing options each present.

In-House Dental/Medical Billing

Pros

• Hands-on Control: When trusted, long-term employees are executing dental/medical coding and revenue management duties, doctors and administrators appreciate having hands-on control of financial operations. When there is turnover of key staff, however, there can be chaos, lost revenue and patient trust.

• Return on Investment: Once a practice has invested in training dental/medical billers and purchasing billing software technology, moving to an outsourced solution means losing lots of time and money spent. When there’s a valid infrastructure in place, it’s worthwhile to just refine existing processes. Measuring this is important to make sure there is a return and not just manipulation of numbers.

• Proximity: Should issues arise, the accessibility of your in-house billing department is a major advantage. If you outsource billing, make sure this entity is easy to contact and available to answer questions within 24 hours or less.

Cons

• Higher Costs:  Usually the expenses of paying billers’ salaries, employee benefits and purchasing technology systems add up to more than is commonly paid out to a third-party billing company. If you are paying an Office Manager to do dental/medical and patient billing, not only are you often paying too much, but your practice can suffer from neglect of her/his attention.

• Liabilities: Dental/medical billing departments can be breeding grounds for embezzlement, and general employee neglect without a keen eye on operations.

• Support Issues: If your billing department consists of only two or three staffers, your operations and cash flow can be halted when even just one employee gets sick or is gone for any reason.

Outsourced Dental/Medical Billing

Pros

• Less Expensive: Especially if you’re starting up a new practice or transitioning because of an employee’s resignation, outsourcing makes the most financial sense.

• Transparency: A dental/medical billing company should be able to supply you with comprehensive performance reports automatically or upon request. Since they are not directly handling money, only posting from EOBs you will have a better picture of total revenues.

• Peace-of-Mind Consistency: Your outsourcer will be contractually obliged to perform certain services for you, such as appealing denials, with a certain level of success. Plus, you never have to worry about staffing since it’s their job to support your needs year-round.

Cons

• Hands-Off:  It’s considered an advantage that outsourcing makes the management of billing someone else’s problem, but it’s difficult for more hands-on managers to give up control of the process to an outsider. If you can find a source that will work with you as part of your team and follow your requests, this will be a more desirable relationship.

• Variable Cost: Most billing companies charge a percentage of collections, so the more you bring in, the more you’ll pay out. This can make it hard to budget your practice’s expected billing expenses, since costs differ widely between slow and busy months.

• Hidden Fees: Read the contract carefully and understand what you are paying for. Are there set-up charges? Fees for things like printing statements or sending reports? What happens if you cancel your membership? Make sure the money you save by outsourcing isn’t offset by a multitude of “fine-print” charges.

Should you outsource? McKenzie Management can help you with this question, and all issues that affect your bottom line. Call today for information and training that can guide you.

If you would like more information on McKenzie Management’sTraining Programs  to improve the performance of your team, email training@mckenziemgmt.com

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