The outsourcing market is expected to grow at an annual compounding growth rate of 4% between 2021 and 2025. The medical billing outsourcing market, in particular, is set to grow from $13 billion to $40.3 billion by 2032. Otherwise known as revenue cycle management, medical billing is also one of the healthcare industry’s most essential and challenging aspects.

Debating between in-house billing and a billing company

This post will compare a medical billing service company to an in-house billing team. We’ll dive deep into each offer to compare costs, revenue, accessibility, and more. Make sure to read this comparison all the way to the end. That way, you can make the best decision for you.

Defining the terms:

Billing Company vs. In-House Billing

Before we begin, let’s quickly define a couple of terms..

Medical Billing Service Companies

Medical billing service companies are third-party organizations that handle the medical billing process for healthcare providers. They specialize in managing the end-to-end process of the billing cycle, from patient registration to collection, so service providers can focus on what they do best.

By outsourcing billing needs to a third party, the practice can rest assured that their billing process is handled by an efficient team with specialized knowledge that’s up-to-date with the latest changes in healthcare regulations.

In-House Billing

In-house billing refers to hiring an internal team to handle the medical billing processes. The healthcare facility or practice is responsible for hiring staff and supplying resources, giving them direct control over the billing process.

Offering in-house billing often allows for better integration with other internal systems (such as electronic health records), and the ability to tailor the billing process to the specific needs and preferences of both the business and the customer.

Feature-By-Feature Comparison

While either option offers the same primary function of medical billing, they differ in specific instances:

A medical billing company is better for costs, experience, compliance, and scaling. In-house medical billing is preferable for control, customer or patient service, and implementing risk measures. Costs

Outsourced medical billing is often more cost-effective than in-house because it eliminates the need to hire and train staff, install billing software, and maintain infrastructure. You should know, however, that medical billing service companies generate revenue by charging based on a fee or a percentage of the total amount, and this fee is generally higher per claim for small clinics because of lower volume requirements.,

That said, in-house billing teams have upfront expenses for which outsourced medical billing companies don’t charge you. Labor, software, training, and hardware are all significant upfront costs that are not charged to you by a third-party billing company.

Advantage: Billing Company


Outsourcing your medical billing process means giving up some control over the billing process. This aspect of “control” with in-house billing is multifaceted and can be broken down into the following points:

  • Decision-making authorities
  • Customization
  • Integration
  • Patient Communication

Advantage: In-House Billing

Customer Service

Patients might see discrepancies in their statement with the service provided. An in-house billing team allows immediate and direct communication between the provider and patient to resolve any issues, including payment inquiries or other concerns. This level of customer service can often only be achieved with an in-house billing team, as they can understand each patient’s needs and concerns much better than a third-party service. On top of this, an in-house billing team is a faster communication bridge between the providers and patients – this creates enhanced patient satisfaction, smoother cash flow, and improved patient loyalty.

Advantage: In-House Billing


Medical billing companies have specialized knowledge of complex systems, insurance requirements, and regulations. This technical knowledge helps providers maximize their claim submissions and avoid costly mistakes related to regulations and forms. While in-house teams do have the potential to accumulate the same knowledge base, it takes a significant amount of time and money from the provider to achieve this level of expertise.

Advantage: Billing Company


This is an important consideration when comparing outsourced billing companies to an in-house team. Maintaining accurate billing and coding protocol protects your practice from reimbursement denials, fines, penalties, litigation, and possible license loss. Medical billing companies are often more updated with the latest changes in healthcare regulations than in-house billing teams. Although we are confident that your in-house billing team has the necessary qualifications and experience, the ability to stay up-to-date is bottlenecked by time and capacity more than anything else. Outsourced companies often have a dedicated team to provide regular legalese training and maintain compliance.

Advantage: Billing Company

Project Scaling

As your business grows, so will your billing needs. An in-house billing team would be easier to customize and integrate with your current systems, such as EHR and practice management software. However, infrastructure, software, and staff training require significant investments of time and money.

A third-party billing company may be better equipped to handle your billing needs as you grow. They are also often more cost-efficient because you pay based on the volume of your billing. However, there may be limitations, penalties, or unforeseen expenses when rapidly scaling your business, as changes in contract requirements often come with added costs.

Advantage: Billing Company

Implementing Risk Measures

In-house and third-party billing each come with their own set of risks. Here’s a breakdown of the potential risks associated with each approach.

Hiring in-house comes with the risk of:

  • Operational error
  • Compliance
  • Overhead costs
  • Staff turnover
  • Training and development

Of these risks, we want to highlight the compliance and staffing risks for in-house billing teams. Compliance risks stem from ever-changing healthcare regulations. In contrast, staffing risks come from the possibility of critical members leaving the practice, which disrupts the billing process and leads to delays and revenue loss. Continuous training is essential to keep the team updated with the latest billing practices and ensure that contingencies are in place should key members leave the organization.

On the other hand, hiring a third-party billing service opens you up to:

  • Communication barriers
  • Contract limitations
  • Data security concerns
  • Hidden costs
  • Dependency

From this list, we want to highlight data security and dependency risks for third-party services. Data security is an issue because sharing sensitive patient data with a third party can pose security risks if the third party fails to set up robust data protection measures. Dependency is another risk that providers face when they over-rely on a third party to run their entire billing process.

Though it may be more costly, you have much more control when handling the risks of an in-house billing team than you do when dealing with third-party companies.

Advantage: In-House Billing

Hiring In-House Vs. Third-Party Medical Billing Service

Deciding if and when to outsource your medical billing is a task that directly impacts your bottom line.

If you remain uncertain about the path forward, we can help clear the confusion. Get in touch with us at Open Practice. If a billing company is the best bet for your practice, we can refer you to a biller who works in your specific state and specialty.

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