Almost half of physician practices process payroll in-house

There are advantages to doing payroll in-house or outsourcing the process. (Getty/01Neptune01)

When it comes down to it, staff members at physician practices probably don’t care how you process their paychecks.

They just want their paychecks to be correct and issued on time, according to Kenneth T. Hertz of the Medical Group Management Association (MGMA).

In a recent MGMA Stat poll, almost half of 1,325 respondents—49%—said they handle staff payroll processing entirely in-house. Some 32% of practices use a combination of in-house and outsourced payroll processes, while 17% outsource the entire process.

Practices may want to periodically evaluate how well their payroll systems are working. Look at whether the processing system is effective and efficient, Hertz says. If you decide to make a change, determine what you want to accomplish. Is your goal to save money, reduce staff or get compliance or tax expertise?

There are advantages for all three types of payroll processing. In-house systems are typically more flexible and give you more control, particularly if you have off-cycle payroll requests, Hertz says. However, if your practice’s payroll is complicated, you may want to outsource the job to a vendor who can give tax, regulatory and statutory expertise.

A combination of in-house and outsourced payroll can allow your practice to collect hourly information and distribute paychecks, while a vendor handles taxes and W-2 forms and prints the checks.

One indication it might be time to outsource payroll is if your practice manager is being overwhelmed by the task. If he or she is not able to give enough attention to this crucial job function, it may be time to consider outsourcing the responsibility.