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It’s Time to Rethink Your Hospital’s AR for Ancillary and Outpatient Diagnostic Services

January 4, 2024

Jared Blankenship

Product Marketing Manager

For hospitals and integrated delivery networks (IDNs) on the path to post-COVID-19 financial recovery, headwinds persist. Staffing shortages hamper clinical care, patient satisfaction, and administrative efficiency. Patient behavior fluctuates and evolves across a broad spectrum of preferences for mechanisms of engagement and interaction. New, disruptive competitors plant their flags—and strengthen their footholds—in the healthcare ecosystem. And inflation continues to make its presence known, driving up costs across the board.

Navigating these challenges requires sufficient revenue and operating at sustainable margins. Every dollar must count. Write-offs are no longer an option. Even for relatively low-dollar claims associated with outpatient, ancillary, or ambulatory services.

Not too long ago, writing off bad debt from those smaller clinical events, especially in the outpatient space, was common practice. It’s understandable. Enterprise systems and revenue cycle workflow are optimized for high-dollar, acute patient encounters. And allocating valuable staff time to resolve claims and manage denials and appeals for lower-dollar events doesn’t always make sense. Doubly so under today’s staffing conditions. The good news: Write-offs are no longer the necessary evil they once were for organizations that adopt automated revenue cycle management (RCM) capabilities. It’s time to change the write-off habits that lead to lost revenue.

That starts with a purpose-built RCM solution—one optimized to the unique workflow and billing dynamics inherent in outpatient diagnostic and ancillary services. With the right solution—and solution provider—in place, the bottlenecks that typically lead to write-offs—such as denials, payment delays, and high-touch administrative tasks—can be significantly reduced, freeing staff to focus on higher-value tasks. Today, the tools exist to help hospitals eliminate the drag on the overall bottom line normally associated with these departments.

But leveling financial performance is just the beginning. Within today’s challenges lie many opportunities to neutralize competitive forces, to align with a wide range of patient expectations, to deliver financial performance and to help sustain your organization’s mission. Ancillary and outpatient services, once considered a cost center, now have the potential to more than offset costs and even drive financial growth for hospitals and IDNs.

Untapped Potential: The Value of Ancillary Services

A wide range of diagnostic, therapeutic, and custodial services fall under the umbrella of ancillary services. Those services most commonly provided by hospitals and IDNs, however, include outpatient radiology, pathology, pharmacy, and laboratory. They also happen to present some of the greatest opportunities to deliver value to your community, your patients, and your health system. Among those points of value:

As the range of care offered by mid-level providers expands, so does the opportunity to provide access for underserved communities. And every physical location represents a previously unavailable entry point for patients to receive care—and sustain engagement with clinicians in the management of their health.
The same dynamics also help improve outcomes for the community at large. For example, outpatient pharmacies—and the pharmacists who staff them—have typically been oriented toward preventing patient readmissions with that first fill of prescriptions at the point of discharge. But more and more health systems are leaning on pharmacists to help manage medication therapy, especially in oncological care and diabetes management. With the availability of onsite diagnostics services and point-of-care testing, those same pharmacists could also initiate a limited but important range of therapies, such as antivirals for COVID-19. Using ancillary services, you can essentially push patient engagement further up the continuum of care—prior to acute admissions or even scheduling an appointment with a physician.
Outpatient diagnostic and ancillary services can serve as an initial point of engagement for your health system. Every time patients receive blood work or an X-ray, they are physically present in your facility. You can use that presence to provide patient education, elevate awareness of additional services, and clearly demonstrate the level of care and service your team delivers. That builds loyalty, which in turn helps you overcome competitive and disruptive pressures.
Amid constraints in clinical staffing, you can use ancillary services to extend both physical locations at which patients can receive care and the pool of clinicians who can provide it. That provides flexibility for staff to the highest points of immediate patient need—while also pushing treatment away from those points of high demand. Increasingly, finance and IT leaders are tapping into highly automated RCM and AI-enabled workflow capabilities that reduce the need for manually touching claims and keeping up with payor policy changes.
Every hospital and IDN faces financial headwinds in today’s economic climate. Ancillary services and outpatient diagnostics can contribute to the bottom line, especially when the revenue cycle is running smoothly. They can also promote growth by drawing more patients into your care ecosystem.


Optimizing Outpatient Diagnostic and Ancillary Services: Where to Start

Begin with identifying core stakeholders, starting with departmental leadership in key outpatient services—laboratory, radiology, pathology, and pharmacy. If they don’t report through the same leadership in ancillary services, make introductions. Talk to each other. Build your team with patient-centricity in mind, not organizational structure. Consider adding an executive sponsor, possibly the CFO or the managed care leader.

After assembling the team, here are the recommended next steps to help you build and implement a successful strategy:

1. Take Inventory
Document what you already have on hand, including facilities, equipment, technology, and staff.

2. Assess Current Performance
Evaluate how well your department performs, weighing clinical and financial outcomes, as well as patient satisfaction. Note your strengths and opportunities for improvement.

3. Optimize Financial Performance
Before you expand outpatient services, your department needs to perform at peak financial efficiency. That means scrutinizing your margins, eliminating reimbursement bottlenecks, and minimizing write-offs. Look for trusted partners who can help.

4. Identify Opportunities for Expanding Care and Services
Start with the outpatient services you already provide. Look for patient-centric points of clinical convergence—where multiple departments can collaborate to treat a condition or help manage therapy. Weigh them against the health needs of your community.

5. Look Beyond Your Four Walls
Survey the landscape in your community. Take stock of your successful outreach partnerships. Can you partner with providers outside your organization to extend access to your care? Can they complement and enhance the value you provide for your patients?

With the right strategy, the outpatient diagnostic and ancillary services you already provide can elevate the care you bring to your community—while alleviating staffing and financial pressures. And as patient care continues to transition from acute to outpatient settings, it also helps position your organization for long-term success. Rethink the role these departments can play in your organization—and for your patients.

Optimizing how you keep up with changing payor policies, expand your market access, and maximize reimbursement to minimize the patient’s responsibility is critical to the success of your outpatient and ancillary services. Seek out those who advocate at the local, state, and federal levels, innovate to address your most pressing issues, and deliver consistent, relevant, and trusted expertise. A focus on innovation, advocacy, and expertise will enable your digital transformation strategy to deliver an outpatient and ancillary service profit center.

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