What Happens When Billing Is Optimized?

Posted on May 27, 2015 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

In my recent EHR workshop in Dubai I talked with them about the many changing EHR business models that I’ve seen over the last 10 years. I was really trying to highlight how these new business models have generally been good for healthcare since it’s caused EHR prices to drop to a much more reasonable price point.

Take for example the Free EHR model. Whether you love it or hate it, one thing is certain: Free EHR has caused all the other EHR vendors to lower their price. I’ve seen this over and over again with EHR vendors. It’s hard to compete with an overpriced product against free. So, they had to lower their price so that the price of their EHR didn’t look as bad against free.

One model that I mentioned to those who attended my workshop was that some EHR vendors charge a percentage of billing in order to use their EHR software. athenahealth is the most famous for this approach. Their business model has worked pretty well for them because they’re able to say that not only will the practice get the EHR software for free, but athenahealth also can make the case that by having them assist with the practices billing, then they can help to better optimize the practices billing as well. So, the practice is getting more effective billing and a free EHR. This is why athenahealth could charge such a high percentage of an organization’s billing.

Turns out that there are a lot of billing companies that make a similar business case. Pay me 4-6% of your billing and we’ll optimize your billing which will actually make you more money than you’re paying us. Most of the billing management companies work off of this approach. Of course, this approach works best when you’re talking about practices that aren’t doing a good job managing their billing. This actually seems to apply to most practices.

What I’ve started to wonder is what’s going to happen once all of these practices’ billing is basically optimized? Now the percentage of billing starts to feel really expensive. Practices won’t be good at realizing the optimization that’s occurred and I’m sure that many will choose to take on the billing again. As they take on the billing, they’ll head back to a less than optimized state and then they’ll be ripe pickings for a billing company again.

I can see this cycle happening over and over again. Plus, if you’re a billing company or a company like athenahealth that makes your money off of a percentage of billing, then there’s always new practices that are at every stage of the cycle. So, there’s new business all over the place. The key for these organizations is to find the practices that are at the right place in the cycle.

Will anything happen to stop this cycle?