Does Your Practice Need A Billing Service?

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Author(s): 
Michael Forman, DPM, FACFAS

A Closer Look At Three Hypothetical Billing Approaches

Let us look at three different practices. These are fictitious doctors and practices, and do not resemble any people living, dead, or semi-comatose. Also please note the discrepancy in the type of practice. A strictly surgical practice will generate higher fees per patient visit and have to send out fewer forms and statements than a practice that deals more with the medical care of the podiatric patient. The latter type of practice tends to see more patients, has more patient charges and requires more employees.

   Alex Valgus, DPM, is a recent graduate of an excellent podiatric residency program and opened his office two years ago. He had a gross income of $100,000 in his second year of practice. Dr. Valgus is in the office 22 days a month and sees 12 patients per day. He sends out 3,000 insurance claims a year and 1,500 patient invoices. One employee does all the billing at her desk. The billing portion of this employee’s job does not require any additional office space. Insurance and billing takes approximately 50 percent of her time.

   Paul Bunion, DPM, has been in practice seven years. He has three employees, including a receptionist/office manager who spends approximately two-thirds of the workday on billing and collection. The receptionist/office manager is a $30,000-a-year employee. Dr. Bunion had a gross office revenue last year of $300,000. He sends out 5,000 insurance claims a year and 5,000 patient invoices. He sends most of the insurance claims electronically. Dr. Bunion has an office of 1,500 square feet and his billing office uses 100 square feet. The rental for his office is $25 per square foot.

   The Keratosis City Podiatry Group is comprised of three practicing podiatrists. They have seven employees. One employee and an assistant are designated as billers. The primary biller commands a yearly income of $33,000 and the assistant receives $15,000 per year. The Keratosis Group had a $1 million gross last year. They submit 15,000 insurance claims a year and 4,500 patient invoices. They send most of the insurance claims electronically. Of their 3,800 square foot office, 150 square feet are designated as a biller area. They pay $26 per square foot per year.

   Let us look at their billing expenses per year (see “Comparing Hypothetical Billing Costs For Different Podiatry Practices” above).

   These scenarios demonstrate the financial savings to a practice with outside billing. That is not all, folks. There are a number of other factors to consider.

How Billing Services Can Provide Security And Peace Of Mind

It has been said that “one” is the most dangerous number in your office. If you have only one employee responsible for a particular task or set of tasks, that employee can “hold you hostage” at salary review time. In addition, the only supervision this employee has is you. Close personal review of everything that goes on in the office is almost impossible. I have personally been embezzled twice that I know of.

   Your biller may decide to leave at any time for any number of reasons. There may be an illness in the family, retirement, a new job, a disagreement with you or co-workers, or even death. The employee may also be terminated for a variety of reasons. At best, you will get two weeks’ notice. If you have more than one employee working on billing, you are very fortunate and if you decide to do in-house billing, please re-read the previous paragraph.

   The more people working in an area, particularly in a relatively small area as is the case in most practices, the more it can lead to internal conflict. When two employees are butting heads over a vast number of possible conflicts, the patient care and production will suffer.

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