SOHO Home Based Business Mentors: Medical Billing

Part Time Profits

By Marcie Geffner

Robert O'Kelly, 59, decided to start his own business when he was laid off from a programming job at a large insurance company. He chose medical billing because he had some familiarity with insurance claims and the start-up costs were manageable He launched his homebased company, Accelerated Medical Billing, in July 1994. With just eight clients, he brought in revenues of approximately $45,000 in 1996.

O'Kelly's start-up costs totaled $500. He already had a computer, tape backup system, office furniture, a laser printer, a copier and a few medical books. He paid $500 for a software program. "I also took a coding class [to learn codes used in the insurance industry]. I took a [medical] terminology class at an online school. I attended Education Direct and took all my classes at home via the Internet," he says.

Billing software is essential. There are dozens of software programs available. The rule of thumb is, the more you spend, the more unhappy you'll be. You really need to spend only $500 to $1,000 on software.

The flexibility of working at home part time was one factor that attracted Diedre Mikkelson, owner of AccuTrac Medical Billing to medical billing. Mikkelson, 35, left a prosperous career to stay home and start both a family and her company in April 1996. Today, Mikkelson has four clients and revenues of $2,200 to $2,500 per month, working just 15 hours per week. Her monthly business expenses are about $300.

Medical billing services generally charge a per-claim fee of $2 to $3 or 5 to 8 percent of the receivables collected. How much each client is charged depends on the services provided and the type of practice. "If you're billing for a neurosurgeon who does maybe 10 surgeries a month at $40,000 a surgery," Mikkelson says, "you're not going to charge as [high a percentage] as you charge a psychiatrist who sees 20 patients a day, four days a week."