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From the Editor’s Desk
Recognizing the Benefits of Outsourcing
Have you ever looked closely at the total cost of your billing
operation? When measuring billing solutions, most institu- the billing cost calculation. Claims that are rejected because
tions do not take into consideration the various components
that make up the cost of billing. Laboratories try to cut costs
to improve their billing performance only to realize that by
reducing the cost, the true price would be much higher.
There are more effective ways to lower your costs and
achieve a better cash flow.
Figure 1 is a breakdown of each component when
using an outside billing solution compared to billing
in-house. When considering a billing option, take in
consideration the following key components and evaluate
the cost savings.
Staffing – Most laboratories underestimate the cost of a
billing staff. Hospitals would like to keep the cost low. Most
laboratories understand employing a managed services
provider removes the burden of outreach billing, freeing the
hospital staff to concentrate on the higher dollar amounts.
System Edits and Claim Submission – Maintaining
system updates and claim submission requires labor
resources. Data maintenance is time consuming and
Know your total cost of billing in the laboratory
Reporting – Laboratories misjudge the cost of reporting. This can have consequences if the laboratory decides to
If the laboratory wishes to add custom reporting there is put-off upgrades to compensate for the maintenance.
additional coding involved and it comes with a price tag.
Most of the time, this cost is passed on to the laboratory. Software Licensing – If the laboratory manages to
lower the cost of the licensing fee it is still a substantial
System Upgrades - The task of upgrading the system is out-of-pocket expense and would have to be approved by
usually deployed to Lab/IT resources to implement changes, upper management.
tests and validations. Without resources to stay on top of
upgrades, inadequacies can cause inefficient workflows and Clearinghouse Cost / Claim Scrubber – Clearing-
a loss of revenue for the laboratory. Most laboratories will house cost and claim scrubbers add up quickly and can be
increase revenue by cutting the cost of IT labor and vendor factored in your cost of billing. Managed service vendors
upgrade fees. that provide billing services include claim scrubbing and
clearinghouse as part of the percentage of net collected.
Coding & Classification – Incorrect, wrong or under The bundled services can be pennies on the dollar.
coding can cause a rise in claim denials. Having to recycle
the claim back through the process can contribute to aging Laboratories should analyze their cost of doing billing and
claims. Particularly now with the new PAMA regulation, measure it against the percentage of revenue and include
laboratories are feeling the effects of diminishing the added hidden cost associated with system deficiencies
reimbursement. and inflated staffing. It makes economic sense to eliminate
out-of-pocket expenses to keep your billing cost low.
Software Maintenance - Software maintenance can Revenue managed service providers are in the business
range from 15% to 25% of the total cost, impacting the to levitate the cost that comes with in-house billing.
bottom-line revenue.
a costly undertaking that is often unintentionally left out of Figure 1
of missing patient/billing information cause a needless
back-log in claims, pulling resources to track down the
information.
Figure 1
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