What are the disadvantages of outsourcing medical billing?

Outsourcing Billing

Outsourcing Billing

The Healthcare industry has grown dynamically and become stringently complicated. Although, advanced technology has improved external collaboration and accelerated treatment planning. However, it has also increased regulatory compliance issues. The vast diversity of computing devices and software capabilities may reduce efficiency in medical billing and collections activities. As healthcare practitioners endeavour to proactively manage medical collections, there are more discussions in the C-suite leadership conversations about outsourcing medical billing and coding tasks.

Third-party medical billing services providers optimize administrative workflow and provide sufficient staffing competencies. However, there are also some drawbacks to partner with the third-party medical billing agency. Discovering the disadvantages of  contracting with an outsource medical billing company enables decision-makers to make a well-informed decision about converting in-house billing to off-site processing.Every organization has unique challenges, financial objectives, and budgetary constraints. Healthcare entities typically face the following challenges while outsourcing medical billing services;

1. No control over resources:

It is one of the biggest drawbacks of outsourcing medical billing services. When a medical billing agency takes over your administration then you lose control over your assets. Incompatible software or hardware can restrain transparency with the workflow. Many medical billing agencies choose to only work the highest-value accounts to increase their revenue potential. It can also significantly raise customer service issues. Whenever your patients come with random queries at any time, then it can make your patients feel uncomfortable. They can also feel insecure to know that “outsiders” are accessing and processing their accounts.

2. Increase the financial crisis:

Outsourcing medical billing services can be very expensive for small surgical centres, private physicians and rural outpatient clinics. Healthcare practitioners should carefully negotiate with medical billing agencies. You should contract an agreement for collection address protocols and commission levels in advance, that can help to reduce costs effectively. It is essential to partner with medical billing agencies that have compatible technology that will not require updating infrastructure for enterprises with limited budgets.

3. Inappropriate and noncompliant security protocol:

Outsourcing your medical billing can open the door for a possible problem with HIPAA privacy and security. Although violations of HIPAA privacy and security can occur with in-house billing, however, it can present an even greater risk when medical billing is outsourced. Whether intentional or accidental, unauthorized disclosure of PHI is against the security protocols of HIPAA. More accessibility to patients’ data increases the risk of a breach.

4. Risks to Patient Satisfaction:

The patient usually suffers the most due to outsourcing. Patients like having the ability to walk into their doctor’s office to pay them directly, set up payment arrangements or discuss the specifics of their bill. Patients can easily build their relationship with in-house billing staff with a more personal feel. It becomes really difficult sometimes to satisfy your patients when they have to discuss their payment matters over the phone.

5. Possible Hidden Costs:

Third-party medical billing agencies can charge for the hidden costs. Healthcare practitioners should beware of hidden costs that can be incurred in outsourcing medical billing services. Medical billing companies can charge for extra costs despite their legal fees. There is also the possibility that you need to hire at least one person to act as a liaison or contact between the medical office and the outsource company.

6. No Flexibility:

Once, you outsource your billing services then all of your business practices come under third-party agencies. A medical office manager can completely control your in-house business practices with feasibility to request overtime to increase productivity, change employees’ work hours and enhance the workflow. Outsourced medical billing services eliminate the control of managers over business matters. This creates a huge difference between high or low performance for a certain month.

7. Limitations:

Outsourcing medical billing services can bound your internal business activities. Offshore medical billing companies provide less information due to a lack of communication between your medical office and their company’s staff.  In-house medical billing staff can easily access medical records and patient’s data. An effective communication process requires a contracting phase to ensure proper transmission of information across the channel. Accurate information flow is essential to ensure successful billing practices.

8. Contractual Misunderstandings:

Healthcare practitioners should thoroughly study the contract before committing any terms. Otherwise, if both parties interpret the contract differently then things start going in a downward spiral.This scenario occurs among most of the contractual agreements. It is the usual factor that legal lingo can cause contractual misunderstandings between the medical office and the outsourcing company. No contract will be perfect and it may be necessary to make adjustments to the contract length, terms and conditions and expectation of both the parties. Both advantages of outsourcing medical billing and disadvantages exist for outsourcing your medical office billing. Be sure to weigh up all the reasons before deciding to switch from in-house to outsourced billing practices.


Outsourcing medical billing practices is an essential and complicated decision for medical practitioners. It can improve revenue capture and internal workflow processes while reducing liability exposure. However, it is very difficult to manage patient experiences through the information transfer procedure in outsourcing billing practices. It limits budgetary constraints, financial goals and flexibility. Therefore, healthcare practitioners should fully understand the terms and conditions of the contract before making any decision. Medical Billing Benefits provides insightful information on how you can improve your revenue practices.

Learn More! About the latest industry news and medical billing practice updates to adopt effective reimbursement models.

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