Healthcare practices of every scale rely on setting firm financial goals to continue to grow and serve their patients. For some, this involves maximizing efficiency while for others it’s about streamlining the claims processing to prevent potential losses.

Most thriving practices strive to communicate with their patients. Making sure to notify them well in advance about their bills, schedule appointments, and acquire pre-approval for potentially expensive specialty services. There are even some practices that prefer to outsource administrative functions like medical billing to help maintain a positive, consistent revenue stream.

Every medical and mental healthcare practice has a right to proceed as they see fit when it comes to choosing between a Medical Billing System or Practice Management Software. Though there are some benefits and drawbacks to both these systems. Understanding the differences between both will help you choose the one that is best for your practice as well as the patients in your care.

There is a fair amount of confusion about the differences between medical billing and practice management software. To the uninitiated, the two terms even sound very similar. Though there are some key differences in the workflow and the functionality of both.

What Is Medical Billing Software?

Modern medical billing software is designed to streamline the medical billing process from the moment you schedule an appointment with a patient to the moment they leave your facility or are discharged from your care. This includes remote services like telehealth videoconference sessions.

At every step along the way, medical billing software handles all the tasks required to ensure you are properly reimbursed for your services.

The best medical billing software often includes additional functions and features for doing things like checking a patient’s insurance status and coverage limits. It also factors in things like the patient’s deductible and their out-of-pocket costs.

All this critical information then moves with the patient throughout the treatment process. The information can even be transferred if the patient needs special services or an in-network referral.

A lot of medium to large practices that have the resources to handle medical billing in-house often prefer to use their medical billing software. Though at this scale, it often requires dedicated administrative staff.

Though there certainly are some smaller practices that prefer to use medical billing software. Especially if you need to occasionally check on the status of a bill right away, as it lets you know if you sent a bill. You can also check to see if a patient with an outstanding balance was sent a second or third notice to remind them of a late payment.

The best medical billing software will also let you configure the software suite to do things like generate reports and check the status of outstanding bills via a dashboard feature.

These features make medical billing software popular with small practices and solo practitioners who need to find ways to reduce their administrative workload.

A lot of medical billing software services can also be set up to highlight errors allowing you can correct them immediately. Thus catching any red flags before the claim is submitted, greatly reduces delays in the revenue stream management.

What Is Practice Management Software?

Practice Management Software is a sophisticated suite of applications that are designed to help medical offices operate at maximum efficiency. Many small to medium-sized practices appreciate it for its ability to help manage daily operations.

Most practice management software systems also include features for tracking financial and administrative functions as well as maintaining electronic medical records. These records are then easy to transfer if the patient needs specialty services or a referral to another provider.

Common Features of Practice Management Software

The best practice management software systems include standard features such as:

  • Patient registration
  • Patient onboarding data collating
  • Patient monitoring
  • Patient scheduling
  • Charge capture tracking
  • Claim generation
  • Performing standard billing procedures
  • Collecting and recording payments from patients
  • Collecting and reporting reimbursement from insurance companies
  • Collecting and recording payments from third-party providers & public health institutions
  • Generating employee reports

When you implement practice management software, every patient in your care is recorded in your and their key financial data is tracked. That closely mimics the way Electronic Health Record software operates, which helps make for more seamless tracking of data and analytics. It also makes it easier to transmit information and claims to insurance companies who require absolutely accurate information about the reimbursements you are requesting for services provided.

A lot of the time practice management software comes in handy for newer medical practices that need to focus their efforts on onboarding new patients, establishing their internal protocols, and the arduous work of launching a new business. The wide range of functionalities offered by practice management software makes it a good compromise for younger, smaller practices and solo practitioners who need to save time.

It’s also worth bearing in mind that practice management software is often more affordable than a medical billing software suite. This further helps small practices save money on their bottom line.

What Is The Biggest Difference Between The Two?

The biggest difference between medical billing software and practice management software is that practice management software requires the administrative side of the practice to manage it. Whereas medical billing software is managed via the clinical side of the practice.

It’s also worth bearing in mind that practice management software also helps manage the facility’s records and stores key data in a digital format that is both secure, as well as easily transferable to another provider. However, medical billing software needs to share patients’ data and records with other medical practitioners and specialists in order to keep a complete log of patients who need care from other providers. This requires additional attention to security and HIPPA protocols.


If you’re trying to decide between practice management software and medical billing software, it helps to factor in the size of your practice and the functions you need the most. If you are a newer, smaller practice or a solo practitioner, you might find that practice management software helps you keep track of critical patient data. It streamlines the medical billing process in a way that insurance payers prefer.

If you have a larger practice with an extensive administrative staff to handle your claim generation and processing, you might prefer medical billing software for its ability to expedite the process.