Medical Billing Cost Calculator
| In-House [Annual] | Outsourced [Annual] | Do It Yourself and Compare [Annual] | |
|---|---|---|---|
| Billing Staff Salaries (Two employees at a salary of $3,800 per month each + 30% in taxes and benefits) | $103,360 | $0 | |
| Billing Software Cost ($150/provider/month) | $3,600 | $0 | |
| Hardware costs (Printer, cartridge, workstation) | $500 | $500 | |
| Continued Education Training Cost | $3,000 | $1,000 | |
| Ancillary Costs (Office Space/Office Supplies, Patient Statements, Others) | $8,000 | $0 | |
| Direct Electronic Eligibility Verification & Claim Processing Cost (Clearinghouse Fees $99/provider) | $2,376 | $105,000 (6% of collections) | |
| Gross Collections | $2,500,000 | $2,500,000 | |
| %age of Gross Collections (including Adjustments, Write-offs, and Bad Debts) | 60% | 68% | |
| Net Collections | $1,500,000 (60% of $2,500,000) | $1,700,000 (68% of $2,500,000) (modest 8% increase in collections with third-party) | |
| Total Collection Costs | $120,836 | $106,500 | |
| Net Collections | $1,379,164 | $1,593,500 | |
| Final Savings | $214,336 |
Savings Calculator for 3 Physician Practice
| In-House [Annual] | Outsourced [Annual] | Do It Yourself and Compare [Annual] | |
|---|---|---|---|
| Billing Staff Salaries (Two employees at a salary of $3,800 per month each + 30% in taxes and benefits) | $103,360 | $0 | |
| Billing Software Cost ($150/provider/month) | $3,600 | $0 | |
| Hardware costs (Printer, cartridge, workstation) | $500 | $500 | |
| Continued Education Training Cost | $3,000 | $1,000 | |
| Ancillary Costs (Office Space/Office Supplies, Patient Statements, Others) | $8,000 | $0 | |
| Direct Electronic Eligibility Verification & Claim Processing Cost (Clearinghouse Fees $99/provider) | $2,376 | $105,000 (6% of collections) | |
| Gross Collections | $2,500,000 | $2,500,000 | |
| %age of Gross Collections (including Adjustments, Write-offs, and Bad Debts) | 60% | 68% | |
| Net Collections | $1,500,000 (60% of $2,500,000) | $1,700,000 (68% of $2,500,000) (modest 8% increase in collections with third-party) | |
| Total Collection Costs | $120,836 | $106,500 | |
| Net Collections | $1,379,164 | $1,593,500 | |
| Final Savings | $214,336 |
How to Get the Most Out of This Calculator
This calculator gives you a real, side-by-side look at what medical billing actually costs a practice, whether you handle it in-house or partner with a billing service. The default figures are built around a 3-physician practice bringing in roughly $2.5 million in gross collections each year. If your setup looks different, the "Do It Yourself and Compare" column is where you swap in your actual numbers to get a picture that matches your practice.
Step-by-Step: Entering Your Own Numbers
- Start with your total staff cost. Pull your billing team's base salaries from payroll, then add 25 to 35 percent on top to account for employer taxes, health benefits, paid time off, and any bonuses. Most practices with two full-time billing staff land between $80,000 and $125,000 annually all-in.
- Add your billing software cost. This is your practice management or dedicated billing platform subscription. If your EHR bundles billing features together, only count the portion specifically tied to billing.
- Include hardware and supply costs. Think printers, toner cartridges, and any workstations used primarily by billing staff. For most practices, this comes in between $300 and $800 per year.
- Factor in training and education expenses. This includes coding seminars, AAPC or AHIMA memberships, annual CEU subscriptions, and any compliance training you invest in to keep your team current.
- Account for ancillary costs. This line catches what most practices forget: the share of office rent tied to billing staff space, paper, patient statement printing, mailing costs, and postage. These add up faster than expected over a full year.
- Enter your gross collections. This is the total amount billed to insurers before any adjustments or write-offs. Your practice management system's annual billing report will have this, usually labeled "Total Charges" or "Gross Billed."
- Set your collection percentage. This is the share of billed charges your practice actually collects after adjustments, write-offs, and bad debt. If you're not sure of your rate, run a "Net Collection Rate" report from your billing software. In-house teams typically land between 55 and 65 percent. Focused outsourced billing services consistently hit 65 to 75 percent.
- Click Calculate. The tool will compute your total annual billing costs and show you exactly where you stand versus the outsourced scenario, including the net savings difference.
Understanding What Your Results Are Telling You
The savings figure at the bottom is not just about cutting overhead costs. It reflects two things working together: lower operating expenses and a higher collection rate. For most practices, that second factor is where the real difference lives.
Here is a practical way to think about it. A 6 to 8 percent improvement in your collection rate on $2.5 million in gross revenue is $150,000 to $200,000 in additional annual revenue. That number frequently outweighs whatever you'd save on salaries or software alone. So when you read your results, give the Net Collections row just as much attention as the Total Collection Costs row. The two together tell the complete story.
Outsourced billing teams tend to collect more from each claim not because they work harder, but because billing is their only job. They maintain dedicated denial management workflows, stay current with payer rule changes across every specialty, and follow up on accounts receivable with a consistency that's genuinely difficult to sustain in-house when your billing staff also handles patient scheduling, phones, and prior authorizations.
Where to Find Each Number for Your Practice
| Line Item | Where to Find It |
|---|---|
| Billing Staff Salaries | Payroll records or your HR platform; add 30% to base pay to capture taxes and benefits |
| Billing Software Cost | Your billing vendor invoice or practice management subscription statement |
| Hardware Costs | Review the last 12 months of office supply expenses in your accounting software |
| Continued Education Training | AAPC or AHIMA membership fees, seminar registrations, coding course subscriptions |
| Ancillary Costs | Allocate a share of rent based on billing staff square footage, then add postage and statement printing from your expense ledger |
| Gross Collections | Annual billing summary in your practice management system, look for "Total Charges" or "Gross Billed" |
| Collection Rate Percentage | Run a "Net Collection Rate" report from your billing or EHR dashboard |
Frequently Asked Questions
Why does the calculator use 60% for in-house and 68% for outsourced collection rates?
These figures come from aggregated benchmarks across multi-physician practices. In-house billing staff who split their time between billing and other front-office duties typically collect between 55 and 65 percent of gross charges. Third-party billing services focused entirely on revenue cycle management consistently hit 65 to 75 percent. The 8-point gap used here is intentionally on the conservative side. The real difference at many practices is wider.
Can I save or share my calculator results?
Yes. Click the Print button to generate a formatted, PDF-ready summary that includes all your inputs alongside the full comparison. You can save it to your device or share it with your practice manager, CFO, or whoever is part of the billing decision conversation.
The outsourced column shows $105,000 in clearinghouse and service fees. What exactly does that cover?
That figure represents 6% of gross collections, which is the standard rate for a full-service medical billing company. It is not just clearinghouse fees. It covers the complete revenue cycle: claim submission, real-time eligibility verification, denial management, payment posting, patient statements, and accounts receivable follow-up. When compared to the true all-in cost of in-house billing including salaries, software, training, and overhead, the outsourced total is typically lower, and the improved collection rate on top makes the comparison more favorable still.
My practice has more than 3 physicians. Will this still work?
Absolutely. The "Do It Yourself and Compare" column is built for exactly this situation. Enter your actual payroll costs, your real software and overhead numbers, and your gross collections figure. The calculator will project savings based on your specific practice rather than the 3-physician baseline. Larger groups tend to see proportionally greater savings since denial management and AR follow-up inefficiencies compound with volume.
Is the projected collection rate improvement realistic for my practice?
For practices currently running below 65%, yes, the improvement shown here is realistic and often conservative. The most common causes of underperformance are denials written off without appeals, eligibility errors caught too late, and claims aging past the timely filing window. Dedicated billing teams have workflows specifically designed to intercept these issues before they become lost revenue, not as a secondary task but as the primary one.
What if I just want to see whether my current billing setup is performing well?
Enter your real numbers into the "Do It Yourself" column and hit Calculate. If your net collections in that column are close to or above the outsourced column result, your in-house team is performing well. If there's a large gap, it's worth digging into your denial rate, your AR aging report, and your net collection rate to understand where revenue is leaking.
Want a Personalized Billing Cost Analysis?
The calculator gives you a reliable estimate, but every practice has a different payer mix, staffing situation, and denial pattern. If you want to see what OmniMD's billing team would actually cost compared to what you're spending today, along with a real collection rate projection based on your specialty, request a no-obligation analysis from the OmniMD billing team.
Request a Free Billing Analysis