Between inflation, supply chain shortages, and a pandemic, just about everything around the American economy has changed — and medical billing companies aren’t immune from disruption or innovation.
The difference is that a medical billing service can still thrive in this period of economic uncertainty. The pandemic, in fact, rapidly shifted how healthcare works in the United States and highlighted the value of hiring a medical billing company for many providers.
US medical billing in 2023 is largely optimistic, and in our recent medical billing benchmark report, we found out why.
The current state of medical billing in the United States
If we wanted to describe the state of US medical billing in 2023 briefly, metamorphosis might be the ideal term. The industry is not just changing but rapidly evolving. With healthcare providers dealing with labor shortages and mounting expenses prompt office managers to outsource one of their most time-consuming tasks — medical billing.
Yet, a medical practice require more than a core medical billing service to succeed, and many billers are diversifying their offerings.
Today, medical billing providers may offer an array of services, including:
- Claims submissions
- Claims follow-up
- Patient support
- Medical coding
- Working old A/R
- Verification of benefits
- Telehealth billing
Many medical billers also include add-on services, like:
- Chart audits
- Practice technology support
- Payer contract negotiations
- Compliance consulting
- Practice marketing consulting
At the same time, 50% of these companies are highly specialized, with the top 3 niches centering around mental health, physical therapy, and family practices. Most organizations work across state lines, although one out of 10 companies will not process customer claims from California or Texas.
While the industry offers a bright outlook, ensuring continued profitability remains a core focus of most companies. As a result, 40% of medical billing companies require a minimum invoice amount before taking on new customers, in addition to other potential requirements.
In terms of pricing, percentage-basis billing dominates as the most popular model. But billing companies continue to use claims-based and hourly charges, too.
Still, no other metric has changed and challenged the industry so drastically as technology.
The impact of technology on the industry
Covid-19 resulted in an overall spike in demand for digital medical billing services, but despite the multiple benefits of digitization and automation, few medical practices have adopted new systems and processes. From EHR to managing an online reputation, both medical billers and their clients are facing a new world of business.
There are 2 primary reasons for the lag, namely the current closure and acquisition of private practices by larger enterprises and outsourcing. Often, a medical practice does not have the bandwidth to train staff on new medical billing technology, even if they have the funds to invest in modern practice management solutions. This scenario provides medical billers with an opportunity to better serve their healthcare organizations and attract new customers.
Still, many billing companies are also catching up to innovation.
As of 2023, less than one-third of medical billing companies use artificial intelligence (AI) automation, robotic process automation(RPA), Health-Level 7 (HL7) integrations, and outsourcing to manage workflows. As a result, nearly half of the organizations have hobbled together two or three different systems to complete their billing services.
Technology, however, may prove to be the answer to many challenges facing medical billing professionals today.
What challenges do medical billing professionals face in 2023?
On the surface, increased competition and fewer customers are the overarching challenges for medical billing companies in 2023. Requirements for new billing customers also cut out start-up clinics and practices, further reducing the customer pool. In addition, inflation and skyrocketing costs of high-deductible plans negatively patient spending, either from fewer patients or difficult collections.
Patient balances can represent up to 20% of past-due balances. 38% of companies say that they are finding it difficult to collect at the time of service, and 27% don’t have proper insurance for patients on file. Only large billing companies have high collection rates of 11% to 20%.
One study found that 25% of adults are skipping care or medicine due to rising costs. Many may also pay bills late. This mirrors a drastic increase in time spent in A/R in 2022 for 56% of practices.
At the same time, 70% of US medical billing companies have increased operational spending over the past year. Keeping up with the latest medical billing software and expanding services requires working capital upfront. Billers must balance payment collections, regularly evolving compliance requirements, and industry standards to stay in the game.
For a competitive edge, organizations need a way to streamline cash flow, tap into new customer bases, and reduce collection time. And ideally, these efforts will dovetail into cost-effective operational spending.
How can you stay ahead of the curve in the medical billing industry?
When we look at high-growth medical billing companies, defined as businesses with 2 years of year-on-year revenue growth of 11% or more, there are a few key trends that stick out.
Offering additional services may be a route to expansion. According to our survey, 91% of these companies offer appeals services, and 84% provide patient support. Other potential services to consider are:
- Practice technology consulting and support
- Compliance consulting
- Marketing consulting
These services branch out beyond billing, allowing medical companies to diversify, retain, and attract new clients. Many practices and medical providers are exhausted from juggling multiple service providers and operating systems. Giving them a “one-stop-shop” or providing them with additional services can also build a stronger customer relationship while generating revenue.
Another key finding is that 52% of high-growthcompanies use Robotic Process Automation (RPA), and 29% use Patient Collections Automation. In other words, implementing technological solutions, such as RPA, e-billing, and e-payments may unlock growth opportunities for medium-sized and smaller firms.
What are the factors driving the US medical billing outsourcing market?
According to a study from Acumen Research, North America accounts for 46.8% of the medical billing outsourcing market and market size is estimated to grow at a CAGR of 11.3% from 2022 to 2023. Our own study highlights that 7 out of 10 medical billing companies feel positive or very positive about outsourcing in the industry.
There are many factors to the rising success of medical billing outsourcing in the United States. Providers continue to see outsourcing as an opportunity to reduce costs and fuel growth. Employing outsourced medical billers allows a healthcare provider to tap into the latest medical billing software, provide additional services, limit staffing needs, and potentially reduce costs.
Billing service organizations can leverage these benefits to attract and retain more customers going forward.
What are the best practices for medical billing companies today?
Many best practices and trends today for medical billing companies fall under 3 main systems: diversification, digitization, and disclosure.
Diversifying your customer base
The closure of many independent practices post-Covid highlights the importance of customer diversification. Even for niche-medical billing companies, it’s critical to have a larger customer base. Offering additional services, such as marketing or compliance support, can both increase revenue from existing customers and attract new ones.
Another untapped source of revenue for many billing companies is start-up practices. New or fledgling firms rarely have the required revenue or monthly invoice amount to qualify for full services. Medical billing organizations can remedy this by providing smaller start-up packages or services that scale as the company grows.
Yet, it’s also important to be proactive and realistic when setting costs. In addition to potential revenue or invoice minimums, most medical billing companies use a combination of one-time set-up fees to cover upfront expenses and ongoing fees.
Digitizing and automating the billing process provides several benefits, including:
- Improved customer experience
- Faster payments and processing
- Easier collections
- Transparent accounts
- Clear communication between front and back offices
It’s not just billing companies or providers that benefit from digitizing healthcare. Patients are demanding it, too. A study from U.S. Bank found that people prefer digital options for bills, including P2P (peer-to-peer) payment options like PayPal or Zelle.
Patients have already experienced the freedom, flexibility, and convenience of making bill payments with other essential services. So, why not with healthcare? Patients expressed in another survey that they would use more digital or mobile wallets to pay if given the option. a mobile healthcare payment in the same way that they pay any other bill.
“An integrated EHR, billing, and communications platform lets patients store a credit card securely in its system and then pay bills with a single click. Patients benefit from the convenience of taking care of obligations any time, wherever they may be, without having to find their checkbook and a stamp,” says Kevin Clinton, Director of Marketing, Payment Solutions at Kareo.
For medical billing companies and providers, offering additional payment methods can boost income and reduce late payments. Streamlining the payment process makes it easier for patients to pay immediately or enroll in auto-payments for recurring visits. At the same time, the back office staff doesn’t need to review every single account, only the ones that stand out.
Operational transparency through disclosures
One of the best ways to form the foundation of a satisfied client relationship is to be completely transparent about operations. A sound example of where this matters is whether or not your operations take place in the States or abroad. While most medical billing providers outsource some aspect of their work overseas, providers like their billing company to be located locally.
“Data has consistently shown that medical practices strongly prefer a billing company with all operations within the United States. More often than not, it’s due to the practice previously working with a medical billing company that offshored its operations, and they experienced poor communication or performance,” says Jamie Howard, Channel Sales Manager at Kareo.
If you do outsource aspects of your services (or all of them), communication is key. Disclosing your processes, how your billing system works with their EHR platform, and realistic support response times will build trust.
This trust is critical since 43% of medical billing companies say customer referrals are the key value driver when they win new business, and 82% say word-of-mouth is their marketing priority for the next year.
If you are transparent with your customers, not only will they stay longer, but they will bring business to your company.
A medical billing company looking to grow in 2023 and beyond, there are many opportunities to boost revenue. Established and start-up medical billers can:
- Modern medical billing software and digitized processes pave the way for cost savings and streamlined workload.
- Ensure clear communication and transparency with medical practices can lead to referrals.
- Offer more than a core billing service can help to diversify income.
- Leverage payment collection as an opportunity rather than a challenge.