Insourcing: A New Path for Radiology Billing

One of the traditional debates in the billing community has always been between in-house billing versus outsourced billing. Each has its advantages, but what if there is a better solution. 

Traditional Billing Models Analyzed

In-house billing is under the complete control of the group and the billing staff knows the local payers and practice policies. In surveys, in-house billing often slightly outperforms outsourced billing in collections. However, in-house billing also tends to have a higher billing cost.

Outsourced billing has the advantages of economies of scale and deeper resources to tap into. Outsourcing also provides fewer employees on the benefits of the radiology practice. Since billing environment changes every year, it can be difficult for in-house staff servicing a small group to keep up with these changes. It is easier for a larger company to handle these annual changes than for a stand-alone 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 outsourcing together into one package. It has the look, feel, and advantages of self-billing, but with the efficiencies of a national billing company.

Insourced Billing Model

Insourcing 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—the same offices, same computers, same desks, same jobs. It is virtually seamless. However, now you have an experienced radiology specific medical billing company running the billing office who can provide you with expert oversight. You also have a company that knows what is happening beyond the four walls of your practice who can analyze and compare your local results to groups across the county.

The basic model for an insourced 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,
    1. All employees will be brought over at existing salaries. Time worked for the group is considered time worked for Dexios for benefits purposes.
    2. 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 Insourcing

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 insourced 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 can 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. With every insourcing client Dexios has brought on, we not only matched the current cost to bill in-house but also increased collections (in some cases substantially).

Another bonus for our insourced clients is radiology groups typically make money back on the “triple net” lease. Dexios pays for the assets in the billing office our new employees use in addition to the actual billing office space.

Increased Collections

Every insourcing client Dexios has, there has been a substantial increase in collections. This 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 six-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:

  • A significant increase in employee morale including those outside of the billing department.
  • A significant decrease in accounts receivable – especially Over 121 Day money.
  • Brought all charge backlogs current.
  • A significant increase in net collection percentage and monthly income to the practice.
  • Instituted policies and procedures to keep the billing department running smoothly.
  • Educated billers on areas that were deficient.
  • Made personnel changes where appropriate.
  • Instituted a 100% charge audit to make sure all charges are captured.

Here is what ADI sees as the benefits of “insourcing” 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 a new employer – avoided bad press from layoffs/firings
  6. Were able to “try and buy” so there was a 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.

Contact us here to see if insourced billing could be beneficial for your radiology group! 

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