A miscalculation of the total cost of billing in a laboratory can lead to a weak bottom line and inferior laboratory accounts receivable performance. Often-missed line items, such as software maintenance, cost of reporting, business intelligence add-ons, and hardware costs, can result in a cost that's closer to four times greater than what was predicted.
For example, a laboratory that fails to account for all its billing costs may estimate billing cost to be $300,000 when it actually has costs reaching as high as $1.2 million. If that laboratory's annual revenue is $20 million, the perceived cost of billing would lead the lab to the erroneous conclusion that its cost of billing is a low 1.5%. But actually, it's a very high 6%. Therefore, without an accurate measure of the cost of billing as a percent of revenue, a laboratory will not recognize it needs to make changes to optimize its revenue and financial performance.
An important step toward an accurate total cost of billing is using a best-in-class billing solution to maximize your lab’s account receivables. XIFIN, a health information technology company grounded in a deep background of working with diagnostic clinical and financial data, has found that laboratories with traditional in-house billing solutions typically have a true total cost of billing between 4% and 6% of revenue. Conversely, clients of XIFIN RPM, a cloud-based solution designed to improve visibility, control, and profitability, typically see a total cost of billing of 2% to 3% of revenue, about half that of industry averages.
Vital Elements of Cost of Billing
To get an accurate total cost of billing, here's what you need to understand about expenses:
To maximize cash and revenue and keep your total cost of billing low, laboratories need an optimized billing solution that enables a comprehensive understanding of the total cost of billing as a percentage of revenue. Total cost is affected by hidden costs and system inefficiencies that can inflate workforce requirements and reduce cash and revenue. These, in turn, can paint an inaccurate picture of billing costs as a percent of revenue, which often leads to a false sense of security in terms of effort required to improve the bottom line.
For a total cost of billing comparison with and without XIFIN, as well as a more in-depth look at achieving a more accurate total cost of billing, download the XIFIN whitepaper, "The Executive's Guide to Measuring Total Cost of Billing in the Laboratory." You'll discover how an optimized billing solution maximizes cash and revenue while keeping the total cost of billing low, and provides the visibility needed to optimally manage a laboratory’s business.