In-House or Outsourced? Run the Real Numbers.
Most in-house vs. outsourced comparisons put a billing company’s fee against one salary. That isn’t the real comparison. This calculator adds benefits, software, clearinghouse fees, and statements, then shows both options as a share of collections.
- Your fully loaded in-house cost to collect
- The outsourcing fee at which you break even
- Net revenue kept under each option
Runs entirely in your browser — nothing you enter is stored or sent anywhere.
In-house billing, fully loaded
BLS median for medical records specialists: $50,250.
Outsourced alternative
Your in-house cost to collect
8.8%
$157,650 a year to collect $1.8M. Outsourcing breaks even at a fee of 8.8% — before any change in what gets collected.
Staff, fully loaded
$131K
salary + benefits
Kept in-house
$1.6M
collections − cost
Outsourcing gain
$50K
net revenue per year
Leave “expected change in collections” at 0 unless you have evidence for it — the honest comparison is cost against cost. Turnover, vacancy cover, and management time are real in-house costs this tool doesn’t include.
How It Works
Compare Cost Against Cost — Then Look at Collections
Cost to collect is total revenue-cycle spend divided by collections. It turns two very different cost structures — payroll plus software versus a percentage fee — into one comparable number. The second question is what each option actually collects, because a one-point change in net collection rate usually outweighs a one-point difference in fee.
The formula
Cost to collect = (Staff + Benefits + Software + Clearinghouse + Other) ÷ Net collections × 100
For the outsourced side, the cost is simply the vendor percentage — plus any fees billed outside the percentage, which you should add to “other”.
Below ~$1.5M
Outsourcing usually wins
Fixed staff and software costs are spread over a small revenue base, and one biller leaving can stop cash flow. Our pricing guide walks through the numbers at three practice sizes.
Above ~$1.5M
It depends on performance
In-house teams gain scale advantages, but only if collection performance holds. Compare net collection rate and days in A/R, not just cost.
Either way
Read the contract
Setup fees, statement fees, credentialing charges, and which dollars the percentage applies to routinely add 15–30% to an outsourced quote.
What goes into the in-house number
| Cost line | Typical source of the figure | Often missed? |
|---|---|---|
| Biller salaries | Payroll — BLS median $50,250 (medical records specialists, May 2024) | No |
| Benefits & payroll taxes | Typically 25–35% on top of salary | Often |
| PM software & clearinghouse | Annual subscriptions, per-claim and per-ERA fees | Sometimes |
| Statements & patient billing | Print, postage, payment-portal fees | Often |
| Turnover & vacancy | Recruiting, training, and cash-flow dips during gaps | Almost always |
Questions
Frequently Asked Questions
What is a good cost to collect for a medical practice?
There is no single official benchmark for physician practices. As a rule of thumb, under about 4% of collections is lean, 4–8% is typical, and above 8% suggests the billing operation is undersized for its cost or under-collecting.
How much do outsourced medical billing companies charge?
Percentage-of-collections pricing commonly runs about 4–10%, with most small and mid-sized practices quoted 5–8%. Per-claim pricing typically runs $3–$10. Our pricing guide covers the fees that sit outside the headline rate.
Should I include the practice manager’s time?
If they spend meaningful time on billing — chasing A/R, handling patient billing calls, managing the biller — yes. Add an estimate to “other”. Leaving it out makes in-house look cheaper than it is.
Why does the calculator let me change collections for the outsourced option?
Because cost isn’t the only difference. If a billing partner raises net collection rate by even one or two points, that often outweighs the fee. Leave it at zero unless you have evidence — such as a vendor’s audited results for practices like yours.
Does outsourcing mean losing control of billing?
It shouldn’t. A good partner gives you real-time access to your practice-management system, monthly KPI reporting, and named contacts. Ask for those in writing before signing.
What about a hybrid model?
Common and often sensible: front-desk eligibility and point-of-service collection stay in-house, while coding, claims, denials, and A/R follow-up are outsourced. Model it by reducing FTEs here and adding the vendor fee.
Sources
- [1]U.S. Bureau of Labor Statistics — Medical Records Specialists, Occupational Outlook
- [2]MedVersify — How Much Do Medical Billing Services Cost in 2026?
This is an independent planning tool built by MedVersify from published methodology. It is not an official CMS, payer, or clinical tool, and results are estimates — confirm decisions against your own reports, payer contracts, and clinical judgment.
Keep Going
How Much Does Medical Billing Cost?
All four pricing models, the 11 fees that inflate a quote, and a worked comparison at three practice sizes.
Read the guideMedVersify Pricing
How we price, what’s included, and what our payment terms look like.
See pricingNet Collection Rate Calculator
The other half of the decision: how much of what you’re owed each option actually collects.
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