Risk Comparison

Risk is an important 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.

Risk factors for In-House Billing are significant and should be carefully evaluated . Often the risks are hidden issues not considered before decisions are made but unfortunately very costly and very difficult to “undo”.

Risk Factors for In-House Billing	Risk Factors for Billing Service
Loss of Data (Hard drive failure, missed backup procedures, faulty tapes)	Paperwork and copies can be high
Inadequate staff training on procedures for proper collections (no one is available to train a collector, opening the practice up to inadequate procedures and “bad habits”	Sense of a loss of control over AR performance
Errors in data entry (no redundant “scrubbing “ of data takes place	Depending on billing service
Inadequate checks and balances for collection performance (Staffing levels and volume do not allow for continuous quality control, necessitating a high degree of trust into the performance of the staff member	Under some circumstances patients may feel the loss of direct contact.
High demand of management involvement in day-to-day activities (lack of established procedures and inadequate staffing require direct physician involvement.	Team building between Billing Service Staff and Office personnel can be difficult.
Collection performance directly proportionate to performance of one staff member (vacations, sick time or other unforeseen events influence the cash flow and in the worst-case-scenario bring billing to a halt.	Depending on the company, cost can be high
Cash flow problems due to turnover and re-training (while there is always some cross-training, the billing process as a whole is very intricate and requires vast experience. The learning curve even for an experienced collector is about 2-4 weeks.)
Patient collections decreased because of direct involvement of staff (personal acquaintance with the patient often leads to less aggressive collections)
FTE cost associated with collection position is relatively high for clerical positions (due to the fact that the collector has to be able to function largely independent and self-directed, an experienced collector is paid between $13.00 and $15.oo per hour plus benefits)
System updates costly (most systems do not include future updates in their initial price and they have to be purchased separately, even if they are an update necessary to comply with new regulations.
Dependency on Software vendor for support
Overhead cost is a fix cost. (regardless of the collections, the cost for staff and system remains fix, this cost can be more challenging to absorb during times where cash flow is weak)
Loss of control (there is no supervision over productivity, quality control and proper work etiquette)