As health care gets even more complicated, it is vital that management and office staff keep up to speed. The problem, however, is that many physician offices are just keeping their heads above water when it comes to billing and collections and day-to-day management of the practice. Fortunately, there are outsourcing options that may improve operating efficiency and even reduce costs for the practice.

In-House or Outsource?

The decision to outsource a particular function is a big investment and management should weigh the pros and cons before making the leap. Outsourcing job functions in the health care industry is not uncommon, as I have evidenced in my blog about third-party billing and physician practice management companies.

Outsourcing requires performing a cost-benefit analysis. For some tasks, the direct cost of outsourcing will be clearly less than that of performing the task in-house. However, for other tasks, the direct cost may be close to — or even exceed — that of performing the activity in-house. The question then is whether outsourcing those tasks will improve results that positively affect the practice's bottom line, reduce indirect costs or provide other valuable benefits.

An effective outside billing service or professional management firm may help increase the practice's cash receipts and reduce its accounts receivable. Cash that your practice generates from more effective billing and follow-up may easily exceed the incremental direct cost increase of an outside billing service.

Is Keeping Everything In-House Feasible?

Regardless of the task your practice is considering to outsource, there are certain factors that will help you determine the initial feasibility:

  • Does my practice have the required expertise needed to perform the task?
  • Are the physicians in my practice interested in, and committed to, participating in management decisions and oversight of the task?

How Outsourcing Works

Outsourcing offers several primary benefits: improved results from a company specializing in a particular activity; a potential for reduced costs; and the elimination of responsibilities and hassles for physicians and administrators.

Not Just Admin

Outsourcing does not necessarily have to be limited to administrative tasks. Specialty group practices performing diagnostic and therapeutic services may outsource not only the administrative responsibility and equipment maintenance, but also the technical personnel or the entire technical component of those services to a niche company that specializes in them.

A cardiology group may, for instance, choose to outsource its cardiac stress tests. This type of outsourcing can provide expansion opportunities — often without the risk, capital expense and lead time required to develop comparable in-house capabilities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.