What Are 3 Different Types of Billing Systems in Healthcare?

There are three types of billing systems in the healthcare industry: closed, open, and isolated. Each system has its own advantages and disadvantages, so it’s essential to understand the differences before deciding which system is right for your organization. Let’s take a closer look at each system.

Different Types of Billing Systems in Healthcare

Closed Medical Billing Systems

A closed billing system refers to a billing solution that doesn’t allow the transfer of information. The billing charts and patient’s records are kept within the confines of a specific clinician. Electronic Medical Records (EMR) are the preferred digital tools for treatment charts (EMR). EMRs contain all the patient information for particular healthcare providers. You can also connect different EMRs within the practice to improve support. However, EMRs cannot be used outside of the practice. It is solely the responsibility of the assigned healthcare professionals and the billing teams to handle. They don’t allow for collaboration with other healthcare providers and healthcare organizations. Medical billing specialists say EMRs are the digital versions of old-school paper charts. 

The advantage of having a closed system is that it’s very efficient since all the data are only found within the organization. The disadvantage is that if there are changes in patient demographic information, these have to be entered manually into your billing solution. Additionally, this means you don’t have access to outside tools or reports necessary for growth and improvement.

Open Medical Billing Systems

An open billing system refers to the billing solution that allows data sharing. It enables transfers between healthcare providers, practices, and facilities, among other things. All major stakeholders in the healthcare industry, including providers, patients, billing teams, multiple healthcare organizations, and third-party vendors, can access the information in this configuration. EHRs, or electronic health records, are one type of open medical billing system. People in the medical field frequently confuse EMR and EHR. Still, in reality, EHRs are a highly collaborative record-keeping style that allows everyone to access the patient’s records.

To have an open system, the medical billing software must communicate and collaborate effectively. Because they want to keep the system closed and have exclusive access to patients’ records, not all software allows for an open system. Furthermore, some practitioners and healthcare facilities argue that open systems must be used cautiously due to HIPAA regulations to protect patient’s privacy.

Most hospitals highly prefer this type of billing system because it has access to outside resources for growth and improvement. However, some disadvantages come with an open system.

The biggest one is security measures because you bring in sensitive patient records from other organizations. Additionally, data entry needs to be done several times for this type of billing system because information may get entered once in each organization that requires that data.

Isolated Medical Billing Systems

An isolated billing system refers to the billing solution, which does not allow for any sharing of information. PHRs (personal healthcare records) are exclusively intended for use by patients. Medical offices, medical organizations, healthcare providers, physicians, and practices do not have access to healthcare records.

This type of billing system is more secure than either a closed or open system. However, the data in this medical billing solution cannot be used for quality improvement or growth.

It’s essential to consider each type of billing system’s advantages and disadvantages before deciding which is suitable for your organization. Each system has its pros and cons, so it really comes down to security concerns versus accessing outside tools/reports necessary for growth and improvement.

Because personal health records (PHRs) are not legally permitted to replace official healthcare records, a standalone system is not commonly used. Sometimes, if the patient uses the appropriate software, their personal health record (PHR) can be used to complete the official records of the medical practice. Once again, open communication between the software is required to ensure that everything is transferred correctly and efficiently.

The Right Fit for Your Practice’s Needs

When it comes to billing systems, each has its own set of advantages and disadvantages. While records are not the only factor in determining the types of billing systems available in the healthcare industry, they play a significant role in determining the kind of system you want in your office or practice. Once you’ve decided on a system and the level of record-keeping you want, you can move on to selecting software or continuing to use the one you currently have. A billing system can assist you in determining the extent to which you should outsource medical billing and coding.

So, which billing system is right for you? It depends on your clinic’s needs and what you’re looking for in a medical billing solution. If you’re not sure which system would work best for you, that’s where Practice with Ease comes in. We can help you determine the best billing system for your clinic and manage all the billing processes for you. Contact us today to learn more about our billing services and how we can help streamline your clinic’s operations!