Changes to current medical billing models should not be made hastily. Even in the best-case scenario, switching to or from an internal or external medical billing model will cause short-term cash flow disruption; the worst-case situation won’t be discussed.
The initial step for a healthcare provider is assessing whether the present medical billing model is producing the intended financial outcome. The provider, accountant, or another financial professional must be able to contrast accurate financial data with revenue and operating budgets, even though financial analysis is outside the focus of this talk. The provider’s medical billing software should be able to produce management reports that can be taken into account, presuming the integrity of the practice’s financial data is maintained through accurate and timely data entry.
Fundamental financial analysis will ultimately highlight the advantages and disadvantages of the provider’s medical billing strategy. The provider’s practice management experience and management style, the local labor pool, medical billing-related operating costs, and the inherent strengths and weaknesses of in-house and outsourced medical billing in Pasadena are some factors to consider when evaluating a medical billing model.
Models with versus without outsourcing
Every medical billing model has particular benefits and disadvantages. For example, think about the in-house medical billing strategy. Unfortunately, a third of independent healthcare practices that use an in-house medical billing model encounter occasional persistent cash flow problems. As a result, a provider may need to take various steps to address their cash flow concerns, from a straightforward modification (increasing employee hours) to a total redesign (replacing staff or switching to an outsourced medical billing model).
In contrast to the provider with the underperforming outsourced (also known as the third party) medical billing model, the provider with the underperforming in-house medical billing model has an advantage: proximity. Within walking distance is an internal medical billing system. A provider has the chance to observe, assess, and address:
- Observe the procedure.
- Evaluate the system’s advantages and disadvantages.
- Deal with problems early on.
Think about the provider who uses a medical billing approach that is outsourced. The third-party medical billing sector has relatively low entry hurdles, which has resulted in a proliferation of medical billing firms all around the United States. The provider’s medical billing department is likely situated in a different region, making on-site observations and evaluations impractical.
Many healthcare providers using an outsourced medical billing model frequently evaluate the process’s effectiveness over concise time frames, such as weekly or month-to-month. By mentally comparing the checks they received this week to the previous week or comparing how much money they deposited this month to last month, providers maintain a hazy and informal impression of their cash flow condition. Unfortunately, a much bigger issue can already be present when a sluggish cash flow catches the provider’s attention.
What factors affect the outsourced medical billing model’s cash flow? Lack of follow-up on the part of the medical billing service is the most frequently mentioned situation. Why? Like any other firm, medical billing businesses are mainly focused on their cash flow.
Experience in practice management and management approach
Before the cash flow crisis gets out of control, providers with practice management knowledge will be able to manage or identify and fix an issue with their billing process. On the other hand, healthcare professionals with little to no experience in practice management are more likely to wait until their cash flow has reached a critical point before taking any action or even realizing there is an issue.
A good medical billing process depends on the individuals carrying out the procedure, regardless of whether a provider opts for an internal or external billing model. Choosing office personnel for an in-house model is comparable to selecting a third-party billing firm, as an aside. Regardless of the model, a provider will wish to interview prospective employees or a third-party billing service account executive to assess their backgrounds, motivation, team orientation, highly developed communication skills, responsiveness, reliability, etc.
In-house providers must rely on their management and human resources to find, hire, and keep suitable workers from the local labor pool. As a result, providers with practices in places with a shortage of qualified applicants or who don’t want to deal with management or human resource issues will have no choice but to pick an outsourced model.
The provider’s primary duty as a business owner is to increase profits. Therefore, a business owner will carefully monitor expenses, evaluate investment returns, and cut costs. Costs related to the billing procedure in an internal model range from the Internet access needed to transmit claims to the office space required by the billing personnel.
Suppose a provider decides to use a third-party billing service. In that case, they should take the time to become intimately familiar with the outsourcing sector before interviewing potential billing providers. To make an informed choice, the provider must be aware of the additional expenses incurred by the outsourced approach.