Does Your Practice Need A Billing Service?

Michael Forman, DPM, FACFAS

Does billing eat up too much time in your practice? Are you overly dependent on one employee to bill for your practice? Are you losing significant money with your billing practices? With these questions in mind, this author discusses key considerations in assessing the billing process at your practice and key questions to ask if you are considering an outside billing service.

As practicing podiatric physicians, we are constantly trying to improve how we provide patient care. Podiatric medicine and surgery is an evolving science that requires constant updating of skills. However, we should not forget that the delivery of healthcare is also a business that needs our attention. From a business standpoint, having a smooth and efficiently run practice allows the doctor to concentrate on patient care.

   The benchmark for billing and collections in a well-run practice is 6 to 8 percent of gross income. This includes data entry, rental of office space, utilities, electronic or manual production of insurance claims, collection of money, posting payments to accounts, billing for balances, postage, collection of overdue accounts and the cost of office personnel to do these tasks. It costs money to perform these functions. If you can do this efficiently for 6 to 8 percent of gross billings without overloading an employee or the doctor, you are doing all right.

What You Should Know About Associated Costs

Biller. The most important employees you have in your practice are those who do your billing and collections. These are professional people who will command a decent salary. Salaries vary by location. Practices in New York City are going to have to pay a much higher wage than a practice in Biloxi, Miss.

   What is a fair salary? It is one that your employees can use to live a decent life and feel that you appreciate their contribution. I will use several examples of professional salaries for billers (see “Comparing Hypothetical Billing Costs For Different Podiatry Practices” below right). These examples are not meant as suggestions or guides. They are merely illustrations. Each situation is unique. Benefits vary. One biller may be married and covered under his or her spouse’s health insurance. Another may work less then 20 hours a week and not qualify for benefits. Another may be older and more expensive to insure.

   Also, you must take into account other benefits that your practice offers. Some offices have a bonus system dependent on the employee’s production. Some offices offer retirement benefits. Other offices include a gasoline allowance, etc. A good benchmark in determining the employee benefits (Social Security, retirement, health insurance, etc.) cost to the practice is approximately 30 percent of salary. That is, if your employee earns $25,000 a year, your actual cash outlay is around $32,500.

   Rental space. Your biller(s) will need a place to work. If you are paying rent based on square footage, multiply the charge per square foot by the space in use. If the space is not in use, you could use that space for some other productive purpose. What do you pay for rental per square foot? Do not forget that those who pay triple net leases will have to add the yearly assessments to that figure.

   Postage, forms and statements, and clearing house charges. You should take a monthly survey of the number of insurance forms that your practice generates as well as the postage to mail them. You can calculate the costs of the statements themselves and the postage. If you use a clearinghouse, you must calculate in that cost as well.

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