“We keep billing in-house because it’s cheaper than outsourcing,” I heard this phrase twice last week. A practice owner told me last Tuesday, “Have you actually calculated what in-house really costs you?” I posed to him.
He stopped. “Well, we give Sarah $45,000 annually in addition to benefits. Compared to paying a percentage of collections, that is far less.
Together, we ran the figures. His face turned pale after fifteen minutes.
In addition to the six-figure revenue leak we discovered hidden in his aging report, his “cheaper” in-house billing was costing him about 7–10% of monthly collections.
The Risky Calculations That Are Bankrupting Practices
The majority of practice owners believe that in-house billing costs are as follows:
What You Believe:
- Salary range for a biller: $40,000 to $50,000 annually
- Benefits: $8,000 to $12,000 annually
- Total: $48,000 to $62,000 annually
“You see? far less expensive than paying 5-8% of collections!
However, that is not the actual figure. Not even near.
The True Cost of In-House Billing You
Let’s discuss what you’re really paying, the expenses that no one brings up during those wage negotiations:
The Clear Expenses (You’re Already Underestimating)
Employee Remuneration:
- Salary range for medical billers: $3,500–$5,000 per month ($42,000–$60,000 annually)
- Health insurance: between $8,000 and $15,000 annually
- Payroll taxes: $3,200–$4,600 annually (7.65%)
- PTO and sick days: $3,500–$5,000 annually (compensation for unproductive time)
- Insurance for workers’ compensation: $500–$1,000 annually
Infrastructure and Technology:
- Software for practice management: $3,000–$12,000 annually
- Self-hosted billing system: $1,580–$3,600 per year after $3,000–$8,000 the first year
- $2,000 to $5,000 annually for EHR updates and integration
- Clearinghouse costs: $1,200 to $3,600 annually
- $1,500–$4,000 per year for IT support and troubleshooting
Compliance and Training:
- $2,000 to $4,000 for new hires’ initial training
- Coding update continuing education costs between $800 and $1,500 per year.
- $2,000 to $5,000 per year for compliance audits
- Coding resource subscription: $400–$800 annually
Physical Area:
- Allocation of office space: $2,400–$4,800 annually (200 square feet at $1-2 per square foot per month)
- Equipment and furniture: $1,000–$2,000 (amortized)
- Overhead and utilities: $800–$1,500 annually
Just the obvious expenses: $75,000 to $125,000 annually
And we still haven’t identified the true murderers.
The Unexpected Expenses That Ruin Your Profit
1. The Tax on Turnover
The cost of hiring, training, and lost productivity when replacing a medical biller ranges from $5,000 to $15,000. What no one tells you, though, is that your biller will quit. In medical billing, the average yearly turnover rate is thirty percent.
This implies that you are paying every 3.3 years:
- Cost of recruitment: $2,000–$5,000
- Training period: two to three months with decreased output
- Loss of knowledge is priceless, but mistakes and the learning curve will cost you between $10,000 and $20,000.
- Real cost over a ten-year period: $45,000–$90,000 in turnover alone
The Premium for Complacency
Do you recall Betty from before? She wasn’t indolent. She was a human. One risky thing that happens when you have a “loyal” in-house biller who has worked for you for years is that they become at ease. They quit fighting for your money because it’s difficult and no one is paying enough attention.
This is what comfort looks like in terms of money:
Written off as minor denials: “It’s only $45, not worth the 30-minute hold time.”
- Small denial on average: $50–$150
- Monthly written-off amount: 20–40
- Cost per year: $12,000 to $72,000
Aging claims are not followed up on: “That payer is always slow. Next week, I’ll check.
- Claims were never investigated: 5–10% of submissions
- $200 to $500 is the average claim value.
- Cost per year: $30,000 to $150,000
Zero appeals filed: “They denied it twice already. They just won’t pay.” Most denials actually deserve a second look. Around 60-80% of them should get appealed. When someone who knows what they’re doing files an appeal, they win about half the time, sometimes even more. If you do nothing, you’re just walking away from money, anywhere from $75,000 to $200,000 or more each year.
3. The Expertise Gap
Think about your in-house biller. They’re juggling everything i.e. covering the front desk, fielding patient complaints, chasing down insurance, and, oh right, handling your billing on top of it all. Now picture a third-party billing specialist. Billing is all they do. They know how each payer works, they spot coding mistakes and missing info before it turns into a denial, and they’re always up on the latest rules.
But your generalist biller? They’re learning as they go, using your business as their training ground. They miss coding updates, don’t know all the pesky payer rules, and honestly just can’t focus on complicated claims. That’s where money slips through the cracks.
That expertise gap? It’s draining your bottom line. You’re losing 2-5% of claims to coding mistakes. In-house teams average a 5.5% error rate, while specialists keep it down around 1-2%. Playing it safe with coding (downcoding) means leaving 5-10% of your revenue on the table. Altogether, that’s $40,000 to $120,000 gone each year. But here’s the real kicker, the stuff nobody counts.
4. Opportunity cost:
While Sarah’s stuck waiting on hold with Blue Cross, she’s not checking eligibility before appointments (so you get fewer denials). She’s not chasing down old claims that could bring in extra cash. She’s not digging into denial patterns to stop future rejections, or making sure every charge gets captured.
She definitely isn’t keeping up with all those regulatory changes that keep you compliant. Outsourcing medical billing saves up to 40% over doing it in-house. Why? Because billing specialists actually have time to handle all those critical tasks your overwhelmed in-house biller just can’t touch. The opportunity cost here? You’re looking at $50,000 to $150,000, every single year.
The Real Cost Calculation
Let’s break down what running billing in-house really costs for a 3-doctor practice bringing in $1.5 million a year. First, the stuff you see right away:
- Staff and benefits: $65,000
- Tech and software: $12,000
- Training and compliance: $4,000
- Rent and overhead: $4,000
All that adds up to $85,000. But the hidden costs hit even harder:
- Turnover: $15,000
- Write-offs and just coasting along: $50,000
- Mistakes and lack of expertise: $75,000
- Missed opportunities: $100,000
That’s another $240,000. So, when you add it all up, you’re spending $325,000 a year on billing. That’s 21.6% of everything you collect, way more than double what you’d pay to let the pros handle it.
What Does Professional Billing Really Cost?
When you outsource your medical billing, you’re usually paying somewhere between 3% and 10% of your collected revenue. Most practices land in the 5-8% range. So let’s look at a $1.5 million practice: At 6% of collections, that’s $90,000 a year. And just like that, you’re saving $235,000 every year. But honestly, that’s just the start.
What Do You Actually Get for That 6%?
With RBS Innovators LLC, you’re not just bringing on one biller, you’re getting an entire billing department. Here’s what’s on the table:
A whole team, not just one person:
- Your own account manager
- Certified coders (no, they’re not juggling a million tasks alone)
- Denial management pros
- A/R follow-up experts
- Credentialing specialists
- Support for patient billing
All the tech, none of the sticker shock:
- Top-tier billing software
- Dashboards with real-time reporting
- Automated claim scrubbing
- Electronic eligibility checks
- Advanced analytics and insights
Expertise that’s always on:
- Up-to-the-minute on coding changes
- Specialists who know your field inside and out
- Direct lines to payer reps
- Proven strategies for appeals
- Ongoing compliance monitoring
And you can actually measure the results:
- 95%+ clean claim rates (in-house averages only hit 85-90%)
- Average days in A/R: 30 (in-house usually takes 45)
- Denial rates under 5% (in-house can hit 8-15%)
- Monthly reports with real numbers and details
With RBS Innovators, you’re not just outsourcing billing, you’re getting real expertise, better results, and a team that actually has your back.
The Stories Nobody Tells You
Dr. Martinez runs a busy internal medicine practice with four providers. Here’s what things looked like before they brought in outside help:
- they had two in-house billers,
- paid out $110,000 a year for salary and benefits,
- and collected about $2.1 million a year.
Bills lingered in accounts receivable for 52 days on average, and 12% of claims got denied. Then they switched things up. They hired RBS Innovators LLC to handle their billing.
The cost went up a bit, $126,000 a year, which is 6% of what they collected. But their collections jumped to $2.45 million, mostly because RBS found $350,000 in revenue the old system missed.
Now, bills get paid in 31 days, and denials dropped to just 4%.
Bottom line: They’re pulling in $224,000 more every year, and the extra billing cost is only $16,000. That’s a 1,400% return on investment. Not a bad move.
The Truth About “Control”
“I want control over my billing!” I hear this all the time. But let me ask,
- do you actually have it?
- Can you rattle off your clean claim rate without digging through files?
- Do you know which payers are denying the most claims?
- Can you explain what’s really causing your A/R to pile up in that 90+ day bucket?
- Do you even have time to check your biller’s work every week?
That’s not control. That’s just hoping things are going well and calling it control. Real control looks different. It means you’ve got live dashboards showing your numbers as they happen. You get weekly reports that lay everything out, no guessing.
You can reach your account manager directly, no phone tag, no runaround. Every month, you sit down and actually talk strategy about your revenue cycle. And if someone drops the ball, you can hold them to their contract, no excuses. That’s what control actually feels like. The rest is just wishful thinking.
The Bottom Line (Literally)
In-house billing isn’t actually cheaper, it just hides the real price tag. Sure, you notice the $50K salary, but you miss the $275K you lose in hidden costs, missed revenue, and lost opportunities. Outsourcing usually slashes your costs by 30-40%. That’s not just from cutting labor expenses, outsourcing also bumps up how much you actually collect.
More than that, it turns your revenue cycle from a black hole you hope isn’t losing money into something you can actually track, measure, and improve.
The Challenge:
Face Your Real Numbers Here’s what I want you to do right now:
Pull your Adjustment Report for the last six months. Then, figure out:
- Total write-offs for “small balance” or “timely filing”
- Claims sitting in the 90+ day bucket
- Your average days in A/R
- Your denial rate
Now, add up what you’re really spending:
- Every dollar for staff (salary, benefits, taxes, PTO)
- All your tech expenses (software, IT, training)
- Office costs
- And a rough guess at your opportunity costs
If you’re straight with yourself about these numbers, you’ll see what so many practices already know: in-house billing only looks cheap on paper. In reality, it’s the most expensive route you can take.
Also Read: RCM 2.0: When Technology Becomes the Practice’s Strongest Partner
Why choose RBS Innovators LLC?
Simple, we’re not your average billing company. We’re actual medical billers who got tired of seeing good practices lose money to so-called “affordable” in-house billing.
Here’s what sets us apart:
- Transparent pricing: You’ll always know what you’re paying, a clear percentage of collections, no surprise fees.
- We guarantee results: If we don’t hit a 95%+ clean claim rate, you don’t pay us. It’s that straightforward.
- We lean on smart tech: AI-driven coding and automated denial management keep the headaches away.
- Specialty know-how: Our team isn’t generic, we have experts who actually understand your field.
- Real-time updates: Our dashboards show you exactly what’s going on with your revenue cycle, whenever you want.
Let’s talk results: On average, our clients see a 25% jump in net collections their first year. We cut days in A/R by 35%. Denial rates? Down by 60%. And we haven’t lost a single client, results keep them here.
So here’s the real question:
Can you really afford to keep billing in-house? Every month you wait, you could be losing $15,000 to $30,000 in missed revenue, write-offs, and hidden costs. That’s money out the door.
If you want to see what’s actually happening with your revenue, reach out to RBS Innovators LLC. We’ll run a free Revenue Cycle Assessment, break down your numbers, and show you exactly what “cheaper” in-house billing is costing you. No pressure. No sales pitch. Just the truth. You deserve to know.