Is DIY billing costing your practice more than you think?

Many group practices start by handling billing themselves, thinking it saves money. But what’s the real cost of going it alone?

The truth is, DIY billing often comes with hidden expenses that can eat into your revenue and your valuable time. From claim denials to the hours you lose managing paperwork, these costs add up. Let’s break down when it makes sense to handle billing yourself and when it might be time to call in a professional.

This post will help you understand:

• The hidden costs of in-house billing

• The true price of claim denials and rework

• When to consider outsourcing your billing

A simple guide to making the best choice for your practice size

The hidden costs of doing your own billing

You see the money you’re not spending on a billing service, but what about the costs you don’t see? These can be even more significant.

Your time is valuable

If you’re a solo practitioner, every hour you spend on billing is an hour you can’t spend with clients. Research shows that therapists can spend over seven hours a week on administrative work. If your billable rate is $200 per hour, that’s over $1,400 a week in potential lost revenue. Even if you delegate it to an office manager, their time is also a significant cost. Is chasing down payments the best use of anyone’s time? Consider how long it takes you (or your staff, if you have any) to complete your billing, and whether that time could be better spent elsewhere.

The high price of denials

Claim denials are a growing problem. Healthcare denial management is expected to reach 8.93 billion dollars by 2030. Denial rates for Medicare Advantage alone have nearly doubled since 2020, with some practices seeing one in five claims rejected. Each denial requires rework, and every claim you have to fix costs an average of $47.

Worse yet, about 60% of denied claims are never reworked at all. They become lost revenue. These denials often happen because of simple process errors, like authorization issues or using the wrong code. These are mistakes that a specialized service can easily prevent.

If outsourcing isn’t an option, check out our denial-proof practice playbook to improve your process.

Delays in cash flow

How long does it take for you to get paid? When you handle billing in-house, the average time to collect can stretch beyond 60 days. This delay ties up your working capital. An outsourced service focused on clean claims and quick turnarounds can often cut that time, freeing up cash that your practice needs to operate and grow.

The risk of non-compliance

Staying on top of billing regulations from payers like Medicare and HIPAA is a full-time job. Audits are becoming more common, and the resulting claw-backs can be financially devastating, sometimes wiping out a full month’s earnings. A professional billing service builds compliance into its process, protecting you from these risks. They stay current on every rule change so you don’t have to.

When does it make sense to outsource?

While all the factors we listed above can have a huge impact on your practice’s finances, there are times when it’s cheaper and easier to do it in-house regardless. The decision on whether to keep billing in-house or to outsource it usually comes down to your practice’s size and complexity. We highlight some metrics you should track to assess your practice’s financial health in this blog post. Here’s a simple breakdown by practice size:

For solo and very small practices (1-3 clinicians)

Keep it DIY if you only file a thousand claims a year, or have a claim denial rate consistently below 8%. DYI also works if you’re comfortable with the time commitment and don’t feel it takes away from your clinical work. An EHR with robust billing features like automated claim scrubbing and submission can help here.

Consider outsourcing when:

You start accepting more insurance panels, your telehealth services grow, or you notice your accounts receivable (A/R) creeping past 40 days.  

For small group practices (4-10 clinicians)

This is often the tipping point. At this size, you’ve likely hired a dedicated administrative person to handle billing. However, once your claim volume grows, that one person can get overwhelmed, and you may face hiring a second. It may still be worth it, especially if your EHR automates the bulk of your billing process. 

Consider outsourcing when:

Your denial rate climbs over 7%. At this stage, a billing service can often provide help you recover more revenue.  Depending on the salaries and benefits of additional billing staff, outsourcing at a percentage of collections may be cheaper than hiring.

For medium to large practices (11+ clinicians)

Once your practice grows to this size, the complexity of billing multiplies. You might be dealing with clinicians licensed in multiple states, a wide range of insurance plans, and complicated Medicaid rules.

At this level, DIY billing only works if you build an internal team of specialists, including a denial analyst and a compliance officer, which can be expensive. In contrast, outsourcing the same volume of billing tasks might cost less money than a full billing team, while also improving your collection rate and cash flow.

Consider outsourcing when:

The cost of outsourcing is less than the salary and benefits of additional billers, or when your billing needs become too complex and start creating bottlenecks that lower your collection rate.

A clear path forward

Navigating the world of medical billing can feel overwhelming, but making the right decision doesn’t have to be. It starts with having a clear picture of your current situation.

The first step is to calculate your first-pass denial rate. If it’s over 8%, you are losing money. This is a clear sign that your current process needs attention, whether you fix it internally or decide to outsource.

The next step should be to shorten your billing cycle. Aim to submit claims daily and ensure charges are entered within 48 hours. Faster, cleaner submissions mean you get paid faster and get higher collection rates.

Think about the future of your practice. Payer rules are constantly changing. For example, some major insurers are moving to require 100% electronic claims. Practices that can’t keep up will face payment gaps. Outsourced billing services handle these transitions for you, ensuring your revenue stream remains uninterrupted.

Ultimately, your goal is to provide excellent care. If billing administration is taking focus away from that mission, it’s time to explore a new solution. By understanding the true costs and benefits, you can make a strategic decision that supports your practice’s financial health and allows you to focus on what you do best: helping people. If you need help choosing the right RCM partner, we have a handy blog post to help you make that decision.