An assumption is made that monthly gross revenue for the practice is $50,000.

Also, even though Tokay Medical Billing feels that they will be able to increase revenues, no adjustment is made for this potential increase.

MONTHLY COST OF IN-HOUSE BILLING Employee Salary $2,500 Employee Taxes & Benefits $500 Employee Vacation/Sick Leave $600 Employee Training/Seminars $600 Computer Hardware/Software $500 Claim Forms/Patient Statements $250 Postage $250 Long-Distant Telephone $100     Total $5,300

COST OF A BILLING SERVICE 6.5% OF COLLECTIONS $3,250

Based on the above figures, in-house billing costs 11% of collections as opposed to a billing service’s 6.5%. In addition, no allowance was made for increased collections by the professional billing service.