TRAKnet Podiatric Billing Service White Paper
As economic pressures gain a grip on medical practices and stress their resources, addressing the concept of “Opportunity Cost” becomes instrumental. In microeconomics terms, an opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
Medicine is rapidly becoming a hybrid of medical care (patient care) and non medical care (business management, billing, etc). Unfortunately, unless resources are unlimited, we cannot devote time to one without sacrificing time devoted to another. That is the applicable opportunity cost. Economists use what’s known as a Production Possibility Frontier (PPF) curve to explore where maximum growth potentials exist. Below might be a PPF curve for Acme Podiatry. It demonstrates the “something has to give” concept of opportunity costs.
Now let’s consider the true costs associated with the billing process of a practice. According to national averages, a full time biller costs approximately $35,000 per year (salary, taxes, benefits) and for each $600,000 in collections, a full time biller is required. So a practice doing $1.2M in collections would typically require 2 full time billers. Using these national averages, the costs of the billers related to collections would be….