Billing cost
Outsourcing vs In-House Billing Calculator
Compare the annual cost of in-house dental billing with a percentage-of-collections outsourced fee and find the break-even rate.
Estimated result
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Annual difference (in-house minus outsourced)
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Break-even outsourced fee
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- Annual outsourced fee
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- Total annual cost if outsourced
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- Monthly difference
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- In-house cost as % of collections
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Estimates only, based on your inputs and the assumptions below. Not a guarantee of results or professional advice. Inputs stay in your browser.
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Quick answer
What does the outsourcing vs in-house billing calculator measure?
This calculator compares what a dental practice spends to run insurance billing in house with what an outsourced dental billing service would cost at a given percentage of collections, plus any costs you would keep. It shows the annual difference and the break-even fee: the highest percentage at which outsourcing costs no more than in-house billing.
Formula
Outsourced fee = Annual collections x Fee %
Annual cost of a percentage-of-collections arrangement.
Outsourced total = Outsourced fee + Retained costs
Costs that do not go away are added back.
Annual difference = In-house cost - Outsourced total
Positive means outsourcing costs less; negative means it costs more.
In-house % = In-house cost / Annual collections x 100
Your current cost on the same basis as a percentage fee.
Break-even fee % = (In-house cost - Retained costs) / Annual collections x 100
The fee at which both options cost the same.
Worked example
A multi-dentist practice spends $175,000 a year on in-house dental billing against $2,400,000 in collections, or 175,000 / 2,400,000 = 7.29%. A 6% fee would be 2,400,000 x 0.06 = $144,000, plus $10,000 in retained costs for a total of $154,000. The difference is 175,000 - 154,000 = $21,000 a year ($1,750 a month). The break-even fee is (175,000 - 10,000) / 2,400,000 = 6.875%, shown as 6.88%.
| Total annual in-house dental billing cost | $175,000 |
|---|---|
| Annual collections | $2,400,000 |
| Outsourced fee (% of collections) | 6% |
| Annual costs you keep after outsourcing | $10,000 |
| Annual outsourced fee | $144,000 |
| Total annual cost if outsourced | $154,000 |
| Annual difference (in-house minus outsourced) | $21,000 |
| Monthly difference | $1,750 |
| In-house cost as % of collections | 7.29% |
| Break-even outsourced fee | 6.88% |
Assumptions and limits
- The outsourced fee is a flat percentage of all collections. Tiered, per-claim or minimum-fee pricing needs separate math.
- Collections are the same under both options. Any change in collection performance is not included here.
- The in-house cost already includes the retained costs you enter.
- One-time transition costs, such as cleaning up old insurance aging before handover, are not included.
Frequently asked questions
Is it cheaper to outsource dental billing or keep it in house?
It depends on your total in-house cost compared with the outsourced fee on your collections. If your in-house dental billing cost as a percentage of collections is above the fee you are quoted, outsourcing is likely to cost less on a pure cost basis. This calculator shows that comparison and the break-even fee for your numbers.
What is the break-even outsourced fee?
The break-even fee is the percentage of collections at which outsourcing costs exactly what in-house dental billing costs today, after accounting for costs you would keep. Any quoted fee below it would cost less, and any fee above it would cost more. It is a useful number to have in mind when reviewing proposals from dental billing companies.
What are retained costs for a dental practice?
Retained costs are expenses that continue after you outsource. Examples include your practice management software, clearinghouse or attachment fees not covered by the vendor, and front desk time spent presenting estimates and collecting at the visit. Leaving these out makes outsourcing look cheaper than it is, so include anything that will not go away.
Why does this calculator ignore changes in collections?
It focuses on cost so the comparison stays transparent and does not depend on a guess about performance. Changes in collections can be larger than cost differences, in either direction. To model an assumed change in collections together with cost, use the dental practice ROI calculator, which counts each effect once.
Written by the Texas Solutions RCM team. Last reviewed . General information, not legal or coding advice; payer rules vary.
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