Summary: It is easy to think of medical answering services as just another monthly bill a practice needs to pay. But after-hours calls need to be handled. So it is necessary to understand whether in-house or outsourced call management is more financially viable.
The after-hours medical answering service solution is often viewed through a clinical-only lens. In other words, handling incoming calls is exclusively about ensuring patient safety and provider coverage. But the CFO and business manager have a different, non-clinical perspective. They need to look at in-house call management versus an outsourced medical answering service from a cost-benefit angle.
Justifying the expense of a medical answering service can be difficult if the only point of consideration is the monthly invoice. To truly understand cost benefit, it is necessary to look more deeply into the financial anatomy of both options. Doing so accounts for the hidden costs and overhead of in-house call management contrasted with the scalability and efficiency of an outsourced service.
The In-House Option: Fully Burdened
There is a trap inherent in calculating the cost of in-house call management: looking only at hourly wages. There is a lot more to it than that. To get an accurate cost analysis, it is necessary to calculate the fully burdened labor cost.
Fully burdened labor cost is generally defined as the total cost of keeping an employee on the payroll. It includes base salary, benefits, payroll taxes, and any overhead expenses. It accounts for the actual cost of labor rather than focusing solely on an employee’s paycheck.
The Overhead
When a practice relies on internal staff to cover the phones after hours, they are paying for more than just time spent on the phone. There is plenty of overhead included here:
- Benefits and Taxes – FICA automatically adds 7.65% of an employee’s base salary. Health insurance, 401k contributions, and other benefits can add 25-40%.
- Hiring Costs – The costs of recruiting, interviewing, and onboarding a new employee can run as high as $5,000 per position in the current labor market.
- Turnover – Turnover is rather high for front-office medical roles. Every time an employee decides to leave, the amount of money invested in hiring and training is lost. Now the practice must hire and train someone new, at an additional cost.
In addition to overhead costs, there are costs associated with technology. An in-house call center needs certain things:
- Sufficient physical space.
- Redundant, high-speed internet.
- HIPAA-compliant hardware and software.
- Specialized software licenses.
Facility and technology costs remain consistent regardless of call volume. When call volume is low, a practice could easily be paying for excess that must remain in place in case call volume increase. This is financially inefficient.
The Outsourced Option: Variable Costs
If the biggest downside to the in-house option is fully burdened labor, the biggest advantage to the outsourced model is being able to transition from fixed costs to their variable counterpart. Fixed costs do not change based on call volume. Variable costs do. That is because medical answering services scale according to a practice’s needs.
How Services Are Priced
Medical answering services can adopt any number of pricing models. Generally speaking, however, there are two pricing structures under which most answering services operate:
- Unit or Minute – Pricing based on units or minutes dictates that the client only pays for the amount of time operators spend actively handling phone calls. This is the ideal model for practices with fluctuating call volumes.
- Flat-Rate Tiered – Flat-rate pricing sets a monthly fee for all services. Fees are tiered based on call volume range. The advantage of this model is budgetary certainty. Business managers know how much they will be spending each month. However, things are still scalable. A practice can move in and out of tiers as needed.
With in-house call management, a practice must pay staff to be available even when the phones are not ringing. Practices can ultimately end up paying after-hours staff to sit around and do nothing for long periods of time.
On the other hand, outsourcing medical answering services allows a practice to save by way of a shared resource environment. All the clients an answering service works with benefit from the entire pool of on-staff operators without having to take on the financial burden of downtime. From the answering service’s perspective, there is little-to-no downtime because client volume keeps the calls coming.
The Training and Compliance Issue
Moving on to hidden costs, consider the training and compliance issue. In the medical industry, a communication mistake isn’t a mere inconvenience or administrative problem. It is also a potential legal and clinical liability. In order to mitigate such liabilities, operators must be fully trained in:
- HIPAA compliance.
- Medical triage.
- EMR integration and best practices.
A medical answering service absorbs all these costs as a normal part of doing business. Service providers maintain their own compliance officers and training departments. This ensures that all operators receive full introductory training along with ongoing training to maintain standards. Practices aren’t faced with the costs of compliance. They also reduce the risk of legal and liability actions taken against them. That means more money saved.
A Question of Management
From the practice manager’s standpoint, it boils down to one basic question: What needs to be managed? A deep dive into the anatomy of medical answering services makes clear that practices can manage either people or outcomes.
Maintaining an in-house call center involves managing people. Practice managers need to deal with shift schedules and call-outs. They need to conduct performance reviews. Someone in the practice also needs to troubleshoot technical problems.
On the other hand, outsourcing answering services transitions the practice manager to pay attention to outcomes. They only need to pay attention to how well the answering service is performing its duties and whether their services are aligned with budgetary constraints.
Here an Apello, we have built a successful business providing high-quality medical answering services to clients who demand the very best. We understand the temptation of trying to save a little money by handling after-hours calls in-house. But when you look more deeply into the labor costs, overhead, and hidden costs of in-house call management, it is harder to justify the perceived savings.
FAQs
What is ‘fully burdened’ labor cost in a business setting?
Fully burdened cost is a measurement of the total cost of employing someone. It includes everything from salary to benefits and payroll taxes to overhead.
What are the hidden costs of in-house call management?
The costs start with base salary. Then a practice adds the costs of recruiting and hiring, onboarding, training, and ongoing compliance.
How does turnover impact in-house call centers?
High turnover rates force practices to continually recruit and hire. Every new hire must be on boarded. If turnover is too high, a call center suffers from a lack of continuity.
What is per-unit/per-minute pricing?
The cost of medical answering services is based on the total time operators spend handling incoming calls. Monthly costs vary based on call volume.
What is flat-rate pricing?
This pricing structure builds practices a set monthly fee in exchange for handling a certain volume of calls. Flat-rate pricing is tiered based on call volume.
