One of the things that significantly impacts health center finances is the hidden cost of collecting revenue. Most health centers think about the direct costs of collecting revenue, such as payroll expenses, taxes, and employee benefits. It is shocking to realize the number of people involved in the billing process and the hidden costs.
When we look at the real world data of a health center with 80,000 encounters annually, the labor costs equate to $343,838 for a fully staffed billing department. The "soft costs," or indirect expenses, equate to $17,500. Meanwhile, the "opportunity costs," or bad debt allowance, is $355,268 (5% of charge revenue). Factoring these numbers together, as outlined in the table, indicates an average cost to collect of 13.42%. That's a significant sum and calculated using real-world data.