Starting a Large Scale Billing Company

[mikey2727]

Hi, I would like to get a few ideas about infrastructure and profit margins. 

I am a manager of a health care company that is considering setting up our own billing company (new entity).  We have over 1 million annual encounters and we are rapidly growing.  Transitioning billing would be scaled over several years.  We do have some resources already.  I used to have a team of 12 billers in the past company, so even though I am not a biller/coder I understand enough about managing a billing team.  I just hired my first in house biller in this company who will help setting the business up and will be used in various roles afterwards.  I also engaged a consultant that I used in the past to help pick the right software.  In our case, it's worth the money and it paid off during prior engagement.  I have a full-time RCM manager on staff and a data analyst. We do not have our own E.H.R., we get data feeds from various hospitals. 

We are located in a high cost city, so our office most likely be located in one of the nearby cities or states.  We will also explore possibly of having some staff out of the country, it seems that a lot of large billing companies have coders stationed elsewhere.       

In the past, I had all my staff work out of our medical offices because our software (Nextgen) was not cloud based.  Some had to commute more than an hour each way.  This time around I would not want to limit us in only having on site staff.  Lots of employees prefer to work from home more and I would happily accommodate.  The biller that we just hired will work from home 3-4 days a week.

We won't have to worry about marketing as we won't be taking on external clients.  We won't need any client relationship reps either.  We would need to rent new space and pay for a billing software that could be accessed from multiple locations and store large amounts of data.  We will test a pilot on one of our smallest locations before we start scaling it.

If you had an opportunity like this and investment amount wasn't an issue, but you would want to keep the costs down to pass on more savings to your providers and generate a stable profit margin, would you do it all out of one office?
Would you have some billers/coders work from home?
Would you explore setting up your own office in another country in addition to a domestic office and split some functions?
What would you expect to generate in profit margins (without marketing or client service reps)?         

Even though we have resources, I am always happy to hear different perspectives.  Thank you in advance

[williamportor]

We won't have to worry about marketing as we won't be taking on external clients.  We won't need any client relationship reps either.  We would need to rent new space and pay for a billing software that could be accessed from multiple locations and store large amounts of data.  We will test a pilot on one of our smallest locations before we start scaling it.






How nice it must be...

I have to make about 1,250 cold call telephone contacts just to land one $400.00 / mo client.  

[Michele]

If you had an opportunity like this and investment amount wasn't an issue, but you would want to keep the costs down to pass on more savings to your providers and generate a stable profit margin, would you do it all out of one office?

I would probably want to do it out of one office because I would want to be able to see what all are doing.  I know with technology that is possible in different locations but my thought is it would still be easier out of one office.  I think costs might be more with multiple locations because you would need a higher end employee at each location to manage day to day issues.  Also, even though rent is probably cheaper for smaller office space it is most likely more than one large office space.

Would you have some billers/coders work from home?

Even though it is more common today I am not a big fan of allowing billers to work from home.  There are just too many things that come up that you need to be in the office to handle.  At least that is how it is for our office.  Even in a paperless society we still have a ton of paper that needs to be accessed.  Some jobs can be completely done from home, but most of our billers need to be in the office to accomplish the complete task.  Also we learn things from each other every day and our interaction is important to our company's success.  I'm not saying it can't be done, I just know that our company benefits from working here in the office.  We have a daily lunch where we all eat and meet to go over what's going on, issues, and just life.  We have a strong team.

Would you explore setting up your own office in another country in addition to a domestic office and split some functions?

I personally would not do this.  I know it can be cost saving, but it's not for me.  I have dealt with insurance carriers that have done this and the service is just not even close.  Not to mention that HIPAA laws (any US laws) are not enforceable out of the country.  I also am a huge patriotic person and believe in providing jobs here in the US.  JMO

What would you expect to generate in profit margins (without marketing or client service reps)?       

That is really not something I can answer without more info.  There are so many variables and Profit margins definitely vary.


I hope this helped some.

[mikey2727]

Michele, Thank you this is very insightful. 

Kareo is currently offering 3.5% rate and McKesson is offering 3%.  As I model the business it becomes practically impossible to compete with those prices in a traditional office model where we would have an office close to us and pay all employees local wages.  We will continue to research and see what we could do. 

William, I feel your pain.  I have a small business of my own and I know how difficult it is to market and grow the client base.  Good luck in your quest.

[PMRNC]

Kareo is currently offering 3.5% rate and McKesson is offering 3%.

And they are utilizing offshore remote workers. DANGER ZONE

[Michele]

Also, from my understanding they offer billing services for the 3-3.5% but those billing services really only mean they will submit the claims.  They notify the provider of the denials but the provider is responsible to make corrections and also aging.  To me the purpose of having billing services is to have someone making corrections, appealing denials that require appeals, working aging and watching over the entire process.  Submitting the claims and autoposting are just the cake jobs.   

AND like Linda said, offshore.  That in many cases means little knowledge of US billing, not to mention the data is not protected by US law.