In house v outsource billing
Matthew Levin <mattlev@adelphia.net> wrote:
RE Outsourcing billing.
Ah, if I only saw that many-- still down around 25-30 and just making ends meet in the office and little take home for home expenses just now.
Numbers: I ave about $10,000 - $12,000/month overhead including EVERYTHING (rent, malp-- paying monthly with a loan, 2.5 FTE staff, AND billing).
Each visit take-home about $80/visit -- I'm very aggressive billing for well care, which fortunately is paid well by the major insurers in area, but you have to check on it. So, $80 x 60 pts/week = $4800/week, x 4 = $19,200/month - $12,000 = $7200 net/month, x 12 = $84,600 per year low end, if overhead would be $10,000/month, then
$9,200/month, x 12 = $110,400.
And business is paying my health insurance, which I was paying almost all of when working for a hospital owned practice, I'll be ahead here.
Outsourcing billing helps me by having 8 hour/day coverage for billing questions, having maintenance of billing system and software by others. Yes, 8% per collected dollar sounds like alot, but I'd be paying way more to do the same myself.
Right now, with my cash received, it works. If I had another doc also seeing 60 pts/week, may not be.
Economies of scale work if you have "enough" work throughput, otherwise, outsource.
My opinion-- share more with you off list if you want.
Best to you!!
Dr Matt Levin
From:
Kevin Egly <kevin_egly@yahoo.com>
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Date: Sat, 15 Jul 2006 12:32:19 -0700 (PDT)
Subject: Re: [Practiceimprovement1] thoughts on small
and on quality
Reply-To: Practiceimprovement1@yahoogroups.com
Matt and David:
You both hit on very good points. Matt, if you performed billing tasks you would have to either invest more time or give up some clinic time. Both may be unacceptable for you to choose to do in-house billing.
David, you may have extra time to invest or see patients for higher reimbursement or lower overhead. You can both be right in your own situation.
For someone to consider outsourcing or in-sourcing a function, you need to know the details of the operations and the opportunity cost of each.
I am struggling with these issues now. As my numbers increase, seeing 8-13 patients some days with 4-5 others, but the time for administration is diminishing as the time for clinical activity and revenue increases.
I estimate my time at $2.00 per minute. This pays my salary at current level and would pay all the overhead. So when I perform the billing functions of say posting payments, it takes me 3-4 hours to post $3-6,000 in accounts receivable. This costs me $360 - 480. 8% of $3-6000 is $240 - 480. The later is a real expense while the former is only lost time unless I could be seeing patients, then lost revenue. Abbout cost neutral for posting alone. There are other functions of invoicing, data collection, statements, collections activities, appeals, but most of my time is spent between posting payments, depositing payments, and printing statements to mail.
I don't like the idea of paying someone to collect money for something I did. I do not like the idea of working 3-4 more hours seeing patients to pay someone to collect "my" money. It could be used for other medical related services like a vial of Tuber-sol, or go to a salary, mine or staff. However, technically no difference between in house vs. outsourcing based on my availability of time.
That said, I always try to close the gap or improve on efficiency. My EMR does most of the coding and billing work for me,if I keep good data on patient insurance and addresses and phone numbers etc. It takes me very little time at each patient visit to generate the invoice one minute or less usually, except for the exotic code or the preventive physical with shots, labs, E&M , and preventive services. As for posting, my biggest sources of revenue are medicare and Blue-Cross Blue-Shield. These two sources of payments can be deposited electronically and automatically. I do this now without a trip to the bank. They have a new service that my EMR supports for auto-posting or ERA electronic remittance advice. This service costs $50 per month, but will save me time. 2.5-3.5 hours per $3-6000 of posting. It will save $$$ if I have patients to see.
The cost to my practice last year on 8% collections would have been $12,000. I paid my wife and I a salary of around $72,000 including FICA MEDICARE and STATE TAXES. This is 12000/72000 or 16.7% of my gross salary. 12,000/60,000 or 20% if I had revenue and time contant neutral costs. . I believe technically then that you could spend 16.8%-20% or your time in billing and collection activities and remain goss profit neutral. You would have lower overhead because I would presume you would actually see fewer patients and require less staffing.
Please challenge my assumptions here because I am not certain they are100% valid.
I encourage all who would save time by doing it yourself to calculate the actual cost of doing it yourself both in terms of time, money, and opportunity.
Sincerely:
Kevin D. Egly, M.D.
P.S. Until I contemplated your posts I had not calculated my true costs of posting manually. I will actually set aside time to fill out the forms to implement ERA. It will cost me $600 this year, but will save me 40-120 hours of time this year. I imagine spending more time with my kids or a two week vacation.
RE Time IS money.
"I don't like the idea of paying someone to collect money for something I did. I do not like the idea of working 3-4 more hours seeing patients to pay someone to collect "my" money. It could be used for other medical related services like a vial of Tuber-sol, or go to a salary, mine or staff. However, technically no difference between in house vs. outsourcing based on my availability of time."
If you can make MUCH more money in same amount of time that it takes SOMEONE ELSE to do lower expertise work, then it makes MORE sense to outsource it.
For ex, I didn't set up my billing system, don't support the software for it, don't do the mailings, don't pay the person. I pay a service to DO ALL THAT WORK for me while I generate income at a much higher level/hour than I could afford to pay someone to do this.
All depends on volumes. It's not just the cost you'd pay to the billing service, but ALSO the cost to support what you're doing already. For ex, YOU have to pay the $50/month for the direct billing system for some of your work. If that cost you $500/month, you might not do it.
If I was billing 3x as much, I might want to bring it in-house.
Self-sufficiency is one thing-- you may want to grow all of your own food, cut your own wood, or dig your own coal.
At this point, I'd buy it.
And I buy the billing service, for now at least.
Each setup is different... principles are similar.
Dr Matt Levin
From:
"John Brady, MD" <drbrady@thevillagedoctor.hrcoxmail.com>
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Date: Sun, 16 Jul 2006 12:10:45 -0400
Subject: RE: [Practiceimprovement1] thoughts on small
and on quality
Reply-To: Practiceimprovement1@yahoogroups.com
But therein lies some redundancy. If you are spending the time going over every EOB (which I do believe is necessary) and spending time answering questions from the billing company and corresponding with the billing company over questions and codes and such, you are spending time on the billing and still paying someone else to do it. That to me is very frustrating. For example, when I was getting my website done, the process was horrible. Around every corner there was another question and by the time the website was complete, I felt like I could have bought books and done the whole thing myself for a fraction of the cost. It’s the same thing with billing. If I outsourced, I would still be looking over the shoulder of whoever was doing the billing and thus spending unreimbursed time doing what I am paying them to do.
I also find doing the billing myself adds another dimension to the doctor-patient relationship. I know who has insurances that are not going through, I know who is having tough financial times, heck, I even know who has moved and hasn’t given us a forwarding address.
As for “economies of scale,” isn’t that the argument that got us on the treadmill of having to push patients through too fast in the first place. It makes complete intrinsic sense, but then why not outsource all the payroll stuff, all the other practice management stuff, all the telephone stuff, etc. After all, physicians are one of the highest paid groups of people, so almost any task can be done cheaper by someone else. The problem is that every person (entity) added increases chaos and confusion and thus increases costs and diminishes the doctor-patient relationship. That is the real reason I try and do the horrible task of billing myself.
John