Variable vs High Fixed Billing Costs

Orthopedics Radiology Revenue Cycle Management

ID-10028480 Here at Healthcare Information Services, we know how important successful management of your revenue cycle is for medical practices.  While every practice’s primary focus is on patient care, we recognize the reality of the situation: a steady stream of income is the only way a practice can continue to provide patients high-quality care.  We believe that by streamlining billing and reducing costs, orthopedic doctors and radiologists can spend more time focusing on what matters, and less time focusing on the bills.

Traditionally, physicians and hospitals kept their own billing staff, but outsourcing claims processing and coding is rapidly growing in popularity. There are a variety of variables driving this shift, including a shortage of high-quality billing professionals, inability to maintain an experienced and talented staff and increasing healthcare costs, but one of the most influential is comparing variable vs high fixed billing costs.

Most billing agencies operate on variable cost.  Rather than working for an hourly rate, they process claims for a percentage of the amount received. Many practices and hospitals shy away from outsourcing their revenue cycle management because of the variable cost without comparing it to the fixed cost of their billing department.

While keeping a billing staff means a predictable cost for claims processing, the fixed cost may end up being much higher than the variable cost of a billing agency.  There are three major things to keep in mind when comparing variable and fixed costs for revenue cycle management:

Inability to Maintain a Highly-Trained Staff

More so now than ever, it is extremely hard to maintain a quality in-house billing staff.  Talented employees may reach a pay ceiling very quickly at the practice and flee for outside opportunities.  Successful organizations such as HIS can provide a career path for individuals and are able to maintain and grow a highly-skilled, experienced and talented team of healthcare individuals. 

Quality of Claims

Because a billing agency is paid a percentage of the amount received, it is in their best interest to generate as much revenue from the claims as possible.  This not only leads to more revenue for the billing agency; it also means a better payment to the practice or hospital.  An in-house billing staff person gets paid regardless of the quality of their claims and has little incentive to increase revenue.

Hidden Fixed Costs

A practice or hospital that handles billing in house incurs costs they wouldn’t see with an agency.  Not only are staff paid for any non-productive time, the practice has to pay employee taxes and provide benefits.  Because billing agencies are paid by the claim, practices aren’t charged for any non-productive time, and because the practice is not employing billing staff, they’re not responsible for any taxes or benefits.  The price of downtime, taxes, and benefits amounts for almost 30% of the total employee cost, and can be completely avoided by outsourcing billing services and the management of your revenue cycle.

To put it simply, one main reason that outsourcing and partnering with an expert in revenue cycle management services is becoming so popular in the healthcare industry is that it provides a cost effective alternative to the higher fixed cost of an in house billing staff.  It’s important to realize that partnering with a revenue cycle management firm providing billing services doesn’t mean a practitioner needs to lose vital lines of communication or let go of the control they need to stay secure.  

Here at Health Information Services, we know that billing companies are perceived as a “dime-a-dozen” which is why HIS is NOT JUST A BILLING COMPANY.  HIS is a physician management organization that can provide everything a doctor needs to feel confident about their income stream, so they can take care of what’s most important to them…their patient.