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Amid Chaos — Big Changes Can Create Future Opportunity and Resilience

  • AVP Product & Partner Marketing, XIFIN

Unquestionably, the COVID-19 pandemic has had a significant impact on the diagnostic industry. Whether you manage a hospital outreach program, pathology practice, remote patient monitoring company, or an independent lab with a broad test menu – volumes have been reduced dramatically with the cancellation of elective procedures. As the XIFIN Laboratory Volume Index reveals, some diagnostic providers have been able to offset the volume decrease by adding COVID-19 testing to their menu, but most have not been able to make up the volume to get back to their pre-pandemic baseline.

During this type of chaos, it may seem to many like maintaining continuity and managing risk is the best approach. Alternatively, some diagnostic providers may be considering significant changes despite the market turbulence in an effort to harness opportunity once the pandemic starts to recede or simply because they were not as resilient as they had hoped. With volumes significantly down, IT and RCM resource capacity for projects have gone up and those providers who aren’t engaged in testing and treating COVID-19 patients are finding time to take on “future” projects today.  With accounts receivables (A/R) going down across the board as RCM teams clean out their respective backlogs, the time to change systems and services have never been less costly.

A change in how claims processing and billing is managed going forward would be considered a “big change” since it is directly related to a diagnostic provider’s cash flow. Performing revenue cycle management in-house means your cost structure is fixed (and predictable). When testing volumes precipitously drop, however, a fixed cost becomes a liability. For that reason, some diagnostic providers are moving or are considering moving to an outsourcing structure that means this cost will be a variable one that aligns with testing or device volume changes. As volume and business grow, their costs scale proportionally, while when volumes decline, they have protection on the downside.

Interestingly, before COVID-19 changed the way labs work, a Black Book Market Research survey revealed a sharp increase in clinical outsourcing relationships due to the pressures of value-based care reforms.

Whether your organization is a start-up, a fast-growing molecular diagnostic provider, an independent diagnostic testing facility (IDTF), or is a more established hospital ancillary laboratory or pathology practice, you may find that outsourcing all or a part of this functionality can improve both operational and financial performance. For some organizations that have been handling billing and RCM services in-house, it can make sense to start outsourcing to gain more flexibility in managing staffing and other related expenses.

Hospital and health system laboratories are one of the groups that stand to benefit the most from a shift to more outsourced billing. For these organizations, outsourcing has been a long-established way to transfer day-to-day administration of noncore functions to outside vendors. This is especially true if the laboratory is using the hospital- or health system-wide enterprise systems. Hospital-wide RCM staff are focused almost exclusively on large hospital-based claims, and as a result, smaller dollar lab claims don’t get the attention they deserve to maximize reimbursement.

Because the average cost of a diagnostic lab test is extremely low compared to a hospital stay, for example, it is often written off without a second thought. Unfortunately, this leaves revenue uncollected for work performed by expensive and highly skilled professionals. And from a risk management perspective, the health system team usually lacks the laboratory-specific expertise on compliance and payor edits to handle the lab claims effectively.

So What Should You Expect When You Outsource Your RCM?

Diagnostics providers that choose to outsource should receive complete billing and revenue cycle management support from a dedicated outsourcing billing group that has demonstrated success working with leading labs, pathology groups, and IDTFs to help efficiently maximize cash collections. Choose an RCM partner that uses a highly distributed workforce and native cloud-based platform, so you know your vendor can execute your billing no what is happening in the world.

Consider an outsourcing partner that offers the flexibility to move between delivery options should your business needs change. For example, you may choose to start with an outsource model and quickly move to in-house billing and collection when you have the staff in place to take it on. Likewise, a current in-house XIFIN RPM client may choose to move to the outsource service model if it needs more flexibility in its staffing. As a diagnostic leader, you want to gain control and visibility over financial operations, optimize revenue and maximize cash collections, whether you manage the process in-house or if you choose to outsource all or part of your billing operation.

Black Book Research has ranked XIFIN No. 1 in 2019 for laboratory support and RCM outsourcing. The advantages of outsourcing with XIFIN include:


Our dedicated outsourcing billing group processes nearly $9 billion annually in gross laboratory claims for laboratories of all types, including hospital outreach, clinical, molecular, anatomic pathology, and IDTF.

Payor Relations

A focused team actively manages the relationship with payors and have developed a wealth of expertise and compliance knowledge.


Organizations benefit from the same award-winning RCM solution, whether delivered in-house or through outsourcing.

Selecting the Right Partner is Key

According to the Black Book Research survey, organizations are doing a much better job in assessing the need for outsourcing and selecting appropriate outsourcing vendors, but many still fall short when it comes to managing the outsourcing relationship through critical clinical, financial and operational performance indicators. “It is a matter of finding the right company to partner with through research, peer recommendations, and due diligence on the firms being considered,” stated the research findings.

As you move forward, this Outsourced Billing Quick Reference Guide’s list of considerations and questions may be useful in the decision making process.
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Published by XIFIN
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