General Category > General Questions
Can you make a profit by charging 4%?
QueenAlicia:
My answer is NO! It depends on the specialty.
The going rate is not 6%, that would be based upon your region.
Also if you are using Kareo than you must be eating those costs as they charge per provider. If you charge 4% it screams cheap, lack of experience (which may not be the case) and that you are desperate. Not only that, depending on the provider reimbursements you may not make anything but $1 a claim (such as MH).
Not to sound harsh but you work to hard to make pennies. Get paid what you are worth, show the provider why you charge would you do and stop letting them nickel and dime you. You want your business to not only make money but for you to make money. I am talking from experience.
tallmanusa:
Thanks for the responses.
I am the organizer, I plan to subcontract almost all of the work. At the end of the day if I can get 20% net margin, I am happy. I am still doing my research and that is why I ask questions; if that is not feasible I will do something else.
Here is medical billing service that charges 4%; they say so on their website:
http://www.ebiometronics.com/
I talked to them, the owner is a doctor ( Nephrologist); they claim to have several hundred clients. They appear to be profitable. Actually I asked him. Nephrology is a high paying specialty, for him to spend most of his time in this business, he must be doing well.
They use the office ally system. Is that better than Kareo? but that is another question.
There are several other companies with the same business model; whether I can emulate them, that remains to be seen.
How do they get their business? Google Adwords. You can get a client for about $200.
PMRNC:
--- Quote ---I am the organizer, I plan to subcontract almost all of the work. At the end of the day if I can get 20% net margin, I am happy. I am still doing my research and that is why I ask questions; if that is not feasible I will do something else.
--- End quote ---
What are your plans in regards to compliance. Subcontracting out the work the way you have planned is additional costs JUST in compliance assurance itself. You are going to want to have the MAX amount in E/O insurance.. right there your 4% is a no -go . I'm not trying to be harsh, just real. I've seen and talked to many billing company owners in start-up with the same stars in their eyes.. "I'll finance it, sub out the work and cash the checks" Compliance gets sacrificed, service is sacrificed because you have subcontractors you cannot expect to have the same level of personal service as an in house office. To get a good picture when you are projecting costs you want to have a good compliance plan in place and obtain insurance quotes. Compliance in this business is absolutely IMPERATIVE. Maybe your plans are to expand on to sub contractors when you have a large client base? I don't see this being done out of the gate or even for a while at same time your only charging 4%.
--- Quote ---
--- Quote ---Here is medical billing service that charges 4%; they say so on their website:
http://www.ebiometronics.com/
--- End quote ---
I talked to them, the owner is a doctor ( Nephrologist); they claim to have several hundred clients. They appear to be profitable. Actually I asked him. Nephrology is a high paying specialty, for him to spend most of his time in this business, he must be doing well.
They use the office ally system. Is that better than Kareo? but that is another question.
--- End quote ---
Maybe I'm misreading but they claim to have their own software.. maybe they just mean they only use their systems for all clients. I use any system the provider wants or I have Kareo if they need a PM solution. Today's billing company has to be diversified. I've heard Office Alley is ok, but no it's not better than Kareo, I believe Office Alley is one of the free ones (could be mistaken) I've seen it and used it once but still feel 150% confident enough to say not it's not better than Kareo.
--- Quote ---How do they get their business? Google Adwords. You can get a client for about $200.
--- End quote ---
Online marketing is hit or miss. It's essential and I've had a LOT of success with PMRNC with Google Ad words, but when you are selling service driven business, sure I will buy they might get tons of hits.. but those hits require multiple hits and then multiple contacts to turn into clients. I do website design and marketing too so I have some experience with that as well. Most of the sites I have built that get hits still require a lot of hand holding after the click through. The website is merely a means of making a first impression in this business. I'm not saying they are not getting clients with only $200 adword campaign but I am saying I doubt it.
Again, just my opinion.
tallmanusa:
I am a retired physician; for 30 years I had my own practice. I was on the other side of the fence, and outsourced my billing to a billing company.
I had a long conversation with the doctor owner of ebiometronics and I have another one scheduled. They have white labeled someone else's software, they can sell that to a billing company as well, and that is what he suggested.
It appeared that he is making money and lots of it, even charging 4% and he is making more money than as a kidney specialist doctor. I believe he outsources some of the work off shore.
Here is a link to another website. http://www.mtbc.com/
They charge 5%; I am not sure if they white label someone else's software or it is there own, however it looks very comparable to Kareo/ Practice fusion combo; they are also owned by a doctor. You will see their prices under practice management icon. By the way I thought they had a nice website.
My impression is that some people are making a lot of money in this business, upwards of a million dollars a year net profit, by selling services at discounted rates.
How they are doing it, that is what I am researching.
Michele:
I have seen companies that charge 4% or 5% but from what I've seen you get what you pay for. When we started we were low, because we didn't know any better. We started in 1994 at 5% (we didn't know about the fee splitting thing). We are very meticulous and do a very good job. We couldn't make it at 5%. We raised up to 6% and didn't lose a client. I know other services that charge that low and there are two reasons. The first, they do a shoddy job. They can afford to take 5% because they aren't doing all the work needed. They send the claims in and take what comes back. No follow up, no appeals on denials, etc. The other thing I see with 5% billing companies is that they are robbing the dr blind! They only charge 5% because they are taking what they think they deserve. You may think I'm crazy but this is based on facts that we have come across.
Just a side note, there may be good services that do their work diligently for 5%, I just haven't seen them. :)
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