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Medical Billing Cost Calculator

What your billing actually costs in-house, against a percentage of collections — with your real cost to collect and the point where the two meet.

Use collections, not charges. Charges inflate every ratio here and are the most common reason these comparisons come out wrong.
Left at zero deliberately — see the note below.
In-house, per year
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Outsourced, per year
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Enter your annual collections, salary and the outsourced rate.

Cost to Collect Is the Only Fair Comparison

A salary and a percentage are not comparable numbers. One is fixed, one scales with revenue, and comparing them directly tells you nothing. Cost to collect — total billing cost divided by what you actually collected — puts both on the same footing.

Run it and the answer is usually less flattering to in-house billing than expected, because salary is rarely more than two thirds of the real cost. Employer taxes and benefits, the practice management system, clearinghouse fees, training, and cover during holiday and sick leave all belong in the total. Leave them out and in-house wins a comparison it would otherwise lose.

Why Volume Decides It

In-house cost is largely fixed. One biller costs roughly the same whether your practice collects $400,000 or $900,000, so cost to collect falls as you grow. A percentage of collections does the opposite: it rises in absolute terms with every dollar collected while staying constant as a ratio.

Those two lines cross somewhere, and where they cross is the whole decision. Below the crossing point a percentage is cheaper; above it, an efficient in-house team wins. The calculator shows you your own crossing point rather than a generic rule of thumb.

What the arithmetic cannot capture is fragility. One biller is also a single point of failure: when they are ill, on holiday, or leave, claims stop going out and the cost of that gap does not appear on any line above.

A Note on Whose Calculator This Is

We are a medical billing company. A calculator built by a billing company that quietly assumed outsourcing collects more would produce whatever answer we wanted, so this one does not: the expected change in collections field defaults to zero, and the comparison is cost against cost unless you deliberately model a difference.

If you do believe a change in collections is realistic — in either direction — put your own number in. But base it on your current denial rate and net collection rate rather than on anyone’s marketing. If your net collection rate is already in the high nineties, there is little for anyone to improve and the decision is purely about cost and capacity.

What the Cost Comparison Leaves Out

1
Immediacy. An in-house biller is down the corridor. Outsourced questions travel by email and wait their turn in someone else’s queue.
2
Continuity. A billing company absorbs illness, holiday and turnover. A single in-house biller does not, and that gap is invisible until it happens.
3
Specialty depth. Billing that hinges on unusual rules — infusion, anaesthesia, behavioural health — rewards people who see it daily, whichever side they sit on.
4
What is actually being done. A cheap arrangement that does not work denials is not cheap. Check your denial rate and your AR over 90 days before comparing prices at all.

Related

In-house vs outsourced medical billing covers the decision in full, and how much medical billing costs sets out the pricing models. To check the health of what you have now, use the net collection rate calculator and the AR aging analyzer.

Frequently Asked Questions

How much does outsourced medical billing cost?
Most billing companies charge a percentage of what they actually collect, with the rate depending on specialty, claim complexity and volume. Percentage-of-collections aligns the biller's incentive with yours; flat per-claim pricing does not, because a per-claim biller is paid the same whether the claim pays or not.
What is cost to collect?
Your total billing cost divided by what you actually collected, expressed as a percentage. It is the only number that lets you compare in-house and outsourced billing directly, because it normalises for practice size. Calculating it from charges rather than collections inflates the result and is the most common error.
What costs should I include for in-house billing?
Salary is usually less than two thirds of it. Add employer taxes and benefits, practice management and billing software, clearinghouse fees, ongoing training, and the cost of cover during holiday and sick leave. Comparisons that favour in-house have often quietly omitted two or three of those.
Is outsourcing always cheaper?
No. It depends on volume. In-house cost is largely fixed, so it becomes cheaper per dollar collected as a practice grows — a high-volume practice with an efficient existing team can beat a percentage rate comfortably. Smaller practices usually cannot, because one biller's fixed cost is spread over far less revenue.
Does this calculator assume a billing company collects more?
No, and that is deliberate. The collections-change field defaults to zero, so the comparison is cost-against-cost unless you choose to model a difference yourself. We are a billing company, and a calculator that quietly assumed we would collect more would not be worth using.

Want the Comparison Done on Your Real Numbers?

We will look at your collections, denial rate and AR and tell you honestly whether outsourcing would help — including when it would not. The first week is free.

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