Practices weighing up outsourcing almost always compare a biller's salary against a billing company's percentage. It is a straightforward comparison and it is not the real one.
Here is what belongs on each side.
The true cost of in-house
Salary. The number everyone starts with, and typically 60 to 70% of the real total.
Payroll tax and benefits. Employer taxes, health cover, retirement contributions. Commonly adds 20 to 30% on top of salary.
Software and clearinghouse. Billing module licences, clearinghouse fees per claim or per month, coding reference subscriptions.
Training and continuing education. Credential maintenance requires continuing education units. Code sets change twice a year. A biller who is not kept current becomes progressively more expensive in denials.
Cover. Holiday, sickness and leave. Billing does not pause. Either someone covers it or the work accumulates, and accumulated billing work ages into uncollectable A/R.
Turnover. Recruitment, onboarding and the productivity gap while a new person learns your payers. And the knowledge that leaves with the departing employee — which payer needs a phone call rather than a portal message, which plan bundles what — is real and undocumented.
Space and equipment. Smaller, but not zero.
The capacity ceiling. This is the one that never appears in a spreadsheet. One biller can only work so many denials. Beyond that, denials go unappealed and A/R ages — and the cost of that is invisible because it shows up as revenue that never arrived rather than as an expense.
The true cost of outsourcing
The fee. Percentage of collections, per-claim, or hybrid. Under a percentage model it scales with revenue rather than sitting fixed.
What is included. This varies enormously between vendors and it is where the honest comparison is won or lost. Ask specifically whether denial appeals cost extra, whether patient billing enquiries are handled, whether reporting is included, and whether there is a setup fee.
What is not. Credentialing is usually priced separately. Standalone audits usually are. Legacy A/R cleanup is often a different percentage. Clearinghouse fees may or may not be covered.
Your remaining internal cost. Outsourcing billing does not remove front-desk work. Registration accuracy, insurance capture and point-of-service collection stay with you, and they materially affect the result.
Transition cost. A parallel run period, data migration, and a few weeks of dual attention.
How to run the comparison properly
- Total the real in-house cost — every line above, not just salary.
- Express it as a percentage of collections. This is the only basis on which the two are comparable. A fixed cost and a variable cost cannot be compared in absolute dollars.
- Add the cost of what is not being done. If denials are going unappealed, estimate that. It usually dwarfs the fee difference.
- Compare like scope. If the outsourced quote includes coding, denial appeals and patient billing, the in-house side has to include the staff time for all three.
What should actually decide it
Cost is rarely the deciding factor once the comparison is honest, because the two often land closer than expected. What decides it is usually:
- Capacity. Whether the current arrangement can work every denial inside its filing window.
- Continuity. Whether the practice can absorb the biller leaving.
- Expertise depth. Whether one or two people can hold specialty coding rules, payer-specific requirements and credentialing deadlines simultaneously.
- Visibility. Whether anyone can state the denial rate, days in A/R and net collection rate right now.
If the honest answer to the last one is no, that is the finding — regardless of which model you choose afterwards.
Our own rates are published on the pricing page, which is unusual in this industry and deliberate.