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What Are 3 Different Types Of Billing Systems In Healthcare

By Majedul Haque Shakil Last Updated -- Monday, 2024-03-25
what are 3 different types of billing systems in healthcare

What are 3 different types of billing systems in healthcare, and which is preferable for your healthcare? Of course, A billing system can change many things for a hospital. Medical health facilities do not use the same billing system in all their transactions. 

It is no wonder that each billing system has its type and use, but all facilitate the hospital.

In this blog, we will go through all the necessary details of each type of billing system. We will also learn which is preferable for the hospital's day-to-day billing process.

Let's start then…

What is Billing in Healthcare-Learn the Basics Fast

In the modern healthcare industry, medical billing is a complex task. The medical billing system is a payment practice. 

Generating healthcare claims for medical services rendered by providers and organizations to obtain insurance payment. For a clinic, a billing system is essential for all. It smooths the billing process and digitalizes the process.

And the central part is that the billing machine fixes all the manual errors of a hospital's manual billing work.

How Does Hospital Billing Work?

Hospital billing is also known as medical billing. Let's take a look at how does hospital billing works. There are several steps to follow to deal with this hospital billing.

The billing process plays a pivotal role in bolstering a hospital's total revenue. However, it has its challenges, as several errors can occur during the transaction.

Step of medical billing process:

  • Registration 
  • Financial responsibility 
  • Check-in and check-out 
  • Checking and coding compliance
  • Preparing and transmitting claims 
  • Payer adjudications 
  • Patient statements and bills form 
  • Assigning patients payments 
  • Arranging the collections 

All of the processes are maintained step by step.

What Are 3 Different Types Of Billing Systems In Healthcare


It is essential to take careful consideration regarding which one is best for your healthcare facilities. Some question comes up including. What are the different types of payment systems in healthcare? Or how many types of healthcare systems are there? 

There are 3 different types of billing software mainly used in hospitals. So frist let's check out the what are 3 different types of billing systems in healthcare.

1. Types Of Medical Billing - Closed Medical Billing System 

Closed Medical Billing System =Handle in one practice 

A closed medical billing system that does not allow any transfer. Yes, that means it only focuses on a singular practice. You don't have to worry about procedures from other locations. It mainly focuses on the practice session. In this practice session, EMRs are your only answer. A EMRs contain all the patient's information and all other plans related to particular patients.

Why use EMRs

  • Check the due date of the patient's checkup 
  • To check the vital parameter
  • preventative screenings
  • Maintain Vaccination program 

Point to note that outside the practice boundaries, the EMRs are strictly prohibited. It is only assigned to the physicians and particular billing teams.

The most significant advantage of this closed medical billing system is you can quickly access any patient information. Because it's all data stored in one practice.

There are also some limitations when you have an advantage for a system. The limitation is that if you want to change any demographics information, you have to do it manually.

Finally, who are the users of the closed medical billing system?

Small stand-alone practices with a limited number of physicians.

2. Open Medical Billing System

Open medical billing system=Transferred to more than one practice

The open medical billing system is more collaborative than the closed one. It's open access to the user. Let me explain it. Medical workers easily share patient information through their other departments. So it's straightforward to use and access the data when needed.

Open medical billing systems give positive health results as they encompass complex details.

So, the main exciting part of the open medical billing system is easy access to information to 

  • Providers
  • Patients
  • Chief stakeholders
  • Insurance payers 
  • Medical billing teams
  • Third-party vendors 
  • More than one healthcare organization

So, you can be terrified about data security. So let clear one thing is: secure and in safe hands.

Open medical billing service handles many tasks, including coding, submitting claims and collecting payments. Not only does the healthcare provider retain control over patient records but also the billing policies.

It's cost-effective for the healthcare providers. After all, they do not have to invest in any particular billing software for that. You do not have to hire any specific team for that.

An open medical system improves the overall efficiency and productivity of healthcare facilities.

uses-of-billing system


Many well-known companies use an open billing system. On the other hand, 42% of Open Billing System customers are in the United States and 12% are in India.

Of all the customers that are using the Open Billing System. let's check some statistics  

  • 56% are large companies and less than 1000 employees are using an open billing system.
  • 2% are small companies with more than 50 employees and 
  • 2% are medium-sized.



3. Isolated Medical Billing System

Isolated Medical Billing System = medical billing services provided in remote or underserved areas.

What is the meaning of an isolated medical billing system? You get the answer in its name. It is not designed to connect to another system. It operates all of its data independently. The patients indeed maintain this system.PHRs systems can not replace regally approved EMRs or EHRs.

In this system, patients can fill out all their details by themselves. They have the power to refer them at their convenience. Still, they can get help from the related medical software.

So now, how PHRs is used 

  • Help to fill in patient information 
  • Offer a holistic view of medical treatments
  • Easily use software for transmission and open communication.

Isolated systems offer a focused approach to billing tasks. Allowing for streamlined workflows without the complexities of EHR platforms. This specialization can lead to increased efficiency in billing processes.

With dedicated functionalities specifically for billing. It can improve the accuracy of coding, claim submissions, and reimbursement tracking. This reduces the likelihood of errors and minimizes revenue loss due to billing inaccuracies.

The Future Of Hospital Billing System

The importance of healthcare services and the healthcare billing system is increasing day by day. With the right billing system in hospitals, anyone can easily increase the bottom line of the company. Generative AI is now a known word in many industries. Many industries also benefit from this new generative AI feature.


You will be shocked to hear the news that AI in the healthcare industry is increasing rapidly. It is estimated to hit USD 21,740 Million by 2032. It is no wonder that the billing system.

Benefits of Billing Software System


Installing a billing system in a hospital or medical brings many benefits. But remember proper medical billing system for your requirements is necessary. Billing software can automate many hospital day-to-day tasks and remove many human errors. Lets check some of the important tasks that can be changed with the help of billing software.

1. General Invoice within a minutes

Creating an Invoice Manually takes a lot of time. It is quick and complex, but the help of the billing system makes it easier for us to generate invoices quickly. It saves us time and money also. 

Creating invoices quickly is easy now. With the help of the billing system, we don't need to maintain a spreadsheet. 

This system makes your tasks easier where manual entry of financial information such as client name, address, invoice number, quotation etc. You can input multiple clients' accurate information into the system in a short amount of time.

2. Create Multiple templates

Through this software, you can create many types of invoices by using different types of templates. That makes your invoice look good attractive and hassle-free to use.

3. Save hospital Money 

Using this billing System can save you money. It also saves you time and hospital time. You don't need to purchase any file or ledger for clients' data entry. You need to put their Information on the billing system.

4. Instant Payment 

You can transfer Online payments quickly with this software. One of the best solutions is that using this billing system would make your payment process more accessible. 

By using this system, you can see everything in one place. You will show which payment is due, which is overdue, which is needed to be paid, etc. 

You can also activate or deactivate clients from this system, so you don't need to handle this manually. By searching the names of clients, you will show all the clients' payment details, so obviously, it's a much easier system for everyday hospital business.

5. Cloud Base System 

In the cloud-based hospital system, you will get unlimited data plans, so the owners do not have to worry about storage. If there is a cloud-based service in the system, there is no risk of computer crashes or data loss. It will store all your client's data online. By using this, you can access the data at any time. You will find the data no matter how old it is. 

End Note

After knowing what are 3 different types of billing systems in healthcare which one is best? So remember one thing. Every hospital requirement is not the same. Choose the best one for your requirements. A hospital auto manager can solve all your medical billing errors and boost up your medical business revenue.

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