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Billing Outsourcing Models

Medical billing outsourcing models offer numerous advantages to healthcare practices. These models help streamline the complexities of medical billing, bringing various benefits. One of the most significant advantages is that they enable healthcare professionals to prioritize patient care while experts handle the intricacies of billing and revenue cycle management.

Billing Outsourcing Models in Healthcare

Outsourcing billing reduces costs and errors, eliminating the financial burden of maintaining an in-house billing team. Let’s explore some other pros of medical billing outsourcing, highlighting their positive impact on healthcare practices.

Pros of Medical Billing Outsourcing Models

There are many advantages of outsourcing medical billing services, and these include:

1. Facilitating Medical Personnel Focus More on Patient Care

Healthcare practitioners can focus more on patient care by outsourcing claims filling and interacting with the payers. Knowing that experts are handling their billing and other RCM operations, providers can refocus on bettering patient care. It is especially beneficial for smaller practices that cannot hire in-house billing staff. Ideally, physicians who are burdened by the financial management of their practice cannot provide quality patient care.

2. Outsourcing Reduces Costs and Errors

In-house billing comes with the added costs of hiring, onboarding, and training staff – all of that is in addition to staff salaries and benefits. Furthermore, all of these costs reoccur whenever there is a turnover.
What matters most is that experienced medical billers ensure that all claims get properly submitted and timely, too. A third-party billing company’s main objective is to offer the best medical billing services to a healthcare practice, regardless of size, specialty, or operations. Third-party companies ensure that their billing team receives extensive training and know-how on how to submit claims correctly. Doing so reduces the number of claim denials or rejected claims due to billing errors.

3. Decreases Logistical Costs

In-house billing teams require office space, software, and computers, the costs of which can be eliminated – it is yet another one of the benefits of outsourcing medical billing. Billing outsourcing models work independently of medical practices on their premises, with billers as employees. This can save healthcare practices money and even reduce their administrative burdens.

4. Securing Patient Information

Billing outsourcing models ensure that patient data is transmitted through the safest channels, as it contains private and identifiable data, including:

  • Patient addresses
  • Family tree (Mother’s maiden name)
  • Insurance information
  • Medical history, etc.

Such information is personal and highly valuable in the market. Hackers continuously experiment with new ways to get hold of this information, so digital security must update software defenses ahead of the game. Third-party billing companies use the latest software to protect patient information while it is being communicated to and fro. HIPAA-compliant billing companies like Physicians Revenue Group, Inc. take steps to ensure data security during exchanges between provider/billing entities.

5. Grows Practice Revenue

In addition to being a valuable service, billing outsourcing is ideal for raising your practice revenue. Healthcare practices lose a significant portion of reimbursements due to claim denials. Third-party companies have set procedures that prevent revenue leakage and facilitate a cascading flow of claims going out, resulting in incoming cash. A continuous revenue flow is essential for your practice’s bottom line, ensuring that is one of the many benefits of billing outsourcing models.

6. Speeding up the RCM Cycle

Effective billing outsourcing models come with a system for swiftly filing claims. These claims can be reimbursed faster if filed as soon as possible. Outsourcing medical billing services increases practice revenue. Efficient EHRs coupled with expert billing services decrease billing errors, errors that lead to claim denials. Furthermore, EHRs keep the unpaid claims in the system until they are paid out.
Third-party billing companies usually work on a small percentage of your total collections/income, thus reducing any risks to your practice.

Cons of Outsourcing Medical Billing Services

While third-party billing services have a profound positive impact on healthcare practice, it still comes with its challenges. Below are some of the challenges stemming from billing outsourcing models, including:

1. Sunk Costs

Traditional healthcare facilities spend a lot of resources, including time and money, on training their in-house billing teams. Outsourcing to a third-party provider results in sunk costs – from resources they have already invested in training their staff. Here, it is a good idea to outsource operations to a software provider, which doesn’t come with a steep learning curve. The newly adopted system and procedures must be faster and easier for employees to learn, understand, and use.

2. Increased Risks

Healthcare facilities have the highest average cost per data breach compared to other industries. The average costs clock in at $9 million plus per incident. It only takes a small blunder on the part of your vendor to expose sensitive patient data, putting your medical practice at massive risk.
Keeping this in mind, data security and privacy must be on top of your mind while selecting a billing partner. It is essential to partner with a provider whose operations are up-to-date, encrypted, and meet industry standards, including HITECH and HIPAA.

3. Service Issues

Outsourcing your billing operations to a third-party provider means trusting they will act in your best interests. These include:

  • Rapid response and troubleshooting
  • Keeping system and software updated
  • Offering end-to-end guidance and support

Eventually, you must feel comfortable knowing your vendor will act as a direct extension of your team. The last thing you want is a provider that remains unresponsive and is hard to work with.


Billing outsourcing models provide healthcare practices with a range of valuable benefits. They ensure the security of sensitive patient information and help practices maximize revenue by preventing claim denials. Speeding up the revenue cycle and minimizing risks to the practice are additional advantages. While there are challenges to outsourcing medical billing, selecting the right billing partner can mitigate these concerns. Overall, billing models can potentially transform the financial aspects of healthcare practices for the better.

Frequently Asked Questions

Medical billing outsourcing entails sub-contracting billing operations to a third-party billing services provider. The concept here entails reducing the administrative burdens of healthcare practices, giving them more time to focus on patient care.
Healthcare RCM stands for Revenue Cycle Management, a process that benefits health systems in billing for services and generating revenue. The process begins at the first appointment of a patient and goes all the way to the payer’s acceptance of the final payment.
Medical billing is an essential part of RCM; however, RCM itself goes above and beyond. The RCM process entails all financial processes that surround medical encounters, including processes like appointment scheduling, credentialing, contracting, collections, and more.