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Medical billing companies generate revenue by facilitating the billing process between doctors and insurance companies. Doctors send invoices to insurance firms, which then process payments that the billing company records into the doctor's software. The billing company invoices the doctor, ideally twice a month, and emphasizes the importance of collecting payments quickly, preferably within five business days. They train independent business owners to automate this process, ensuring steady cash flow. The company's earnings are linked to the doctor's income, as they charge a percentage of the revenue generated, creating a mutually beneficial relationship. Further insights will be shared in the next video.