Pros and Cons of Outsourcing Medical Billing

Whether to outsource medical billing or keep the medical billing process in-house is a big decision for doctors and their practice administrative staff. The best answer is different for each practice based on size, specialty, finances and access to well-trained billing staff.

The most important part of any practice is the provision of clinical services, second to that is billing and collections to maintain the financial health of the practice. Your cash flow depends on how well your staff executes on billing and collection for your practice. The decision to keep it in-house or to utilize a third party medical billing service is an important decision and should be assessed on an ongoing basis. The smaller practice of 1 to 10 physicians faces more difficulty in billing and collections as their billing departments are smaller than larger entities and keeping up with all the changes in the medical billing process is more burdensome. A thorough assessment of your practice’s expense, staffing, and volume of billing is needed to determine what’s right for you.

In the preliminary stages of the decision-making process, however, you’ll need to take a generalized look at what most doctors and administrators consider to be the major advantages and disadvantages that the in-house and outsourcing options each present.

In-House Medical Billing


Control: When a practice has long-term trusted employees that are proficient and show great turn around in A/R, physicians and administrators appreciate having hands-on control of financial operations through billing in-house.
ROI: Once you have invested in software and training medical billing employees, moving to an third party medical billing solution means losing lots of time and money spent learning the software. When there’s a great infrastructure in place, ongoing refinement of processes can generate a great return on investment.


More Expensive: In general, the expenses of paying billers’ salaries, covering employee benefits, and purchasing technology systems add up to more than is commonly paid out to a third-party medical billing solution, especially for the smaller practice of 1-10 doctors.
Risk: Medical billing departments are at risk for embezzlement and general employee neglect (ignored encounter forms, discarded billing, and claim denials not being worked) can go largely unnoticed if managers don’t keep an eye on billing operations.
Consistency: If your billing department consists of only two or three staffers, your operations – and cash flow – can be hampered when even just one employee gets sick, goes on vacation, takes a leave of absence or quits their employment.

Outsource Medical Billing


Less Expensive: Outsourcing can be less expensive if starting a new business or improving cash flow due to poor existing claims management. Practice events such as losing a valuable billing asset may also trigger a need to expertise and not take a hit on cash flow and outsourcing makes the most financial sense.
Transparency and Reporting: A medical billing company should be able to supply you with comprehensive performance reports preferably online or automatically upon request. This capability grants you visibility into your financial health and billing operations without requiring you to oversee any employees.


Loss of Control: Many consider it an advantage to outsource the management of billing and it becomes someone else’s problem, however it may be difficult for some hands-on managers to give up control to another entity.
Variable Cost: Most medical billing companies charge a percentage of collections, so the more you bring in, the more you’ll pay out. This can be a good thing if income goes up and overall expense go down. However, it can make it hard to budget your practice’s expected billing expenses, since costs differ between slow and busy production months.
Learn more about Prodata Medical Billing Services.

Prodata Medical Billing is committed to US-based employees only.

Some medical billing companies have their customer service based in other countries. Choosing Prodata Medical Billing Services as your business partner for your medical revenue cycle management needs, you can be assured that all your work is being taken care of by employees based in the USA. Prodata Medical Billing does not outsource any of our work to other countries. To inquire how Prodata Medical Billing may be of service to your medical practice. Please Contact Us or call 844.442.9697.