Is It Fine To Outsource Your Medical Billing System?

California is famous for its top-rated attractions like the Golden Gate Bridge, Yosemite National Park, and Disneyland. However, California is also known for having some of the best hospitals. Newsweek’s list of the world’s top hospitals included twenty Southern California hospitals. And three of those hospitals were ranked among the top 100 in the world.

The healthcare industry is a significant part of California’s economy. The reasons for this growth are due to recent healthcare reforms, demographic change, value-based pricing, electronic health records, and cost containment. Cost containment strategies include a hospital’s choice of medical billing companies in California.

Importance of medical billing

Medical billing is a crucial component in the sustainability of a hospital. Aside from giving the best medical care to patients, hospitals also need to address the business side of healthcare. Otherwise, they face the risk of closure.

According to an article in the East Bay Times, around 50 California hospitals have closed since 1998. In 2019, Navigant reported that rural hospitals are particularly at risk of closure due to financial losses, with one of the reasons due to outdated payment models. Therefore, it is critical for hospitals to assess their medical billing system.

Some hospitals prefer handling all of its medical billing in-house due to the low cost.

Another advantage is the faster response. With billing staff housed in the same building, investigations of issues are immediate. Thirdly, it is faster for billing staff to communicate with doctors in case of questions.

However, more hospitals are deciding to outsource to medical billing companies in California. Although it may look expensive upfront, this option will be more beneficial in the long run.

Here are the reasons why.

Flexible payment options

Medical billing companies in California offer a variety of payment options. First, if hospitals prefer to use their current in-house billing, they may require the services of a management consultant on a fixed monthly rate. Consultants are experts in analyzing the hospital’s revenue cycle and advice on best practices for business growth strategies.

Another option is avail of percent-basis payment offered by some medical billing companies. Under this setup, they charge a percentage of the hospital’s revenue. Therefore, they will be more diligent in getting faster collections and following-up on claims.

Current billing staff may have their hands full with operational problems. Hence, hiring a third-party professional focused on collections and claims is a wise decision.

Better HR management

Hiring a dedicated billing staff is costly. Hiring new people means time and money spent on recruitment, training, salary, benefits, and taxes. When outsourced billing to medical billing companies in California, they will handle the hiring and training of their staff.

Billing services maintain a roster of trained professionals who are motivated to deliver results. Since they get paid on a per cent-basis, they will only receive money when they collect.

More time for patients

Doctors and nurses have more time to focus on patient care if they are not concerned with billing issues. With outsourced billing, medical staff will use the skills to save lives instead of spending time on admin work.

Compliance with the latest health care laws

Health professionals work round-the-clock with emergencies and critically-ill patients. Therefore, they may not be up-to-date regarding the latest developments in health care – the HIPAA, Health Care Reform bill, and the Health Care Mandate in California.

Medical billing companies, however, keep themselves compliant with the latest rulings. Therefore, they are in the best position to alert hospitals on necessary billing updates.


Having an updated and proactive medical billing process will ensure that hospitals continue providing the best care for their patients.