Running a mental health treatment facility comes with a lot of responsibilities, and insurance billing is one of the most crucial—and complicated—tasks. Many facilities choose to handle billing in-house, thinking they’re saving money by keeping things internal. However, what often goes unnoticed are the hidden costs of DIY insurance billing.
These hidden costs add up in lost revenue, slower cash flow, increased staff burnout, and even higher denial rates. Let’s explore how these hidden factors may be hurting your facility more than you think.
1. Lost Revenue Due to Claim Denials
According to industry data, insurance companies deny anywhere from 5% to 10% of claims submitted by healthcare providers. Unfortunately, studies show that 65% of denied claims are never resubmitted, meaning facilities are losing out on thousands, even millions, in potential revenue.
For a facility billing $1 million annually, even a modest 5% denial rate results in $50,000 in lost revenue each year if claims aren’t resubmitted.
The Numbers:
Denial rates: 5%–10%
Unworked denied claims: 65%
Average cost of denied claims: $50,000+ annually (based on $1M revenue)
2. Slower Reimbursement Times
One of the most frustrating aspects of managing insurance billing in-house is how long it can take to get paid. Industry research from the Medical Group Management Association (MGMA) shows that outsourced billing services process claims up to 35% faster than in-house teams .
With internal billing staff often juggling multiple roles, it’s easy for claims to be delayed, slowing down cash flow. If claims are denied, further delays occur during the correction and resubmission process. Meanwhile, facilities that use specialized billing services report receiving payments more quickly, helping them maintain positive cash flow and avoid financial stress.
The Numbers:
Outsourced billing reduces processing times by up to 35%
Delays in claims lead to extended reimbursement periods, sometimes up to 90+ days
3. Higher Operational Costs
While on the surface, managing your own billing might seem cost-effective, it can actually be much more expensive in the long run. The staff responsible for billing need to be trained regularly on coding updates and insurance regulations, both of which change frequently. Facilities often underestimate the cost of training, software, and the time spent on rectifying errors.
In fact, the American Medical Association estimates that billing and insurance-related administrative costs make up about 15% of total revenue for healthcare providers . Add to that the cost of managing denied claims, and the price tag for doing it in-house can easily surpass the cost of outsourcing.
The Numbers:
15% of total revenue is spent on administrative costs
The average cost per claim denial rework is $25
4. Staff Burnout and Inefficiency
Billing is time-consuming and can contribute to burnout among your administrative staff. In-house billing personnel often wear multiple hats, handling front-office duties, patient scheduling, and financial management. According to a 2021 study by Medical Economics, insurance and billing responsibilities consume 20-30% of an administrative staff's time, detracting from other essential duties .
This divided focus can lead to inefficiencies, errors in claims submissions, and ultimately, higher denial rates.
The Numbers:
Billing tasks consume 20-30% of administrative time
Overworked staff face higher burnout risks, leading to more mistakes
5. Missed Revenue Opportunities
One of the biggest hidden costs is opportunity cost. In-house billing teams are often reactive, focused solely on processing the current stack of claims. Outsourced services, by contrast, take a proactive approach, identifying missed revenue opportunities and catching small errors before they become major financial setbacks.
A study by RevCycle Intelligence shows that facilities working with external billing services experience a 12% boost in revenue, thanks to their ability to identify revenue cycle gaps and prevent revenue leakage .
The Numbers:
External billing can increase revenue by 12%
Specialized services help reduce revenue leakage and identify billing inefficiencies
The Bottom Line: Is DIY Billing Worth It?
While managing insurance billing in-house may seem like a cost-saving measure at first, the hidden costs often outweigh the benefits. From lost revenue due to denied claims, slower reimbursements, and staff inefficiencies, to increased operational costs and burnout, handling billing internally can put your facility’s financial health at risk.
At Bridgeway Billing, we specialize in mental health billing, helping treatment facilities like yours streamline their processes, reduce denial rates, and maximize revenue.
Ready to reduce the hidden costs of billing? Let’s discuss how we can help your facility thrive.
Sources:
American Academy of Family Physicians (AAFP): "Insurance Claim Denials," AAFP. Source
MGMA: "Billing Benchmark Data," Medical Group Management Association. Source
American Medical Association (AMA): "Administrative Burden in Healthcare," AMA. Source
RevCycle Intelligence: "Boosting Revenue with External Billing," RevCycle Intelligence. Source
Medical Economics: "How Insurance Billing Contributes to Burnout," Medical Economics. Source
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