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Medical software and services pricing

You basically have two options for purchasing medical software for your practice: an in-house model that’s installed on your servers and maintained by your staff, or application service provider (ASP) that you access through the Internet and that the vendor hosts on his servers.

As a general rule of thumb, in-house software is the most expensive up front and requires skilled IT professionals to maintain but affords you the total ownership of your system. ASP is considerably cheaper up front and requires monthly fees for accessing the technology. However, no Internet connection stays up and running 100% of the time so if there’s a system failure, natural disaster, or virus, you may not be able to access your data.

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MPM and EMR costs
If you're purchasing in-house software, pricing starts between $1,500 and $4,000 and can go as high as $10,000 to $15,000 and more depending on the complexity and customization of the software. You also may need to purchase servers and hardware to properly maintain the software which can run in excess of $40,000 to $50,000 so expect to budget for that as well.

The pricing can be made up of different factors including the number of doctors using the software, the number of different users accessing the technology at one time, and how many computers will have the software installed. While the up-front investment can be high, the vendor may work out a payment schedule with you so you can spread the cost out over time.

For a lesser burden on your budget, ASP software involves considerably smaller expenses ($500 to $1,000) and a monthly fee for the service that can cost $40 to $350. Unlike other types of software, MPM vendors may charge for usage rather than a flat fee with costs ranging from 50 cents to $1.00 for each transaction.

In addition to set up and monthly costs, you could be responsible for another set of costs if they aren’t included in the pricing. This may include data transfer and exportation fees, additional service and support, intensive training, software branding, and more. Depending on the vendor, you may have to pay for software upgrades for in-house applications; ASP vendors typically include updates in the monthly fee.

Two important things to keep in mind:

  1. The vendor should provide a detailed list of all fees that you are responsible for.
  2. You should be able to take data with you if you decide to cease working with a particular vendor. It's dangerous to trust your vital patient information to an application that could lock you out if you want to go elsewhere.

Medical transcription costs
Vendors base their prices on each line of text that is transcribed – typically 65 characters with spaces. This cost can range from 7 to 20 cents per line with an average price of 12 to 15 cents. If you only need a series of short reports transcribed, a vendor may provide pricing per report. Make sure to work that out with the vendor before agreeing to work with him.

A quality digital recorder can be purchased for $200 to $300 and allows you to convert the audio to any format you wish. Avoid low-cost recorders that may not provide top audio quality Otherwise, the vendor will provide a toll-free number to call in notes as part of their service offering.

Additional factors that could impact pricing include transcription volume, extra-fast turnaround, and transcription services for specific industries that may require specialists in a particular practice.

While signing a contract is not necessary, you could lock in a better rate for your practice. Make sure you are 100% comfortable with a vendor before making that commitment as you may be responsible for cancellation fees if you need to break the agreement.

Medical billing services pricing
Pricing for a medical billing service can either be based on a percentage of business, or a flat rate. Regardless which method the billing service uses, you could save money in the long run since you wouldn’t have to pay the perks and benefits of a full-time staffer to handle the billing.

Percentage-based pricing model
A medical billing service that bases rates on percentage can charge 3% to 18% based on the number of claims processed, the total dollar value of submitted claims, and how many services the vendor offers. Expect to pay the higher-end for full service medical billing that also includes customer support, full reporting of activities, research and follow-ups, and staffing assistance.

The rate of return will vary greatly based on the percentage. Since primary care doctors deal with several high-volume, low-dollar office visits, you will pay considerably more for billing services – 8% to 18%. A surgeon with fewer claims for a lot more money per claim could charge as low as 3% to 8%.

Another thing to consider is how the percentage is based. The billing service may charge you a percentage of collections (all claims the service submits), a percentage of gross claims (the total dollar amount the service submits), or a percentage of total collections (all collections for your entire practice). Paying a percentage of total collections is the costliest option but the billing service usually provides additional HR-type services such as staffing and scheduling in addition to billing responsibilities.

Flat fee pricing model
With a flat rate, a medical practice pays a pre-determined fee for each submitted claim regardless of dollar value. The amount the billing service charges is based on the number of claims and the range of services provided. Typical flat fees start at $1 to $3 per claim and can reach prices of $10 or more depending on the number of additional services provided.

While you can get a very low fixed rate, direct attention from a billing service can vary. Since the vendor makes the same amount regardless of the claim, they may not devote similar amounts of time to a particular claim that a percentage-based service would.

Another downside to flat fee pricing is it’s very difficult to collect most of the money with single invoice submissions. If the fee only covers the initial submission, you’ll need internal staff to follow-up on claims. So essentially, you’ll be paying for the same service TWICE for a single invoice! Paying a flat fee for basic services could result in paying for the service but not getting as much as you had hoped in return.