Why Outsource Your Medical Billing?

The healthcare industry is hobbled by systemic inefficiency, not the least of which is its payment system. A 2007 McKinsey report found that 15% of every health care dollar goes to payment processing. Medical billing services offer a light at the end of the tunnel for individual medical providers. Providers currently absorb the cost of both manual processing and high rates of denied claims. Billing services resolve these issues through electronic billing, boosting collection results and delivering both added revenue and time savings to clients. Find out how your healthcare business can beat an inefficient system by contracting with a medical billing service.

The Key to Efficient Medical Billing
Its no secret that the U.S. health care payment system is hugely inefficient. A 2007 McKinsey study found that the administrative costs of health care payment consume 15 percent of every dollar spent on health care. Given that the industry processes $1.9 trillion a year, this is a vast waste of funds in an overtaxed industry already operating on tight margins.

A range of structural inefficiencies are at fault, but one of the most important is a simple procedural factor: manual billing. The McKinsey report explains: andquot;An important reason for these high costs is that more than half of the transactions between payers and providers are paper-based and thus much more expensive than transactions using electronic channels.andquot; Increasing the industry-wide penetration of electronic processing from the current 40% to 90% penetration across medical billing transactions would save an estimated $6 billion a year.

Billing Services Win the Collections Game
Outsourced medical billing services present a cost-effective means for individual providers to implement electronic billing. Billing services are able to extract higher returns from insurance companies because they have the resources to file and follow up on large numbers of claims electronically. A 2005 study found that the major factor in the failure of individual providers to collect payment was the insurance companies rejection of paper claims. Paper claims are rejected at a rate of 30-35%; electronic claims, by contrast, enjoy a nearly perfect collection rate, with fewer than 1% rejected.

What does this mean for your business? Medical billing services afford medical providers the clout and technological resources to extract more payment than these single-party claimants could collect on their own.

Simply put, billing services gather relevant claim information such as procedures and patient insurance coverage and submit it to the insurance companies for payment. Since they complete the time-consuming process electronically, however, they enjoy greater success in collecting the funds owed. Electronic submission facilitates follow through, allowing the billing service to track the payment process from submission to collection. And it prevents the sort of administrative errors--typos, information omissions, incorrect procedure codes, etc.--that result in denied claims.

Medical billing services hold the key to greater efficiency for a struggling payment system. And the winners of a streamlined system are bound to be the individual providers. The McKinsey report predicts that a restructuring of the value chain of health care payments stands to benefit providers, as fewer dollars are wasted on transaction-processing inefficiencies. These clinics and health care practitioners currently miss out on billions of revenue in processing expense and denied claims. By outsourcing the payment process to medical billing services, your business can grow revenue and save time. All while avoiding the least popular task in the industry.

Sources
Growth in Outsourced Medical Billing Sector, HMBA.org
Overhauling the US Health Care Payment System, The McKinsey Quarterly (June 2007)
The Medical Billing Industry, Vimcor