Stabilizing your labs revenue is an important goal whether you are just starting or perhaps you have been working at the same lab for some time, and you need a good laboratory billing system to increase efficiency in your revenue process.
This article will help you know the billing information that determines whether your program is meeting your financial objectives and to identify areas that will optimize the financial benefit of your laboratory.
Getting The Right Information
The first process is to get the right information and understand how it will help you run your laboratory. You need to check your patient activities and volume. Knowing the number of patients you have daily and monthly is very important even if you don’t know how much you are collecting at times as this understanding will help you control your financial activities for making profit in your laboratory.
How Can You Know Whether Bill Is Keeping Up With Your Clinic?
It is very important that you compare several months of gross charges to patient activity. The average charges should be a consistent. You need to know if the number of tests per requisition is consistent and also if all lab patients have been registered.
It can be a difficult task to make your system data correlate with your billing system since charges are independently generated on their own time of the day of service so making more cash is a proof that you are successful.
One important strategy is to look at is called EOBs [explanation of benefits] from your top client and observe their payment method. Collecting the accrual rate of your top payers is also a good idea because a particular client may pay 50% for a charge test and maybe 70% on another which will require you to come up with both volumes to determine the collection rate.
So you need to look at the consistency of the fixed costs and variable costs of your top payers and relate it with your overall cost to know the pays that are profitable. This information is vital to improve your lab’s financial performance.
The Basics of How To Understand Payer And Client Profitability And Revenue
Let assume that your costs are $40 per requisition, and you will have to know which of your financial classes are paying at your cost rate and figure out the payers who are contributing at least to your marginal cost.
You should not operate your business on a marginal cost basics which means you have to make choices on how you do your pricing.
While you choose the kind of payer you work with, it is also important to know the clients that are profitable, why are they not? And what you should do about it?.
There will always be less client profitability, Whether they are generating an inappropriate amount of edits like medical necessity where there is a lack of good documentation and when the valuable percentage of the work is denied.
SOME OTHER FACTORS INCLUDE you should be aware of are:
- more bad debt based on the co-pays and self-pays that the practice is operating on
- if the clients only send from select insurers HMO
- Whether the test mix ordered by the specialty is not is not well paid for.
- Another factor that determines your profitability is that you should always make sure your client revenue meets your marginal costs.
So HOW Can You Optimize Collection to Keep Your Laboratory Running
You will always need to collect payments even if you are yet to figure out your gross charges.
There are many issues that will determine how well you can collect in the laboratory like:
- Missing Or invalid diagnosis
- Business not being paid initially
- File definition issues in the lab system
- Missing UPINs [unique physician identification numbers]
- Missing Requisition Because Of Lack of Process control.
Since following up missing information can be very challenging as many as 50% of laboratory agreed that they lack appropriate follow-up according to research, it will be of great importance to:
- Edit information in other to know how to improve client behaviors and to track the response rate of unresolved edit
- Managing claims that aren’t paid for
- Taking a further step by collecting revenue from patients
In conclusion, you cannot successfully manage your laboratory income without some basic economics understanding.
You need this information to make wise business strategies. And getting that information is always the beginning of your laboratory success. I would guess that only 10 to 15% of the labs have all the information they need to manage their business – and of that number, only 5% act on the information proactively to better develop strategies to position themselves for success.