Healthcare Uncovered Episode 9: The Cost of Getting Paid

Doctors, how much do you spend just trying to get paid each year? Between collection fees and write-offs, it adds up. But do you know by how much?

In this week’s episode I am going to take a look at what you can do to get paid more and get paid faster.

Just simply getting paid by insurance companies is very expensive for doctors. A study in the Journal of the American Medical Association found that at one academic physician practice, billing and collections cost $99,000 per primary care doctor per year.  

That’s 14% of their total revenue – the equivalent of almost two months of work! But that’s by no means a worst-case scenario.

Some specialties can spend close to 25% of their total revenue on insurance billing and collections alone. That’s only part of the cost of billing and collecting from insurance companies...the other major category of costs is write-offs.

The cost of write-offs

Write-offs are the uncollected payments from insurance companies that the practice never gets paid... so they just write them off.  Write-offs can be an additional 5-10% of revenue in many cases.

When you add write-offs to the cost of billing and collections, the total cost of just ‘getting paid’ can be over one third of total revenue. That’s four months of work for nothing.

And I am not even counting the time value of money for carrying the receivables on your books.

Billing and collecting

The process of billing and collecting is so complicated that it is filled with errors, often incorrect information collected from the patient or wrong information entered into the billing software.

A medical biller I recently spoke with said one practice had a dropdown list of 45 different insurance plans they had to choose from, and employees were constantly choosing the wrong plans.

Billing and collections are essentially an endless game of non-payment whack-a-mole. Fix one error and two, three, or ten more immediately pop up.

But doctors, there are alternatives.  

There are new direct contracting relationships with employers and governments completely outside the traditional health insurance system.

You can’t switch all your revenue overnight, but there is a way to get started. One idea is to join a direct contract network like the Nomi Health Open Network.

Healthcare shouldn’t be complicated. Check out Nomi Health’s Open Network of physicians to break through the red tape, collect the money you’ve earned, and get back to why you’re doing this in the first place.... helping patients.