A first look at the early outcomes of the COVID Issue and how it will affect your income.
Many laboratories and pathology practices are struggling financially. They have had their billers close down, the staff laid off and their volumes plummet. Many managers are wondering how they are doing compared to others in their field. While some states are still shut down and others just starting to open up, the question needs to be answered, how is my laboratory or practice doing compared to others?
There are numerous variables involved in medical billing; in-house versus outsourced billing, billing software, offshore vendors versus onshore, payor mix, bill cycles, and fee schedules, just to name a few. There are several common denominators we should accept. First, everyone is being affected. Second, most groups want to know their total loss due to this change and how to move forward. Here is how several types of laboratories and practices are looking at this time:
Independent toxicology, molecular and clinical laboratories:
Most groups had a very average first quarter. In fact, many of our clients were even up 1% in charges. First quarter payments were average across the board.
The second quarter saw the beginning of the change for most providers — many saw charges drop up to 40% in April. This is due to closing all non-emergent healthcare, which caused testing to drop significantly. Some of this lack of testing will be made up on COVID testing, but most of this volume will be in May and further as our laboratories ramp up testing.
So far, the payments are off for these clients over 50% on average in April. This is due to a loss in business and changes in billing procedures such as work at home. Furthermore, many billing people were labelled as “non-essential” and unable to do their work from home. Complicating this is the fact that many off-shore payers closed down also.
Hospital Based Pathology Groups:
First quarter charges were very normal for most groups nationwide. The second quarter charges are down 30% in many areas and are slowly starting to rebound. Most states will have elective surgeries up and running by May 24, if not much sooner. Some outliers may exist.
The second quarter shows payments are off significantly for many practices — currently our practices are tracking at a collection rate of 60% of norm. This again is tied to lack of volume and lack of attention as the billers struggle to understand the new environment.
Independent Anatomic Laboratory/Dermatology Laboratories:
This category of clients seems to be hit the hardest. These groups are totally dependent on referral of anatomic tissue from others and most of their referral sources were shut down. The closing of these preventative healthcare providers will have a dynamic effect on these laboratories. Most of these laboratories have seen a 50%-70% reduction in their work volume. These companies will be the slowest to recover from this change and will likely have the largest negative outcomes.
In summary, the good news is many states are starting to open up elective and preventative healthcare procedures. The bad news is that many laboratories and practices will struggle to understand their finances and the total loss going forward.