Medical practices routinely outsource accounting, IT, HIPAA, marketing –all without giving the process of outsourcing a second thought. That’s because we “subconsciously” understand that outsourcing creates huge benefits when we focus on “opportunity costs” and “specialization of labor.”

As an example, the advantages of outsourcing medical billing are clear and abundant. Let’s review them:

Staff Flexibility: If your practice employees two full-time billers and one of them calls out sick, the productivity of your billing process is literally cut in half.

Specialization of labor: Much like you should choose an accountant who is well versed in medical practice costs; you should choose, for example, a billing company that specializes in podiatric billing. Unlike other specialties, podiatric billing has many nuances and state variations of Local Coverage Determinations policies (LCDs).

A return to a focus on core business processes: When you and your staff are focused on something other than medical care (what you have been trained to do), quality and costs escalate. Revenue-generating opportunities are missed.

Recently, I had the opportunity to perform an onsite practice improvement consultation for one of my colleagues. Without warning (other than “the road sign up ahead”), little did I know that I was about to enter the “Twilight Zone.”

On the surface, the practice’s data looked good. The three providers were very productive. But what lay on the other side of the door was another story. Their profitability was plummeting. They were all working harder and harder and making less and less. They were feeling trapped by their own existence. They were truly in the Twilight Zone.

Here are some of my actual notes taken from my visit:

1. $1.4M in annual collections
2. The staff struggles to enter charges contemporaneous to the date of services
3. Of the payroll, three full-time equivalent salaries (FTEs) are dedicated to billing. Their performance rating indicates the quality and timeliness of their processes (0-10 with 10 being excellent)
– 1 FTE focuses on scrubbing and claim submission (rating = 8—not too bad)
– 1 FTE focuses on posting payment and appeals (rating = 4– appeal process very weak)
– 0.5 FTE focuses on secondary claims and patient balances (rating = 5 – untimely submissions)
– 0.25 FTE focuses on MIPS so that penalties are not assessed
– 0.25 FTEs are useless – they are a “cushion”

This practice had 8.6% of its collections dedicated to bankrolling the billing process! But that is NOT what it truly costs this practice to perform billing! 8.6% is only the start. We must also estimate the losses for any rating below 8 and add that to the costs.
In the end, it was estimated that it cost this practice 10.5% of collections to perform billing. My decision was easy. Outsourcing to podiatric-specific billers who could connect directly to the database of the providers was clearly the answer.

Here is the math that drives that decision:

Current Economics:
Cost of billing = $1,400,000 X 10.5% = $147,000
New Economics:
Outsourcing for 6.0% = $84,000
Savings: $63,000 annually

The best part of this decision to outsource is yet to come. While the owners are now enjoying the extra $63,000, they are currently on the path to higher revenues (making this decision even more profitable) since they can now focus on their core competencies.

2021 is the year that we NEED to recover from the financial effects of COVID. Ask yourself if there are processes that you should outsource so that you and your staff can keep your eyes on the ball.

Dr. Guiliana is an Executive Vice President of NEMO Health as well as Podiatry Risk Group. Find out more about outsourcing by contacting a NEMO Health team member HERE.