From a competitive perspective, hospital outreach laboratories seem to be well positioned, with recent research indicating outreach programs are holding their own market share compared to national laboratories. One such survey1 shows average operating margins at or above historical levels.
That said, laboratory leadership is often challenged to ensure hospital and health system leadership recognize the value the outreach laboratory brings to the larger organization. Optimal financial performance with steady growth, good profit margins, and revenues accurately forecasted is one important component of value. But hospital-based revenue cycle management teams are not built for the high-volume, low-dollar, laboratory claims. The net result is bad debt, reduced margins, a high cost to collect, and a laboratory viewed by executive leadership as underperforming.
Outreach laboratories also contribute a significant, albeit less quantifiable, value to the health system. With 70 percent or more of all physician – patient interactions consisting of a laboratory test, outreach laboratories can positively affect the customers’ (referring physicians) and patients’ perspectives on the entire healthcare system by focusing on the key strengths2 of the hospital outreach laboratory – rapid turn-around time, quality, and customer service.
A successful strategic plan for an outreach advanced clinical laboratory solution encompasses many facets. A fundamental pillar, however, must include:
- A revenue cycle system and service team specifically focused on the outreach laboratory that is fully integrated with other hospital systems
- Business partners who are experts in the laboratory industry
- Data analytics tool to measure and manage the performance of the outreach laboratory against its key performance indicators (KPIs)
The most effective and efficient revenue cycle management system will be:
- Highly automated (processing large volumes of claims with little labor intervention)
- Rules-based (serves as a repository for payor-specific billing rules)
- Integrated with other hospital systems
- Provide connectivity to customers and patients.
Optimized revenue cycle management will provide for increased collections, physician and patient communication portals to engage and improve satisfaction and retention, and improve efficiency through interoperability with other hospital systems.
The trend for outreach laboratory billing continues toward systems developed specifically for laboratories, whether operated by an internal or outsourced billing team. Optimized revenue cycle management will provide for increased collections, physician and patient communication portals to engage and improve satisfaction and retention, and improve efficiency through interoperability with other hospital systems.
Measuring and Managing Value
The critical requirements of an optimized revenue cycle management system must also provide visibility and access to actionable data. The availability of an easy-to-use business intelligence tool providing data via dashboards and reports gives the metrics needed to laboratory managers to best manage their business operations. Additionally, the laboratory expertise and industry knowledge of business partners help laboratory managers identify the most appropriate KPI’s to manage their business operations. This high-level, industry focused, access to data will help laboratory leadership manage the efforts of their sales team, measure month-over-month revenue and profitability by client, sales rep, procedure and payor, and provide quantifiable documentation to hospital executive leadership clearly demonstrating the success of the laboratory outreach operation.
Source1,2: Chi Solutions, 16th Annual National Hospital/Health System Laboratory and Outreach Survey Findings.