Cost of In-House Billing

If you have your billing in-house you may have a billing office that is overstaffed. This can be driven by a disorganized and chaotic billing process; ineffective billing staff or billing supervision; or high employee turnover which prevents you from ever reaching operational efficiency. No matter the cause, your organization can easily find itself with one or more billers for each provider. If this is the case, you are paying too much internally.

In addition to the labor costs of internal billing, there are many "hidden" costs of billing. For instance:

• System configuration and maintenance,
• Supplies and forms,
• Postage,
• Clearinghouse costs,
• Phone calls to payers and patients,
• Coding and billing books,
• Training,
• Benefits,
• Occupancy costs (the space you are using for your billing department that could be used for other purposes),
• Management focus (spending time managing the billing process instead of expanding the organization)

These costs can easily equal 20% of your labor costs (i.e., if you spend $5,000 for billing employees each month you are likely spending at least an additional $1,000 each month on the costs outlined above).

The costs outlined above are the direct and indirect costs of performing in-house billing. These do not take into account the lost revenue that typically occurs from in-house billing. These sources include:

• Claims that are denied for untimely filing,
• Claims that are submitted, "lost" by payers and never pursued by the billing department,
• Claims that are underpaid,
• Claims that are never submitted,
• Money lost due to poor patient follow-up, and
• Secondary claims that are never submitted or pursued.

This lost revenue can easily be costing your agency 10 to 20% of your potential revenue. For most organizations, this lost revenue more than doubles the actual cost of billing (i.e., continuing the example from above, if the labor and non-labor costs of internal billing are $6,000 per month, then the lost revenue is likely at least an additional $6,000 per month - for this example, the true cost of internal billing is at least $12,000 per month).