A strong laboratory outreach program is vital to hospital and health system success. A positive hospital outreach lab encounter helps drive admissions and referrals to the health system for additional services, and also provides the health system with valuable lab data, which contributes to help lower costs across the health system and support the move toward precision medicine. Outreach labs are also well positioned for continued steady growth and provide great contribution margins to the health system.
Even with all the positives, many health systems still do not manage the laboratory as a separate business unit or service line. This usually means they are also billing lab claims through their hospital revenue cycle system, utilizing hospital revenue cycle staff, neither of which are well-positioned to handle the high volume, low dollar transactions generated by the lab.
Below are some of the key challenges outreach labs face when trying to utilize their existing hospital revenue cycle system and the associated staff for their billing, collections, and reporting.
Hight Bad Debt Rates
Utilizing the hospital or health system revenue cycle management (RCM) staff using the health system RCM system results in a high percentage of bad debt write-offs for the lab claims. The staff is trained to prioritize and focus on large dollar claims, such as inpatient surgeries and high dollar outpatient procedures. This makes sense. However, as a result, the majority of laboratory claims that get denied are never corrected and resubmitted, instead they end up in a queue for write-off. In fact, CMS reports that 50% of denied claims never get corrected and resubmitted for payment. This percentage is often even higher when a health system is using their RCM system rather than a laboratory-specific system. This is because the hospital healthcare system lacks the automation and client engagement tools needed to fix invalid information and efficiently correct denials.
Lack of Laboratory-Specific Compliance Logic and Payor Rules
The health system RCM technology is simply not focused on laboratory compliance and billing rules and may not contain the most up-to-date laboratory-specific payor edits. That said, laboratory compliance, regulatory requirements, and specific payor billing policies are constantly changing. Without up-to-date laboratory compliance logic and billing rules configured into the RCM system, the laboratory and ultimately the health system is open to a much greater amount of risk.
Lack of Outreach Client Support Tools
The hospital RCM system lacks the tools the lab needs to understand, engage, and support their ordering clients, physicians, and patients. The laboratory needs automated tools to help them receive updated information from ordering clients as up to 40% of requisitions have missing or incorrect information. In addition, an ordering client should be able to go online to review and pay invoices, check pricing and CPT codes, and deliver documents to the lab. The laboratory also needs to be able to understand and easily track profit, utilization, and errors by a client in order to support, sell, and grow the business. Lastly, the health system RCM system often lacks integration into key laboratory outreach systems, such as CPOE and CRM systems.
Lack of Financial Reporting and Visibility
The hospital RCM system often does not provide near enough lab specific reporting for the laboratory leaders to understand their financials and run their laboratory as a business. To optimize financial performance and demonstrate business value to health system leadership, the laboratory needs to be able to track lab-specific key performance indicators (KPIs) such as net revenue and operating margin on down to detailed analysis of month-over-month revenue and profitability by client, test, and payor.
Hospital-centric thinking is the number one cause of outreach lab failure. The laboratory administrators would benefit to think like business people and establish the outreach lab as a revenue center and its own service line or business unit. To measure and grow the lab business, a laboratory-specific RCM system and laboratory billing partner, such as XIFIN, is crucial. This health information technology is ultimately needed to optimize clinical data management and improve the financial performance of the lab while gaining influence at the health system C-level.
Contact us today for a demo and to how to establish the outreach lab as a revenue center.