Choosing the Right Billing Method for Your Practice: In-House, Outsourced, or Offshore?

For many physical therapists, billing is kind of like weeding a garden. It’s a chore that—though tedious and generally unenjoyable—is absolutely necessary. Because just as your pansies and geraniums will suffer if you let weeds overrun them, your practice will suffer if you let outstanding balances and backed-up appeals overrun your billing department. However, while most people would find it fairly easy to hire someone to pull their dandelions, many practitioners are reluctant to turn over their clinic’s billing processes (a.k.a. revenue cycle management) to a total outsider. If you’re tossing around the idea of outsourcing your billing to a third-party company—or, on the flipside, if you’re thinking about bringing your billing department in-house—consider the following list of pros and cons associated with each:

In-House Billing

Pros
  • Control: When your billing department is under your clinic’s roof, it’s easy to keep a pulse on your day-to-day financial operations. And for all the Type-A therapists out there, that kind of accessibility is pretty enticing. When you do all of your billing in-house, you can address questions and investigate issues in real time. Plus, if you decide you need to make a change, you can implement it immediately.
  • Dedication: When you—or one of your staff members—handle your clinic’s billing, you’re 100% dedicated to chasing down every last dollar. After all, your livelihood depends on it. Outsourced employees, on the other hand, have no emotional connection to you or your business—which, as the author of this article suggests, means they might be less motivated to pursue low-dollar amounts.
  • Trust Factor: You might feel a bit uneasy about letting other people handle your money—and justifiably so. Billing is a big deal, and if you feel more comfortable entrusting that responsibility to someone you know—someone you’ll see every day—then in-house billing might be the best option for you.
Cons
  • Cost: If you elect to tackle billing on your own, you’ll have to front the dough for billing software, computer equipment, clearinghouse registration, and reference materials. And if you hire an in-house billing professional, you can tack salary, benefits, and educational courses onto that total.
  • Liability: Even if you’re meticulous about the people you hire to take care of your billing, there’s always a chance that greed will get the better of them. As this article points out, “...billing departments can be hotbeds for embezzlement.” Ethics aside, if you don’t have a quality employee managing your clinic’s billing process, then you’re putting yourself at risk for the consequences of sloppy billing practices—like money lost due to unappealed claim denials.
  • Dependency: The success of your therapy business hinges on steady cash flow, and that means you need your claims submitted promptly, accurately, and consistently. But what if your in-house biller gets sick, goes on vacation, or quits for good? If you see a temporary drop in revenue, will you be able to keep your doors open?

Outsourced Billing

Pros
  • Savings: Outsourcing your billing to a third-party service is typically cheaper than keeping a full-time, dedicated biller on staff. Plus, you don’t have to worry about any major overhead costs for software or equipment, which is why outsourcing often is an attractive option for small practices that don’t have a lot of budgetary wiggle room.
  • Less Responsibility: As a therapist, you’re already busy enough managing your appointment schedule and treating your patients. If your blood pressure spikes at the thought of dealing with things like accounts receivable and collections, it might be best for you to pawn your number-crunching off on someone else.
  • Reliability: Any billing service worth its salt will have an army of knowledgeable billers who are always up to speed on all the latest rules and regulations. And if you go the route of outsourcing, you’ll never have to worry about losing sleep—or revenue—over a staffing crisis. Plus, as this article explains, billing services are contractually bound to “perform certain services, such as appealing denials, for you with a certain level of success.”
  • Data Intelligence: Billing services have the tools and technology necessary to provide you with data-driven insight—like performance reports—that you might not be able to produce on your own. Some billing providers—like the WebPT Billing Service—may even review your metrics with you and make suggestions for improvement.
Cons
  • Cost Fluctuation: Even though outsourced billing is typically less expensive than in-house, remember that you’ll lose 5–10% of your collections in fees. So, as this article states, “the the more you bring in, the more you’ll pay out.” That month-to-month cost variation can make budgeting tough. And speaking of fees, if you do go the route of outsourcing, be sure to renegotiate your payout percentage as your volume increases. As this article explains, “There is a lot of flexibility in this industry and these small contractual modifications could have a significant impact on your personal revenue.”
  • Less Control: Sure, it might seem like a big relief to take billing off of your plate, but remember that in doing so, you’re also relinquishing the control of your billing process—and your cash flow—to an outside entity. That could be a tough pill to swallow. If you’re not ready to let someone else take the wheel, then outsourcing probably isn’t your best bet.
  • Hidden Fees: Before you sign any contracts, make sure you read over the fine print very carefully to determine whether you’ll have to pony up extra money for things like printing statements, sending reports, or even canceling your membership. All of those little charges add up quickly and could actually offset the savings you got from outsourcing in the first place.

Offshore Billing

If you’ve been researching billing options for your practice, you may have come across the term “offshore billing.” As the name implies, this category of outsourcing includes third-party companies that are located outside of the United States. While these overseas companies often offer significantly cheaper service rates than their American-based counterparts, contracting with offshore entities is risky, to say the least. Why? Because foreign companies are not legally obligated to comply with US regulations—including HIPAA. So, when you outsource to them, you have no guarantee that your patients’ information will be safe. And ultimately, you and your clinic will be held responsible for any data security breaches. Furthermore, as this article explains, offshore workers “are far less trained in the complex details of the US Healthcare system,” which could increase the likelihood that they will “create costly billing mistakes, which could end up costing your practice a lot more than just money.”

Bottom line: In the case of offshore billing, the cons definitely outweigh the pros. So, if you’re leaning toward outsourcing your billing work, go with a service that operates on US soil.


Does your practice currently bill in-house, or do you outsource? What’s your opinion on the in-house-versus-outsourced debate? Share your thoughts in the comment section below.

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