Short answer: Outsourced billing usually costs 3% to 7% of collections across the market (RH Billings charges 2.9% to 4.9%). An in house biller costs salary plus about 25% to 35% in benefits and payroll taxes, plus software, clearinghouse fees, training and coverage for absences. For most practices under about 10 providers, outsourcing costs less and collects more.
Side by side example
Assumptions for a practice collecting $120,000 a month. Replace them with your own figures.
| Cost line (annual) | In house | Outsourced at 4% |
|---|---|---|
| Billing staff (1.5 FTE at about $50,000 each) | $75,000 | Included |
| Benefits and payroll taxes (about 30%) | $22,500 | Included |
| Billing software and clearinghouse | $6,000 | Included |
| Training, coding updates and certification | $2,500 | Included |
| Service fee | None | $57,600 |
| Total | $106,000 | $57,600 |
Costs that rarely make the budget
- Turnover. Replacing a biller takes months of recruiting and ramp up, during which follow up slips.
- Absences. Vacations and sick days stop claim follow up unless someone covers.
- Uncollected revenue. A few points of net collection rate on $1.44 million a year is $30,000 to $70,000.
When in house makes sense
Large groups with an experienced billing manager, low turnover and strong reporting can do well in house. A hybrid also works: keep front desk tasks in house and outsource coding, claims and denials. Use our revenue calculator to estimate what better billing would recover.
