Cost Comparison

COST ANALYSIS BASED ON 2004 PUBLISHED FIGURES

Cost is a deciding factor in deciding whether to perform billing and collection functions in-house or outsource them. For purposes of clarity, here is a side-by-side comparison of the cost associated with each.

As this comparison clearly shows, the savings using PRS vs. in-house billing are significant with total savings per year of $62,115.20.

	PRS	Financial Impact PRS	In-House Billing	Financial Impact In-House Billing
Staffing	Practice does not require additional staff for billing or collection purposes	0	Minimum 1 1/2 trained and experienced billing staff is required, whose sole responsibility is billing and collections	Experienced and trained billing staff is on low end $12.50/hr (plus benefits. For 1 1/2 position = $43,000
Computer System	Optional	0	Standard system for electronic claims submission, claim printing, statement printing, and standard reporting capabilities is minimum requirement.	Hardware requirements for 3 stations, server, printer, modem extra cabling are approx. $9,500. Software such as Medical Manager with appropriate set up valued at $15,000, plus yearly contract, clearinghouse fees, maintenance contract add $9,000 equals yearly $33, 500
Supplies	Superbills and daily reconciliation of deposits	For a practice seeing 30 patients per day the printer cost would be about $1,200 ($150 for 1,000 Superbills). For copies the total yearly cost is only $24. Total Cost = $1,224	Statements, secondary and occasionally primary claims, patient communication, multiple statements require stamps, paper, envelopes, time for stuffing and mailing. Additional supplies are required to store EOBs	Assuming a total cost for each mailing of $0.52and an average of 2 statements per patient, plus secondary claims, total mailing related cost is $6,489.60. Storage cost are valued at about $100, making the total cost per year $6, 589.60
Telecommunication	Calls to PRS may be necessary to inquire about particular accounts	Experience shows an average of 3 calls per week, making the yearly cost a total of $10.40	Collection work to insurances on the phone is absolutely necessary.	For appropriate collection activity the phone cost would be about $200/month or $2,400/year. In addition, cost for high speed internet connection or upload times for claims easily add up to $80/month ($960/year), resulting in a total of $6, 589.60
Other Charges	PRS charges as a % of actual revenue, making billing expenses a flexible cost rather than fix, thereby helping the practice's cash flow.	Assuming an average revenue of $55,000 per month for the practice, which is common with our clients at a negotiated rate of 7% the total cost for the year would be $39,600	Hidden charges are the loss of income from space taken up by billing related activities rather than revenue generating activities (for example, the 300 sq ft billing office incl. storage could easily be used for an additional treatment room, an EKG, Echo, etc. equipment room. Other hidden costs are staff training, continuous education, turnover loss, office furniture.	Not calculating income that could be generated the savings on rent would be about $1,500 for 300 sq ft. Losses generated because of turnover, inappropriately trained staff, sickness, incompetence and such are frequently undervalued but realistically run yearly $15,000. Hidden costs easily average total of $16, 500 per year
Total Cost		$40,834.40		$102,949.60