Pointers on Starting a Medical Billing Business

by Esa
(Philadelphia, PA)

I enjoyed reading your links. I am starting a new medical billing business myself and I wanted to get a few more pointers from someone well experienced such as yourself. What software do you use (billing software) and how much should I charge the doctors per claim or by percentage. Thanks in advance for your time.

With regard to software we currently use two different software programs; AltaPoint and Lytec. I don’t prefer using two different programs but one of our providers prefers their software and server. They are both capable programs but Lytec seems to be more popular and widely used. And Lytec was easier to set up with our clearinghouse. If you’ve searched for software you’ve noticed how many choices there are – it’s overwhelming!

One of the drawbacks of software is the initial cost, the cost of periodic updates (usually every year or two), and having to back up your data regularly. There’s also the cost of the operating system (we use Windows Server) and the hardware.

For doctors we sign up in the future I’m going to consider an online (browser based) billing software. One that looks very promising is Kareo (www.kareo.com). There’s also others like AdvancedMD. I like Kareo’s pricing options with no long term contracts and no up-front cost. It looks like they have a lot of billing service clients also. Check out their site and see what you think.

I think the price also includes clearinghouse charges. The only drawback with an online service is making sure you can periodically back-up the data just so you have a local copy available in case something happens with the software provider. It looks like Kareo allows this. I like the fact that you don’t have to mess with updates, daily backups, servers, software purchases and updates, etc. and you can just concentrate on billing. Software and computers setup can be a real headache and cost sometimes.

As far as pricing – where I’m located it typically ranges from 6% to 10% depending on the practice and services offered – typically in the 7 to 8% range for a family doctor practice that wants full service – claim submission, patient statements, follow-up on unpaid claims, patient inquires. I have charged a per claim fee when the doctor only wanted claim filing. This is typically in the $3 to $5 range – just make sure you can cover your costs and still pay yourself. I’ve made the mistake of charging to low a fee just to get a client and ended up barely breaking even.

I also tried to cover fees and pricing in more depth on our Medical Billing Fees Page.

Advice from my accountant is you typically want to price your services so you make at least three times your costs. Your costs would be clearinghouse, postage, patient statements, labor, supplies, printer toner, software fees, etc. Probably our biggest cost is patient statements, clearinghouse, and labor. Patient statements for a large busy practice can be $200 to $300 a month. Part time labor may be necessary as you grow as in my case – figure anywhere from $8/hour to $13/hour.

Hope this helps – let me know if you need clarification of have more questions.


Join in and write your own page! It’s easy to do. How? Simply click here to return to Your Questions.