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In-house vs Outsourced Billing Services

Updated on :  

08 min read.

Calculating and recording expenses is imperative for all businesses, irrespective of type and size. Businesses often find it difficult to decide whether to outsource their billing services or keep them in-house. While the former model using in-house coders and billers might be a great option, businesses need to consider their present and future needs, their capacity to find, manage and retain suitable staff, net income, etc., before deciding upon in-house vs outsourced billing services.

What is an In-house Billing Service?

In-house billing services are adopted by businesses that wish to handle the crucial tasks of generating and submitting bills, ensuring the prompt collection of receivables and compliance with industry guidelines on their own. Businesses must invest in hiring at least one to two trained billers and coders to ensure swift and accurate collection and tracking of revenue. 

Medical institutions such as clinics, hospitals, etc., opting for in-house billing services have properly trained staff, ensuring the setting of charges, collection of patient fees, management of accounts receivable, and other aspects of revenue cycle management.

What is an Outsourced Billing Service?

Businesses can also outsource their billing services to credentialed billers and coders. Outsourced billing services enable businesses to avoid expensive start-up costs, stress related to delayed submissions, staffing, management, etc. 

In medical institutions, some providers outsource their billing to a third party known as a medical billing service, which takes up a percentage of collections and/or a recurring monthly fee as payment for managing the institution’s revenue cycle.

In-house vs Outsourced Billing Services: Pros and Cons

In-house Billing Services

Pros

  • Direct Control Over Billing Process – In-house billing services enable businesses to have complete control and easier oversight of financial functions. It allows prompt implementation of changes and enhances accountability and transparency.
  • Flexibility – In-house billing services allow businesses to operate billing functions according to their own rules.
  • Confidentiality – Several businesses, such as medical institutions (especially STD clinics), necessitate strict confidentiality of patient reports. Strict control over patient accounts can be accomplished by using in-house billing services.

Cons

  • Costs – Costs of labour, technology, hardware, billing software, staff training, ongoing maintenance and updates of the software, etc., often exceed the cost required for outsourcing billing services.
  • Staff dependency – Managing the revenue cycle includes several complex and crucial tasks that might take time to master. Moreover, depending upon 1-2 staff members can result in financial issues during their sick leave.

Outsourced Billing Services

Pros 

  • Enhanced Productivity – Businesses opting for outsourced billing services are not required to spend time on managing, training and hiring staff. 
  • Professional Expertise – Outsourcing billing services to expert billers and coders ensures enhanced accuracy and compliance.
  • Improved Revenue – Outsourcing billing services enables businesses to save on in-house costs, administrative benefits and salaries, etc. They are also known to maximise revenue generation. Outsourcing also ensures minimal IT needs.

Cons

  • Less Control Over Billing Functions – Although outsourcing will necessitate a business employee to oversee and ensure the fulfilment of contract obligations, it will not provide direct control over billing processes.
  • Difficulty in Finding an Outsourcing Billing Company for Small Businesses – Third-party billing companies usually charge a percentage based on the total collection. They usually necessitate a minimum number of claims for taking the outsourcing contract. 
  • Less Control Over Customer Accounts – With outsourcing, businesses will not have immediate access to customer accounts. This might make it difficult for businesses to provide swift answers to customers having billing-related queries, hence resulting in customer dissatisfaction.