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Pros and Cons of Outsourcing Medical Billing

October 12, 2017


A variety of economic and regulatory factors can affect the ability of patients to pay for medical services. For example, an economic downturn can cause widespread unemployment that leads to higher deductibles and co-pays, resulting in a major loss of revenue for many practices. Insurance companies’ rules and coding standards are also constantly changing, which can cause claims to be unexpectedly denied. All of these changes can  adversely impact a practice’s bottom line.

Some practitioners outsource billing services to a third party to gain control over billing problems, thereby increasing revenue. Other practitioners feel that keeping those services in-house is safer and more cost-effective. This article discusses the pros and cons of both methods for performing medical billing services.

In-House Billing Benefits

In-house billing is generally more cost-effective in smaller practices, where practitioners are better able to control their offices’ productivity. They can make adjustments to improve efficiency more easily since workers are directly employed by the office. In comparison, outsourced employees must follow the direction of their own company.

Problems can also be addressed more quickly when billing is performed in-house, since the billing staff is located in the same physical office. Practitioners don’t need to spend time contacting the right person at the outsourcing company and waiting for an investigation to be completed. Furthermore, the direct communication between administrators and practitioners means that the billing staff can receive rapid responses to questions on medical coding and patient information.

When Outsourcing Makes More Sense

Outsourcing medical billing is initially more expensive than in-house billing, although it can save money in the long run. The return on investment (ROI) for outsourcing generally becomes greater as the size of the practice increases. A comprehensive solution that outsources virtually all administrative services is often the most cost effective.

Companies that specialize in medical billing typically have greater expertise and resources in this area then a medical practice. They can also provide a practice with a software solution that performs multiple functions such as the handling of electronic medical records (EMR), billing and practice management. Outsourcing companies may offer other administrative capabilities for an additional fee, including appointment reminders, eligibility verification and patient follow-ups. These companies should also be familiar with the current healthcare laws, including HIPAA and the Health Care Reform bill. The compliancy requirements for these laws are updated regularly, which can be difficult for a busy practice to track.


Another advantage of outsourcing billing is that employing an entire internal staff can become quite expensive, especially for a thriving practice. In addition to the base salary, each of these employees incurs costs such as training, employment taxes, insurance and other forms of compensation. A new employee who is already skilled in medical billing in general will still require training to become familiar with the procedures that are specific to each practice. Furthermore, the turnover rate for billing specialists is relatively high, often resulting in periods of under staffing until another person is hired.

Related Article: 5 Medical Billing Mistakes Most Profitable Practices Avoid

Professionals who work for an outsourced billing service generally make money only when the practice makes money. In comparison to employees who earn a flat salary whether the practice has patients or not, outsourced billing companies typically charge a percentage of the practice’s revenue. This payment structure also motivates outsourced workers to be more diligent in resubmitting claims and collecting payments than in-house staff members. In addition, third-party professionals are typically dedicated to performing billing procedures, whereas a practice’s internal employees often have additional duties. Outsourcing can therefore eliminate the time that healthcare practitioners spend on billing issues, thus providing them with more time to care for patients.


M-Scribe Technologies, LLC  is a national leader in medical claims billing and coding. Contact us today at or 770-666-0470 for a free analysis of your practice’s needs.


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