In-sourcing: The Basics and the Benefits

Posted on February 8, 2017 in Operations

One of the traditional debates in the billing community has always been between in-house billing versus outsourced billing. Each has its advantages.

In-house billing is under the complete control of the group, has knowledge of the local payers and practice policies. In surveys, in-house billing often slightly outperforms out-sourced billing in collections. They also tend to have a higher billing cost.

Out-sourced billing has the advantages of economies of scale, deeper resources to tap into and less employees on the benefits of the radiology practice. The billing environment changes every year and it can be hard for a billing office servicing a small group to keep up with these changes. Two quick examples of these changes are occurring this year. In October 2015, for example, ICD10 needs to be implemented. There are also changes in compliance every year. It is easier for a larger company to handle these annual changes than for a standalone billing office.

Dexios has introduced a third model in the market we call “location-based billing.” We typically implement this via insourced billing in an existing self-billing group. This model brings the advantages of self-billing and out-sourcing together into one package. It has the look, feel and advantages of self-billing, but with the efficiencies of a larger billing.

In-sourced Billing Model

In-sourcing means we take over your current billing operation. Your billing employees become Dexios’ billing employees. Your billing operations become Dexios’ operations. The employees leave one day as your employees and come in the next as Dexios’ employees—same offices, same computers, same desks, same jobs. It is virtually seamless. However, now you have a company running the billing office whose primary mission is billing radiology and expert oversight. You also have a company that knows what is happening beyond the four walls of your practice and can analyze and compare your local results to groups across the county.

The basic model for an in-sourced billing model looks something like this.

  1. Existing billing costs are calculated and agreed upon by all parties.
  2. A proposal is created outlining what costs will be assumed. For example,
    • a. All employees will be brought over at existing salaries. Time worked for the group is considered time worked for Dexios for benefits purposes.
    • b. Assuming the billers will remain in their existing facility, a “triple-net” lease is proposed that reimburses the radiology group for the expenses associated with the billing office such as rent, office equipment and furniture, phone systems, computers, etc.
  3. A “go live” date is set. Depending on the situation, either a new server and instance of ImagineSoftware is brought in or the billers will bill off of Dexios’ cloud-computing data center.
  4. On-site training is conducted for new employees.
  5. On “go-live”, the employees become Dexios’ employees but continue to work at their same desks.

Advantages to In-sourcing

No Conversion

There is no conversion and therefore no risk of a downturn in collections. The existing billing system AR is worked down by employees already well versed in its use.

No Increase in Costs

The typical deal for in-sourced billing costs no more than a group’s existing billing costs. The fee, which in every deal to date has always been equal to current billing costs, represents the hard costs associated with your billing. We are able to do this because of economies of scale.

However, we believe that the actual cost to bill should be represented with both your hard costs and the amount of money that you are leaving uncollected that you could reasonably collect. You can never collect everything and you do not want to spend $1.01 to collect $1.00. The optimization of the balance between maximizing collections and minimizing expense is the concept we refer to this as the True Cost to Bill. In every in-sourcing deal we have done, we not only matched the current cost to bill but also increased collections…in some cases substantially.

Finally, in the typical deal, the group actually makes money back on the “triple net” lease that Dexios pays for whatever assets in the billing office it uses in addition to the actual billing office space.

Increased Collections

In every in-sourcing deal that Dexios has done, there has been a substantial increase in collections. This obviously depends on the current level of collections achieved by the billing office. Dexios has been able to increase collections using the same billers by giving the staff the right tools, training, resources and incentives.

Case Study – Advanced Diagnostic Imaging (ADI)

Advanced Diagnostic Imaging (ADI) in Saginaw, MI is a 40-man radiology group supporting six hospitals, several imaging centers and several other agency account facilities. ADI was self-billing at the time Dexios became involved.

Here is an overview of the steps we took with them over 6 months:

  1. Initial two week consulting engagement. The result was a 31 page analysis of the billing with specific recommendations.
  2. As a result of our report, ADI brought in Dexios for a six month engagement to transform the billing department and correct the problems.
  3. Four months into this 6 month engagement, the program was so successful that ADI requested that Dexios take over the employees and the billing permanently at the end of the six month engagement.
  4. Dexios assumed all employees and billing on the existing ADI billing system.
  5. Several months later, Dexios converted ADI’s billing to ImagineSoftware.

The result was a tremendous success story. Dexios won 2015 Customer of the Year from ImagineSoftware for the amazing results there. Being #1 out of approximately 575 practices is truly an honor. This is a hospital-based group that has public hospitals in the 3rd and 5th most violent cities in the US. Their Net Collections in 2014 were 99%, Days in AR was 25 and Bad Debt was less than 1%.

Again, as a cursory overview, here is what was accomplished during our six month engagement:

Here is what ADI sees as the benefits of “in-sourcing” its billing operations to Dexios.

  1. Lowered their Total Cost of Billing
  2. Increase in collections
  3. Relieved themselves the employee hassles and benefits
  4. Keep the employees on-site for minimal disruption
  5. Smooth transition to new employer – avoided bad press from layoffs/firings
  6. Were able to “try and buy” so there was significantly lower risk
  7. Kept the experience by keeping existing staff who knew local payers, systems, state regulations, but also filled in gaps where employees needed help to achieve higher collections.

About Dexios Corporation

Dexios is a national, radiology-only billing company. The company was created around the central idea of providing radiology clients with custom solutions to fit their needs, not force-fitting what we had to sell into their organization. To this end, we have come up with a wide array of solutions.

Dexios uses ImagineSoftware as its billing system. ImagineSoftware now processes about 40% of all radiology billing transactions in the US. Dexios was its first and only authorized cloud computing vendor. We are also an authorized reseller.