You have to have someone in charge of handling dental insurance billing in your office.
In today’s ever changing dental insurance world, the dental claim tasks are too in depth to have your check-in or check-out person, or even your office manager assuming these responsibilities in addition to practice management.
You may be soon forced to make a decision between outsourcing and hiring an in-house insurance coordinator. At the end of the day, your real goal is to just make sure your insurance billing is handled correctly. You want whoever is filing your claims to be efficient and effective. You want to get paid for what you produce.
As a remote dental billing company, Dental ClaimSupport has seen many dentists, like yourself, struggle with the option of insourcing vs outsourcing. Each path has its pros and cons. We understand that outsourcing may not be for everyone, but we also believe that it is very beneficial for a majority of dental practices.
In this article, we aim to give you an honest and detailed comparison of the costs of outsourced dental billing and the alternative you have with insourcing. For an apples to apples comparison, let’s assume that both outsourcing and in-house dental billing would produce the exact same results for your insurance revenues.
How much does outsourced dental billing cost?
There is one main factor that affects your costs for outsourced dental billing. This factor is the size of your practice. And the size of your practice is measured by your insurance revenue collected each month.
These are the different tiers of insurance collections:
- Under $40k
- Between $40k-$100k
- Between $100k-$150k
- Between $150-$200k
- Over $200k
These are some examples of the the average costs ranges of outsourced dental billing based on the monthly insurance collections:
- $25k Collected = Avg. Monthly Cost Range $1,250-$1,300
- $50k Collected = Avg. Monthly Cost $1,750
- $75k Collected = Avg. Monthly Cost $2,625
- $125k Collected = Avg. Monthly Cost $4,250
- $175k Collected = Avg. Monthly Cost Range $5,125-$5,625
- $250k Collected = Avg. Monthly Cost Range $6,000-$7,250
The average dental practice’s insurance collection is around $45k per month.
Overall, the average cost for outsourced dental billing is about $1,500-$1,600 per month,
or $18,000 to $19,2000 per year.
According to a 2020 Ziprecruiter article, a dental office insurance coordinator (in-house) salary average is $18.26 per hour.
An insurance coordinator earning $18.26 per hour will actually cost you between $47,476 and $53,173 per year in salary cost.
In-house W2 employees also have overhead costs above and beyond their hourly or salary rate. W2 employees for any business cost on average 1.25 to 1.4 times base salary range. This extra compensation includes employer taxes such as social security, federal and state unemployment, Medicare, workers’ comp insurance, payroll costs, as well as any benefits you may offer.
This means you can expect the total compensation for one of these employees to be 25% to 40% higher than their base salary.
At $18.26 per hour, your average dental insurance coordinator costs your practice $50,325 in annual salary, which includes the benefits and employer taxes. Any bonuses given to W2 employees would be additional to this calculation.
Can I save money by outsourcing my dental billing versus hiring someone in-house?
Depending on your monthly insurance collections, you may be able to save more or less than the averages we have used in these examples.
Perhaps, based on your location, you may also be paying (or about to hire) someone for more than $18.26 per hour.
If we go by the average dental practice collecting around $45k per month AND the average insurance coordinator making $18.26 per hour, here are the results:
- In-house insurance coordinator costs: $50,325 per year
- Outsourcing dental billing costs: $18,900 per year
- Subtracted Difference: $31,425 savings per year
If you are collecting $45k per month (insurance collections) and paying an in-house employee $18.26 per hour, you would save over $30k per year on average by outsourcing your dental billing.
What if we have multiple people handling our claims in-house?
You do need to consider how many employees you will have working on your dental insurance related tasks such as sending claims, working insurance aging reports, and posting dental insurance payments. Some offices have insurance coordinators along with the office managers managing these tasks, or possibly 2-3 employees dedicated to dental insurance.
Having multiple in-house employees handling your dental billing will impact the costs breakdown, and these must be considered in any calculation.
What’s the breakeven point between in-house and outsourced dental billing?
From our example above, with one in-house employee making $18.26 per hour in-house, this equates their annual salary to $50,325 per year. If you break this down monthly, you are paying about $4,200 per month to have in-house dental billing services.
- ($50,325 yearly / 12 months = $4,193.75 per month)
With this scenario, to breakeven with outsourcing you need to be collecting around $123k in insurance collections per month.
- $123,000 monthly insurance collections would break down to:
- The first $100,000 x 3.5% = $3500 plus
- The remaining $23,000 x 3% = $690
- $3500 + $690 = $4,190 monthly cost
Once you start adding additional W2 employees, you must begin to take this into account in your calculations. For example, if you have two employees making $18.26 each, then your breakeven point would be over $300k in insurance collections per month.
What other factors should I consider when comparing outsourcing vs. in-house dental billing?
Cost is inevitably a large factor when you are considering which path you should take. In addition to costs there are other factors such as expertise, your time, and even your patient experience.
An additional item to consider when comparing the breakeven costs between in-house and outsourcing is the business tax benefits. Considering the services provided by an outsourced dental billing company, you should speak with your accountant about the benefits of expensing the costs of outsourcing.
Ultimately, dental billing and insurance coding can be challenging, and that should not be taken lightly when comparing in-house versus hiring an expert.