Every medical practice faces a similar issue; getting paid for services performed for patients.  Some practices have made medical billing a core component of their business.  They have a group of medical billers who are usually heads down, medical billing specialist.  The group manages the entire billing process and watches the accounts receivable like a hawk.  Other practices want no part of having the medical billing function in house and are happy to outsource it to a company that specializes in medical billing.  The questions to be asked; is there a right or wrong decision to be made and how do you make the decision?

Chris Thorman over at Software Advice gives a very good analysis of the costs to an typical 3 physician practice.  He compares the cost of in-house vs outsourcing medical billing.  Here is an overview of his cost analysis:

Cost Analysis
For many practices, the outsourcing decision boils down to one factor: cost.

To help compare the costs of in-house billing versus outsourced billing, we’ve created a hypothetical, three-physician practice. To arrive at these numbers, we’ve used what we believe to be industry averages. Here are the characteristics of this practice:

Three primary care physicians;

Two medical billing specialists;

80 insurance claims filed per day (~20,000 per year);

$125 billed per claim on average (~$2,500,000 per year); and,

We assume that the billing service has a high collection rate on claims.

So, how much does each billing approach cost? Take a look at the annual costs:

	In-House	Outsourced
Billing department costs	$118,000	$4,000
Software and hardware costs	$7,500	$500
Direct claim processing costs	$3,600	$122,500
Software and hardware costs	$5,500	$2,000
% of billings collected	60%	70%
Collections	$1,370,900	$1,623,000
Collections costs	$129,100	$127,000
Collections, net of costs	$1,241,800	$1,496,000

Chris goes on to justify this cost analysis by discussing the cost assumptions.  Click here for the complete analysis.  Based on Chris’ analysis he determined that collections would be higher for the the practice if they choose to outsource the medical billing function.

Today, companies and medical practices have the ability to outsource many functions that are required to run the business.  You can outsource your payroll, human resources, computer support, etc.  In each decision to outsource you have to ask yourself the questions; is this function core to my business and can I do a better job at it than outsourcing to a company that specializes in this function? 

I have seen practices that are really good at medical billing.  They have made billing a core function of the practice and have gotten the function to a well greased machine.  I have also seen practices with constant turnover in the medical billing department and have heard about the pain associated with the turnover. 

My advice is to make sure you know what you are getting into.  If you choose to keep medical billing in-house then you need to understand the costs, hardware/software/network dependencies, training requirements and staffing requirements.  If you choose to outsource you need to understand the costs, the functions your staff will still have to perform, the service level and the agreed upon expectations you have of the medical billing company.

Do you have a success or horror story related to medical billing?  Are there other factors that need to be considered when making the decision?  Feel free to share your thoughts.

There are literally hundreds of Electronic Medical Records (EMR) systems for sale.  Some have similar feature sets while other differ in their offerings.  There are many articles, blogs, and whitepapers on picking and implementing the best EMR for a practice.  Most of these seem to focus on the software selection, the workflow process, the implementation process and ongoing support of the EMR.  What seems to be missing is the focus on the actual network and computer system that the EMR will be running on.

As a practice goes from paper charts to a full blown EMR implementation, there will be a need to grow the practice’s computer network dramatically.   With the old paper chart model, there may be a couple of computers at the front desk for patient sign in and insurance information collection.  There may also be a few computers for billing and administration.  On the whole, a practice may have a very small or limited computer network. 

On the other hand, once a practice moves toward an EMR implementation the amount of technology required increases dramatically.  The front desk will may need scanners to scan insurance cards, driver’s licenses, etc.    Additionally the front desk may check on insurance coverage which may require Internet connectivity.    Physicians will need tablet computers to enter patient information during a visit.  If a practice decides not to purchase tablet computers then perhaps each exam room will need a computer, laptop or terminal to access the EMR system.  The billing department will need access to the EMR system as well as Internet connectivity to submit insurance claims.  Workgroup or network scanners may be needed to scan old patient records into the EMR or to scan patient’s new paper information i.e. letters, referrals, etc.  Electronic fax servers may be required to send information out of an EMR to another physician’s office or the fax server may be used to receive electronic faxes and attach them to patient records within the EMR. 

In addition to the equipment mentioned above, there is the EMR itself.  The EMR may require a database server and database software such as Microsoft SQL Server.  There may be a need for a network domain controller which stores the user names and network credentials for a practice’s employees.  The EMR database may be backed up to a tape backup unit or by a remote backup service that backs up the data securely over the Internet.  The reliance on the Internet become essential and requires a dependable and fast Internet connection.  These connections can be a T1 from a phone carrier (i.e. Verizon, AT&T, Qwest, etc.), DSL or a Cable Modem.  The Internet connection should be secured via a Firewall which protects a practice’s network.

Once all of the above technology is purchased and deployed a practice may want to roll out Email for both internal and external communication.  Email with patients may require additional email encryption technology.  With all the new computers and employees that now have access to the Internet, the potential for abuse may arise.  Technology to limit employee’s access to the Internet may need to be implemented.  Additional technology to provide Disaster Recovery of the EMR or network may also need to be purchased and implemented.  Remote Access to the EMR may be required which may require additional network technology.

As you can see, a practice may go from a handful of computers to a full blow computer network with a lot of advanced technology.  The network will need to be maintained which may include verifying data backups, security patch deployment, software upgrades, preventative maintenance, etc.  In addition, the HIPAA Security Rule and HITECH Act requires that a network be secure, audited and access to patient information must be available.  These requirements bring along the need for additional technology and network maintenance processes.

We will go into detail about a lot of these technologies in future updates.  A final thought to think about when a practice is evaluating EMRs – Don’t forget about the computer network!