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Medical billing specialist working on insurance claims.

Pros and Cons: Should Your Practice Outsource Medical Billing?

As a result of the pandemic, the U.S. healthcare sector is facing a massive clinical and administrative staffing shortage. Despite gaining about 50,000 jobs since January, the industry still needs to fill more than 500,000 additional positions to get back to pre-pandemic levels.

Chances are your facility is experiencing the impact of this shortage, leaving less time to handle complex backend administrative tasks like medical billing.

To streamline operations, more and more healthcare facilities are outsourcing medical billing to third-party providers. In fact, the medical billing outsourcing market is now on pace to reach $9.52 billion in 2021, up from $8.415 billion in 2020. And that growth isn’t expected to slow down anytime soon, with another study suggesting the market will reach $25.9 billion by 2028.


On one hand, outsourcing medical billing can have a transformative impact on your organization. Partnering with a medical billing provider can save money and boost the patient experience. At the same time, the decision to outsource medical billing is one that you should take seriously as it can also increase risk. 

Keep reading to learn the top points you should consider before deciding to outsource your medical billing.

Cons of Outsourcing Medical Billing Services

While outsourcing medical billing can have a profoundly positive impact on your healthcare practice, it is not without its challenges. Here are some of the potential problems that can stem from hiring someone else to manage your bills

Sunk costs

Medical companies often spend a lot of time and money training billing teams. Outsourcing to a third-party provider can result in sunk costs stemming from the resources you’ve already invested in training your staff. 

As such, it’s a good idea to outsource operations to a software provider that doesn’t come with a steep learning curve. The new system should make it fast and easy for employees to learn and use.

Increased risk

Healthcare organizations have the highest average cost per data breach of any industry, with average costs clocking in at $9.23 million per incident. All it takes is one small blunder on the part of a vendor to expose sensitive patient data and put your medical practice at risk.

As such, privacy and security should be top of mind when selecting a vendor. It’s critical to partner with an agency that is up to date with the latest industry standards — such as HIPAA and HITECH.

Service issues

Putting your billing in the hands of a third-party vendor means trusting that the company will always act with your best interest in mind — like providing rapid-response troubleshooting, keeping software updated, and giving end-to-end support and guidance. 

Ultimately, you have to feel comfortable knowing the vendor will act as a direct extension of your team. The last thing you want to do is partner with a medical billing provider that is unresponsive and hard to work with.

Pros of Outsourcing Medical Billing Services

By now you are probably asking yourself a simple question: With all these potential downsides, should I outsource my medical billing?

Without a doubt, the reasons to outsource medical billing far outweigh the risks. Outsourcing medical billing to the right provider can ease administrative burdens, lower costs, and boost profits. With that in mind, here are a few major advantages to working with a third-party medical billing provider.

Improved efficiency

Outsourcing medical billing saves a significant amount of backend work. Doctors and managers can spend less time hiring and training administrative staff members — giving them more time to focus on patient needs. As a result, productivity increases, which ultimately leads to heightened patient experiences, better reviews, and more referrals.

Reduced accounts receivable

Billing administrators spend a considerable amount of time tracking bills in accounts receivable (AR). Oftentimes, bills get stuck in cumbersome AR workflows and end up going unpaid, leading to lost or delayed profits. 

By outsourcing operations, you can prevent bills from piling up in AR while freeing staff members to focus on other responsibilities. This, in turn, leads to faster payments and less stress.

Heightened security

While there may be some risk to outsourcing billing, it can also lead to a stronger overall security posture.

Small medical practices typically lack the security expertise and resources needed to safeguard against sophisticated cyberattacks. By working with a trusted medical billing provider, your company can access features like encrypted 256-bit SSL connections, data backups with fiber-optic connections and power management, and strong firewalls — enabling you to fortify your security stance. 

Cost savings

At the end of the day, outsourcing is primarily about saving money. When you partner with a medical billing service provider, your practice will save on administrative salaries and benefits, as well as hardware and supplies. At the same time, you can reduce costly backend billing errors, which further enhances your bottom line.

How to Choose a Trusted Billing Partner

The vendor you choose will have a major impact on your operations. That being the case, it pays to take your time when searching for a partner and ensure you ask the right questions.

With this in mind, here are a few strategies you should consider when searching for a trusted billing provider.

Involve your stakeholders

When searching for a vendor, it’s a good idea to collect feedback from all stakeholders — including IT administrators, security leaders, and employees who are on the front lines of billing. By involving your stakeholders, you can get a better sense of everyone’s needs and the overall needs of the practice.

Focus on integration

It’s important to invest in a platform that integrates with your existing electronic health record (EHR) and electronic medical record (EMR) solutions. When it boils down to it, you shouldn’t have to replace any existing software to support your new billing provider.

Read reviews

One of the best things you can do when researching providers is to read what others have to say about their experiences. Check out user reviews to get a better sense of the vendor’s reputation and ability to deliver on their intended promises.

Transform Your Medical Billing Strategy with CollaborateMD

CollaborateMD is a cloud-based provider of medical billing and practice management solutions. Thousands of practices are now using CollaborateMD’s purpose-built platform to handle their backend administrative tasks.

By partnering with CollaborateMD, your practice will enhance the patient experience while saving money and reducing risk. 

What’s not to like?

Want to learn how CollaborateMD can help improve your revenue stream? Check out our revenue calculator.

CollaborateMD schedule a demo today

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