Published - July/August 2022 Edition of BC Advantage Magazine

Is Now the Right Time to Start a Medical Billing Company?
By Dave Jakielo

Occasionally, I receive a call in my office asking my advice regarding whether or not I think it is a good time to start a medical billing company. I never answer the question directly; rather, we have a discussion outlining the positive and negative aspects of running a billing company in today's healthcare environment.

I would have thought by now, in 2022, that medical billing would be an easy and uncomplicated task, and the need for professional billing companies would be diminishing. However, with each passing year, it seems that trying to receive reimbursement for services rendered by providers is getting more complex.

So, let's take a look at what is occurring with medical billing companies in today's marketplace. Companies are continuing to be sold or merged, which leads to larger companies. Many owners say that their children are not interested in taking over the business that they have poured their sweat and tears into building over the past decades. They would like to retire, but they haven't spent any time planning an exit strategy. Plus, some are being informed by their practice management software vendors that they are sunsetting their systems and the owners must invest in newer or totally different products.

On one hand, depending upon the specialty, there are fewer clients/prospects because providers are still abandoning their independent practices and deciding to become employers of larger entities. Plus, venture capital firms are investing in practices and rolling them into super groups.

On the other hand, practices that are remaining independent are struggling to attract and retain competent billing staff. This leads to some practices thinking about outsourcing their billing for the first time. Additionally, denials are increasing in frequency and complexity, leading to a need for medical billing professionals to navigate the complex reimbursement process.

Cost of entry into medical billing is another facet to take into consideration. Overall costs are decreasing for practice management software due to cloud-based systems and possibly reduced hardware requirements like servers, dedicated data centers inhouse, hardware experts on staff, to systems up and running, etc.

Other cost reductions are being realized, and thanks to COVID-19, we found out that our staff members can work from home, and the need for office space is a fraction of what we needed in the past. Plus, with the continued adoption of Robotic Process Automation (RPA) and Artificial Intelligence (AI) in our operations, we are able to eliminate the mundane repetitive tasks, thereby reducing the number of people needed in our companies.

However, while we are realizing some cost reductions mentioned above, we are also faced with rising personnel costs as a result of some states increasing their minimum wage and the potential need to adjust our current clerical salaries to remain competitive. We also need additional higher-salary knowledge workers to deal with the increase in denials and the fact that more claims need reworking. Reimbursement continues to be ratcheted down and new rules limit what can be charged and collected for out-of-network services, which may affect what we can charge our clients.

Opportunities do exist, because there seems to be an increase in practices that are becoming first-time outsourcers, and large practices are thinking about hiring a professional billing company to handle their revenue cycle requirements. Some of the joint venture roll ups will not succeed, and those practices will be searching for medical billing companies rather than trying to restart their inhouse operations.

There are some threats we cannot ignore. Will providers continue to throw in the towel and become employees, thereby not needing billing services? There is always a threat or eventual possibility that the fee-for-service environment may diminish or disappear completely. But we have heard this possibility for decades, and so far, we haven't come up with a viable alternative to replace the current system. Then there is the possibility of additional legislation being passed, like the surprise billing regulations, which would cause a major disruption to the revenue cycle process.

If you decide to launch a medical billing company, here are some issues you'll need to address:

  1. What cloud-based practice management software will you choose?
  2. Will your staff work in your office, remotely, or offshore?
  3. What specialties are you sufficiently competent to do a great job?
  4. Who will be your second in command? You can't do it all yourself.
  5. How will you fund growth?
  6. What is your branding, marketing, and sales plan? This will be mandatory.

Landing your first client is a monumental task. Ninety percent of all billing companies started in one of two ways:

  • Their first client was a relative whose billing operation was in shambles, and they were willing to become client zero.
  • The person starting a new billing company was the current practice manager for a group, and the group decided they didn't want to be responsible for running their own billing office any longer and decided to outsource the process to a trusted individual.

I am not advising you one way or the other when it comes to starting a billing company, but hopefully the points and issues that I have listed above will assist with your decision about any future endeavor you may be considering.

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

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