Understanding the Billing Staff-to-Provider Ratio in Medical Practices

What is the right billing staff to provider ratio in a physician practice?

Determining the ideal billing staff-to-provider ratio in medical practices can be complex due to the varying sizes and structures of practices. For large practices, the ratio differs significantly from that of smaller practices. Larger practices often benefit from economies of scale and have specialized roles, such as dedicated “coders” and “billers,” and perhaps even a “Medicare specialist.” In contrast, smaller practices might rely on a single person to handle multiple responsibilities, including medical billing staffing. Despite these differences, this ratio is crucial for assessing your practice’s financial health. 

The billing staff-to-provider ratio is often viewed merely as an “expense” indicator. However, it also serves as a significant gauge of your practice’s overall financial health. A lower ratio generally reflects a more efficient revenue cycle, leading to consistent revenue flow. Conversely, a high ratio could signal underlying issues in the revenue cycle, such as frequent rejections, denials, and appeals. These issues are time-consuming and can necessitate more billing staff, thus increasing the ratio. 

Automated tools can mitigate some of these issues and help maintain or improve a solid ratio. For instance, real-time patient eligibility tools can reduce denials by verifying patient information before claims are submitted. Online claims editing capabilities, including CCI and LCD compliance edits, can expedite the resolution of rejections. Fewer rejections and denials mean less need for appeals, and maximizing electronic claims submissions, ERA, and EFTs can streamline payment postings, reducing the manual labor involved. 

Calculating Physician and Billing Staff Full-Time Equivalents (FTEs)

Accurately calculating your practice’s staff-to-provider ratio requires precise FTE calculations for both physicians and billing staff. Here’s how to do it correctly: 

1. Physician FTE Calculation: Instead of counting each physician individually, you need to calculate physician full-time equivalents (FTEs). To do this, divide the total number of patient encounters performed during the past year by the average number of yearly encounters per physician. This number typically ranges from 3,600 to 4,800, depending on the specialty. For instance, primary care physicians usually reach the higher end of this range, while single surgical specialists may fall on the lower end. This method accounts for part-time physicians and those with less-than-full-time schedules.
2. Billing Staff FTE Calculation: Define an FTE as an employee who worked 2,080 hours over the past year (40 hours per week × 52 weeks). This calculation should include all personnel involved in the physician revenue cycle, such as data entry, coding, payment posting, accounts receivable follow-up, and patient statement processing. 

Here’s an example calculation: 

For the year ending June 30, 2024: 

- Billing Staff Employee 1 worked 2,080 hours = 1.0 FTE (2,080/2,080) 

- Billing Staff Employee 2 worked 1,720 hours = 0.83 FTE (1,720/2,080) 

- Billing Staff Employee 3 worked 1,500 hours = 0.72 FTE (1,500/2,080) 

- Dr. Koch performed 1,800 encounters = 0.5 FTE (1,800/3,600) 

- Dr. Sjogren performed 3,600 encounters = 1.0 FTE (3,600/3,600) 

Total Billing Staff FTE count = 2.55 (1.0 + 0.83 + 0.72) 

Total Physician FTE count = 1.5 (1.0 + 0.5) 

Thus, the physician-to-billing staff ratio is 1.70 (2.55/1.5). 

Utilizing Benchmark Ratios to Improve Revenue Cycle Management

According to the Medical Group Management Association (MGMA) in its 2008 publication, *Benchmarking Success – The Essential Guide for Group Practices*, the benchmark ratio is approximately 2.7 billing staff per physician. This figure is an average derived from various specialties and does not account for specific practice sizes or other variables. Nonetheless, it serves as a useful starting point for evaluating your practice's efficiency. 

Consider whether automation could help improve your ratio by streamlining your billing processes. For more tailored advice, contact us at Reed Tinsley, CPA. We can provide insights and strategies to optimize your medical billing staffing and overall revenue cycle management.