Published - March/April 2021

Medical Billing Companies: We Are Not a Commodity
By Dave Jakielo

Have you ever wondered why sometimes it seems that the relationship between medical practices and their billing companies are not on a level playing field? I have and it leaves me confused as to why relationships deteriorate even when the billing company is producing excellent results.

Problems seem to arise when the practice sits back and looks at the checks they are writing to their billing company each month. After all, their monthly check to the billing company is usually their second largest expense, and they seem determined to try to reduce the percent they pay, even though, logically, the bigger the check they write, the more money they have in their bank. I also recommend you bill your client twice a month. It improves your cash flow and makes their checks seem smaller.

I wonder how a physician would react if after they have examined a patient and before the patient left their office, the patient would say, "You know, you have been providing me excellent care, but I would like a discount on today's visit," or "You know doctor, I've been seeing you for over a year and I really appreciate you saving my life after my heart attack, but you are just too expensive; do you think you could charge me less this year?"

I am sure they would be hurt—or furious. However, this is exactly what some physicians do to billing companies. I have heard countless stories of how after a billing company has saved a practice that was on the verge of bankruptcy or had an accounts receivable larger than the national debt, they have actually requested a fee reduction from the billing company.

Another amazing phenomenon is once the Revenue Cycle process is corrected and running smoothly, thanks to the efforts of the professional billing company, the practice thinks they can take the billing back in-house and do it at a lower cost themselves. How could they be so quick to forget what a mess they had created previously when they were trying to do their own billing?

Do these same physicians sit down with their accountants and attorneys and ask for periodic decreases in the hourly rates they charge? Of course they wouldn't think of confronting these professionals in that manner, so why do they consider a professional billing company a commodity?

If a practice is utilizing a billing company that is providing excellent service, why would they want to jeopardize the relationship by trying to nickel and dime them on various issues?

Here are some common issues that surface occasionally that can lead to an antagonistic relationship between a practice and the billing company:

  • The practice wants the billing company to send an unlimited number of statements to deadbeat patients or accept any monthly payment amount. The reality is, if a patient doesn't pay after 2 or 3 statements, they are never going to pay. That is why collection agencies exist.

  • The practice thinks that a billing company shouldn't take a fee on monies collected at the time of service. This doesn't make sense, because there is still the expense of entering the encounter and payment into the system, reporting, recording, balancing, etc. If the practice insists that a fee not be taken, then offer them the alternative of a higher management fee on the monies you do collect.

  • Because you are collecting more money than their office staff was ever able to collect, they think they are paying you too much and want a rate reduction. Inform them that you'd be happy to give them a rate reduction, but you will have to cut out some services (to maintain your profitability) and their collections will probably decline. I like giving the client a list of the services that I have been providing and asking them which ones they would like me to eliminate. Let it be their choice.

I am not inferring that you should have an obnoxious attitude when a discussion about fees arises; I'm just trying to point out why you need to hold your ground. Keep in mind that there is always someone out there who will promise (with their fingers crossed) a lower fee and imply that collections will remain the same or improve.

Keep in mind also, when you know you are providing excellent service and you are offering a competitive and fair management fee, there is no reason to cave in and lower your price. It is okay to make a reasonable profit; after all, I don't think you decided to open a billing company as a hobby.

You will lose clients over pricing; it is inevitable. However, do not get angry or become belligerent, treat a client on the way out the way you treated them on the way in. Because if they fail trying RCM internally or have a bad experience with their new billing company, you want to keep the door open for them to return to you.

Dave Jakielo, is an International Speaker, Consultant dedicated to the Medical Billing Industry, Executive Coach, and Author, and is President of Seminars & Consulting. Dave is a Founder and past President of Healthcare Business and Management Association and the National Speakers Association, Pittsburgh. Sign up for his FREE weekly Success Tips at Dave can be reached via email; phone 412-921-0976.

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