The economics of central billing offices

The anticipation of economies of scale in physician billing has led many medical practices to consolidate their billing operations. This article analyzes these economies of scale, comparing performance indicators from centralized and decentralized operations. While consolidation provides compliance, control and information, diseconomies of scale can exist in the centralized receivables management process. The authors conclude that physician practices should consider a hybrid approach to billing, thus reaping the benefits of both centralization and decentralization.