The hidden cost of outdated medical billing

Key takeaways

• The biggest costs in healthcare billing often come from delayed payments, manual workflows and administrative overhead.
• Reduce staff workload and errors when you connect payment systems with electronic health record (EHR) and practice management systems (PMS).
• Minimize exposure to HIPAA violations and costly penalties with modern platforms that include PCI compliance, encryption and tokenization.

Maybe you’ve felt it or are feeling it right now: margin pressures squeeze small and independent practices particularly hard. Work with enough small- and medium-medical practitioners and you’ll know:

“Burnout is everywhere in healthcare today,” says Misty Meraz, vice president of healthcare and public sector sales at Elavon. “It’s a problem for administrative professionals as well as clinicians.”

Across healthcare practices, rising labor, technology and administrative costs continue to outpace reimbursement growth.* When every dollar counts, minimizing your cost-to-collect can have a major impact on your overall operating costs. With payer reimbursement remaining stagnant – or falling – and operational expenditures continuing to rise, strategically managing your costs is necessary to control your operations.

How do you contain billing costs?

When payment processes are efficient, a larger share of every dollar collected contributes to the bottom line, keeping your operations sustainable. These four – often overlooked – strategies can help reduce the overall cost of keeping your practice running and billing smoothly:

1.  Collect faster
2. Streamline front desk operations
3. Provide convenience, transparency and choice
4. Reduce compliance risk

Inaccurate billing or outdated payment systems take time and attention away from what matters most – patient care. Minimizing outstanding accounts receivable (AR) improves cash flow and liquidity, reducing financial risk. Streamlining payments also reduces administrative overhead, while providing both patients and staff with better experiences.

“If you think of it in terms of per-transaction cost or flat monthly fee, practice owners usually know what it costs to collect each payment,” says Meraz. “But when you begin to think of it more holistically, the lost cash flow and higher administrative expenses associated with outstanding accounts receivable add up quickly, as do labor costs if manual workflows are time-consuming.”

Why modernized billing matters for your practice’s financial health

With a growing percentage of healthcare costs falling to patients, ease and speed of collection from those patients becomes paramount. The higher the patient responsibility to pay, the greater the risk of delay or nonpayment. With this shift, payments operations become care operations – your payments infrastructure can affect how easily and confidently your patients pay, taking payments out of the back office and to the front desk.

Having the right foundation for your payments operations is what allows your practice to smoothly navigate the complexities of the healthcare system. That goes beyond transaction costs. Hidden operating expenses can be difficult to quantify, even if you know they exist: How do you put a price on HIPAA compliance risk? Or front-desk frustration?

That’s where your payments strategy can help. Efficient billing can boost the financial health of your practice, even beyond per-transaction cost-to-collect. Ensure your payments strategy includes these four pillars:

1. Collect faster

Steady, predictable cash flow is critical for maintaining viable operations. So how can you collect faster?

• Deploy in-office terminals and accept mobile wallets like Apple Pay* and Google Pay* to encourage more patients to pay in-full, on-site.
• Provide convenient payment options like pay-by-text that make it easy for patients to pay promptly.
•  Offer payment plans to reduce defaults.

The sooner payments arrive, the better cash inflow can match ongoing expenses like rent, payroll and supplies. Collecting at or near the time of service means that fewer patient balances will age, require reminders or need to be handed off to collections agencies. And when collections are timely, your practice will have more cash on hand, which can be reinvested in technology upgrades, staff development or other initiatives that enhance care quality. Customer financing options like U.S. Bank Avvanceâ offer flexible repayment options that allow your customers to pay in a way that compliments their financial situation.

2. Streamline front-desk operations

Outdated payment processes often include time-consuming, manual steps. In fields like physical therapy, survey respondents estimate that 75% of facilities* have added nonclinical staff just to accommodate administrative burden. How can you reduce the frustration caused by unnecessary administrative work?

• Automate payment posting to reduce manual effort and mistakes.
• Integrate medical payment processing systems with electronic health record (EHR) and practice management software.

When you find ways to automate and integrate, appointment check-in becomes faster, and it’s easier to collect balances and co-pays. Staff will spend less time following up with patients about outstanding balances, mailing out paper statements or manually updating payment records. Instead, they’ll spend those valuable labor hours enhancing patient care and experiences.

3. Improve patient satisfaction

Today’s patients expect the same degree of convenience, transparency and choice from their care professionals that they’ve grown accustomed to in their interactions with banks, retailers and online businesses.

To improve satisfaction outside of the exam room, ideally, your practice would:

• Accept all major credit and debit cards.
• Store payment card details to simplify post-visit and recurring payments.
• Allow patients to pay bills anytime, on any device, via a secure online portal.

Offering these capabilities can improve patient satisfaction and engagement, which often translates into increased long-term retention and practice growth.

4. Reduce compliance risk

Medical practices can’t afford to take chances with personally-identifiable information (PII) belonging to their patients. The Office for Civil Rights (OCR) ramped up HIPAA enforcement for small practices in 2025, with imposed fines exceeding $10 million* in just the first half of the year.

All payment card processing systems must be PCI DSS-compliant, but those used in healthcare should also:

• Provide robust point-to-point encryption (P2PE) for all PII (including patient names and address information).
• Enable tokenization to further protect patient privacy.

Look for a payments solution provider that is HITRUST certified, meaning their security practices have been validated to reduce risk – they should have the needed capabilities. If the payments provider has extensive experience in the healthcare space, they should also be familiar with the standards for documenting compliance in healthcare.

Run a smoother, more controlled practice

Making billing simpler and easier for both patients and staff can help turn the tide for many healthcare practices, Meraz points out. Fewer physicians are in private practice now than at any point since the American Medical Association* began tracking the trend, with financial challenges driving the shift. The average independent practice spends three to seven percent of its annual revenue* on billing and collections. This figure increases to 10.9% for solo practitioners*. But practices that improve their billing operations consistently report stronger margins than their peers*.

“A modern payments solution can save time and increase efficiency for staff while improving the practice’s profitability,” Meraz says. “This is a win for everyone involved, and these kinds of wins make it possible for small practices to stay independent.”

See how you can run a smoother, more controlled practice by making healthcare payments simpler, with Elavon behind every payment.

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