The Real Cost of in House Billing - Part 1
The single biggest mistake doctors make is forgetting to calculate what it will cost them to manage the staff they hire to do billing in house.
It is one of the golden rules of business.
Pay yourself first.
There are other hidden costs when it comes to managing a billing team as well.
The numbers below are based on numbers that were given to the doctor from a very well know chiropractic coach, not numbers I came up with.
· Projected number of weekly patient visits: 500 patient visits/week · Projected Total Collections(TC): $60,000/month x 12 = $720,000/year · Total Insurance Collections (TIC): 60% insurance = $432,000 Total Staff Cost (SC) · Staff hours per year (SHY): o 3 part time staff = 3 x 20 hours/week = 60 hours per week x 52 weeks = 3120 hours/year · Average hourly rate (SHR): o $15/hour · (SC) = (SHR) $15/hr X (SHY) 3120 hours = $46,000 Management Cost (MC) · Doctors hourly compensation (DHC) o Hours worked = 30hrs/wee X 52 weeks = 1,560 hours/year o Total Collection = $720,000/year o DHC = (Total Collection) $720,000 / (Hours Worked) 1,560 = $461/hour · Hours spent managing billing staff personally (HS): 2 hours/week x 52 weeks = 104 hours/year · MC = (HS) 104 hours/year X (DHC) $461/hour = $48,000 Total Cost for in house billing (TCIB) · TCIB = Staff Cost (SC)+ Management Cost (MC) · TCIB = (SC) $46,000 + (MC) $48,000 =$94,000 TCIB as a percentage of collections (TCIB%) · TCIB / Total Insurance Collections = TCIB% · $94,800 / $432,000 = 21.
94% Total Cost of Outsourced Billing (at 8%) (TCOB) · TCOB = Total Insurance Collections X Billing Company Fee · $432,000 X .
08 = $34,560 FAQ Q: What if I found one super biller that could work 20 hours per week they can get it done? A: You would still need to manage that person 2 hours per week and it is not worth the time.
Your staff salaries would drop to $15,600, but you would still be paying yourself $48,000, giving you a total of $63,600 or 14.
72% of insurance collections.
You would not be under 8% until you spent less than 45 minutes per meek managing one part time person to do billing for a 500 per week office.
Here is what you should be asking: 1.
Can one part time person handle the billing for an office seeing 500 patients per week? Claim submission, EOB posting and follow up? 2.
Since this person is not paid based on a percentage will they really fight for every dollar? 3.
What happens if they are out sick for three days? 4.
What if they get a better job? How will you find the time to replace them? 5.
Will they be attending seminars to learn the latest in coding? 6.
Will they be processing thousands of claims per month like a professional billing service would and be able to analyze data to make sure they stay ahead of the insurance companies? 7.
Will they give you compliance reports showing you exactly when you raise a red flag for an insurance audit? 8.
Will they provide real time reports and accurate call logs on every claim so you can check their productivity at any time? 9.
What if insurance collections go down? Will your staff take less pay? 10.
Would an in house biller agree to a percentage of collections as compensation?
It is one of the golden rules of business.
Pay yourself first.
There are other hidden costs when it comes to managing a billing team as well.
The numbers below are based on numbers that were given to the doctor from a very well know chiropractic coach, not numbers I came up with.
· Projected number of weekly patient visits: 500 patient visits/week · Projected Total Collections(TC): $60,000/month x 12 = $720,000/year · Total Insurance Collections (TIC): 60% insurance = $432,000 Total Staff Cost (SC) · Staff hours per year (SHY): o 3 part time staff = 3 x 20 hours/week = 60 hours per week x 52 weeks = 3120 hours/year · Average hourly rate (SHR): o $15/hour · (SC) = (SHR) $15/hr X (SHY) 3120 hours = $46,000 Management Cost (MC) · Doctors hourly compensation (DHC) o Hours worked = 30hrs/wee X 52 weeks = 1,560 hours/year o Total Collection = $720,000/year o DHC = (Total Collection) $720,000 / (Hours Worked) 1,560 = $461/hour · Hours spent managing billing staff personally (HS): 2 hours/week x 52 weeks = 104 hours/year · MC = (HS) 104 hours/year X (DHC) $461/hour = $48,000 Total Cost for in house billing (TCIB) · TCIB = Staff Cost (SC)+ Management Cost (MC) · TCIB = (SC) $46,000 + (MC) $48,000 =$94,000 TCIB as a percentage of collections (TCIB%) · TCIB / Total Insurance Collections = TCIB% · $94,800 / $432,000 = 21.
94% Total Cost of Outsourced Billing (at 8%) (TCOB) · TCOB = Total Insurance Collections X Billing Company Fee · $432,000 X .
08 = $34,560 FAQ Q: What if I found one super biller that could work 20 hours per week they can get it done? A: You would still need to manage that person 2 hours per week and it is not worth the time.
Your staff salaries would drop to $15,600, but you would still be paying yourself $48,000, giving you a total of $63,600 or 14.
72% of insurance collections.
You would not be under 8% until you spent less than 45 minutes per meek managing one part time person to do billing for a 500 per week office.
Here is what you should be asking: 1.
Can one part time person handle the billing for an office seeing 500 patients per week? Claim submission, EOB posting and follow up? 2.
Since this person is not paid based on a percentage will they really fight for every dollar? 3.
What happens if they are out sick for three days? 4.
What if they get a better job? How will you find the time to replace them? 5.
Will they be attending seminars to learn the latest in coding? 6.
Will they be processing thousands of claims per month like a professional billing service would and be able to analyze data to make sure they stay ahead of the insurance companies? 7.
Will they give you compliance reports showing you exactly when you raise a red flag for an insurance audit? 8.
Will they provide real time reports and accurate call logs on every claim so you can check their productivity at any time? 9.
What if insurance collections go down? Will your staff take less pay? 10.
Would an in house biller agree to a percentage of collections as compensation?
Source...