Business StrategyUpdated 2 min read
In-house billing costs and where outsourcing breaks even
Work out what one in-house biller costs from federal wage and benefits data, and where a percentage-of-collections fee breaks even.
Written by the billing team at Medical Billing Services for Small Practices
If you handle billing in-house, the payroll line is only part of the cost, so it is worth running the comparison with outsourcing on real numbers.
The salary and benefits gap
The Bureau of Labor Statistics reports a median annual wage of $51,140 for medical records specialists (May 2025 data).[1] Job titles and duties vary, so treat that as a rough reference point for billing and coding staff. BLS also reports that in June 2026 benefits made up 30.0% of employer compensation costs for private industry workers, and wages and salaries the other 70.0%.[2]
Here is the arithmetic. $51,140 divided by 0.70 is about $73,000 a year for one hire. That is an illustration built from national averages, not a quote for your area, and it comes before software, training and supervision.
Where a percentage fee breaks even
Suppose an outsourcing quote came in at 5% of collections, the rough benchmark an MGMA article gives for billing and revenue cycle cost.[3] That article cites no underlying data, and the figure covers in-house cost as well, so treat the result as an illustration rather than a verdict. At 5%, the fee equals the $73,000 estimate at about $122,000 in monthly collections ($73,057 divided by 0.05, divided by 12).
| Monthly collections | Annual fee at 5% | Against the $73,000 estimate |
|---|---|---|
| $60,000 | $36,000 | Lower |
| $100,000 | $60,000 | Lower |
| $122,000 | $73,200 | About equal |
| $150,000 | $90,000 | Higher |
| $250,000 | $150,000 | Higher |
Below the break-even the fee costs less than the estimate, and above it more. If your in-house cost is higher than the $73,000 estimate, the break-even moves up: at the same 5% rate you would need more in collections before the fee costs more than an in-house hire. For the wider pricing picture, read what outsourced medical billing costs.
Costs to add to the estimate
The $73,000 figure covers one person's pay and benefits. Before you compare it with a quote, add what your practice actually pays for the rest:
- Software and clearinghouse fees: your billing system subscription and per-claim charges.
- Training: coding education and payer updates for the biller.
- Supervision and recruiting: the time a manager spends on the role, and the cost of hiring again if the biller leaves.
- Coverage: who bills claims, verifies eligibility and works denials during vacations and sick days.
Then ask any outsourcing company which of these its quote includes, and get the answer in writing. To see where your billing stands today, request a free billing audit and we will review your aging report and denials.
Sources
- Occupational Employment and Wage Statistics data series OEUN000000000000029207213: annual median wage, Medical Records Specialists (SOC 29-2072), May 2025, U.S. Bureau of Labor Statistics Public Data API (machine-readable data)
- Employer Costs for Employee Compensation, June 2026, U.S. Bureau of Labor Statistics, released September 9, 2026
- Medical practice operating costs are still rising in 2025, MGMA Stat, June 11, 2025
This article is general information for practice staff, not legal, coding or compliance advice. Payer rules and Medicare policy change, so confirm current requirements with each payer before you bill.
