Every medical practice relies on a reliable, high-quality medical billing process to operate effectively. Medical billing, aka Revenue Cycle Management (RCM), helps medical practices manage their cash flow and assure they are getting the correct payments from their patients. Nowadays, this process is done predominantly online using convenient medical billing software. This lets practices to easily submit insurance claims, receive information from insurance companies about claims, and ensure their revenue is where it needs to be.
When practices are getting started, they have to ask themselves whether or not they want to outsource medical billing or handle it in-house. There are pros and cons to both choices, one of which being cost. That’s why one question that determines the decision to outsource or bill in-house is: how much does medical billing software cost?
What is Cloud vs. Hosted Medical Billing Software?
When researching medical billing cost, the first thing you need to know is the difference between cloud vs. hosted billing software. Both of them are web-based billing platforms, but they have slight differences.
“Hosted” medical billing software is when a medical practice decides to install their own server, data center, and applicable softwares on-site at their own location.
To choose this option, practices will need a separate area in their office dedicated to the server and its equipment. They are then responsible for acquiring their own equipment – such as servers, routers, bandwidth cables, back-up drives, and more. Additionally, they must perform their own updates and manage the system regularly.
However, choosing to host the system allows practices to have more control over it at all times. They can look into it directly if they were to experience an Internet outage, slower than normal Internet speed, and other issues.
Most practices tend to choose cloud-based aka “web-based” or “software-as-a-service” (SaaS) software when they want a hands-off approach to software management. When choosing cloud-based, practices will choose a software provider who “hosts” the server at their own business location. Then, the practice connects to it remotely.
With this option, the practice does not have to worry about self-management, such as IT issues, Internet upkeep, hardware purchases, and more. At the same time, your practice will have less immediate control over things like Internet outages, scaling up or down, and more. To manage these issues, you will have to get in touch with your provider during each issue. This can be time-consuming during a busy workday and delay patient payments.
Cloud-based Software Costs
Expectedly, cloud and hosted medical billing software are priced very differently. This is mostly due to the fact that hosted software requires a heftier capital investment up-front. Cloud-based software, on the other hand, simply requires you to sign up for a subscription and pay on a monthly or annual basis.
Generally, cloud-based medical billing software will be cheaper than hosted software. Many software providers charge by a fixed monthly fee. The typical starting cost is between $30-$100 per user per month for the service itself, not including set-up fees and other fees. Higher tier pricing plans can run as high as $200-$500 per month. For instance, Kareo (one of the more well-known software providers in the industry) has their most commonly purchased plan priced at $250 per month. However, remember you are able to choose the pricing plan that best suits your needs and budget from your provider.
|Basic tier pricing|
|Higher tier pricing|
|$30-$100 per user per month||$200-$500 per user per month|
Keep in mind that as you add more users to your software plan, your monthly rates will go up. Also keep in mind that if you are choosing to outsource your medical billing to a provider, the pricing model works differently. To learn more about pricing more outsourced medical billing, take a look at our Medical Billing for Physicians guide.
Hosted Software Costs
Hosting your software through an on-site server is typically more expensive than going with a cloud-based service. (But remember you have more control over the system – hence the price). This is due to the fact that hosting software requires a capital investment upfront for hardware and software equipment.
Industry leaders estimate the total start-up cost to host your own system and software to be between $3,000 – $8,000. Take a look at some of the expenses that contribute to this price.
|Reliable computer server||$3,000 – $5,000+|
|Ethernet equipment||$50 – $200|
|Back-up hard drive||$500 – $800|
There may be additional costs tacked onto this if you need to purchase computers, bandwidth upgrades, and other necessities for your billing staff. If you host your system and software for a long period of time, you can expect to pay additional costs down the road for normal upkeep and maintenance.
In addition to monthly and/or up-front costs, there will be additional costs involved with getting medical billing software for both cloud and hosted options. It’s smart to factor in these additional costs when determining your budget and expenses. Here are some of the additional costs you can expect to pay when getting medical billing software:
|Software training||$1,000 – $3,000|
|Software license||$1,500 – $3,500 per user|
|Annual upgrades and maintenance||$1,500 – $3,500 per year|
|IT/Tech Support (optional)||About $200 per hour|
At the end of the day, you will want to calculate your total cost for both cloud-based and hosted software to make a final decision.
|Cloud-Based Software||Hosted Software|
|$4,000 – $16,000 |
for first year
$2,000 – $10,000
for years after first
|$8,000 – $25,000+|
for first year
(not including IT help)
$1,500 – $3,500
per year after first
(not including cost of IT help after first year)
As you can see, hosting your own software will cost several thousands of dollars upfront, with small ongoing costs. On the other hand, cloud-based software will require smaller ongoing payments, but you will have to keep paying.
Top Providers: Prices
When doing research, many medical practices want to take a look at some examples of cloud-based software prices from top providers. We’ve put together a list of example of monthly costs from some of the top-rated software suppliers:
|Kareo||$200 – $250 per user per month|
|TotalMD||$199 – $499 per user per month|
|NueMD||$150 – $250 per user per month|
|My Client Plus||$19.95 per month |
($10 extra per month for unlimited billing)
Although there are very cheap and sometimes free options out there, remember that revenue management is not something you want to go cheap on! You will be using your billing software to run your business, so we recommend purchasing a sustainable plan that will support your practice day-in and day-out.
Remember that you do not have to purchase billing software to run a medical practice efficiently! Tons of medical practices today are choosing to outsource non-essential needs like medical billing and medical answering services to save money and boost productivity.
You may also want to look into VoIP for healthcare if you want to keep your administrative tasks in-house.
360Connect has a top-rated network of professional medical billers that can partner with you for medical billing services. They handle your billing claims so you can focus on patient care! To compare prices for free, fill out our online form. We match you with the best medical billing providers that fit your needs and save you up to 30%!