How to turn a hospital lab from a cost center to a profit center — 3 takeaways

Hospital labs perform a critical function that guides clinical decision-making and impacts patient outcomes — and there is growing pressure for health system leaders to expand labs' orbit of influence.

During a March webinar hosted by Becker's Hospital Review and sponsored by XIFIN, Harley Ross, chief commercial officer at XIFIN, and Stephanie Denham, associate vice president for revenue cycle management systems and analytics at XIFIN, discussed challenges hospital labs face, a new and evolving role for these labs, and strategies to reinforce their value-add to organizations.

Three takeaways:

  1. Hospital labs are not immune to the broad challenges health systems face. Those challenges include staffing shortages; complex payer, compliance and regulatory requirements; interoperability and cybersecurity difficulties; nontraditional competitors; increasing digital patient engagement expectations and rising out-of-pocket costs. Hospital labs also face a unique set of operational issues, such as high denial rates due to missed opportunities on the front end (such as coding limitations), external challenges (such as payer contracting exclusions) and internal competing priorities (such as a lack of reporting to track lab financials).
  1. The lab's role in the health system is evolving. Hospital labs are essential for the practice of medicine and are often thought of as a cost center. However, if managed effectively by establishing the right benchmarks, metrics and continuous process improvement, labs can also be a profit center. Managing effectively, Mr. Ross said, "is not just about maintaining the status quo, but about giving a transformational experience that helps your clinicians, helps your patients and helps your bottom line — without the need to sacrifice one for the others." To support such transformation, operational leaders can work with subject matter experts to scale lab operations, collaborate with their health system's revenue cycle and financial teams, and leverage automation technology to expedite processing of high-volume, low-value claims.
  1. Turning a hospital lab into a profit center requires calibrating it as an "outreach lab." An outreach lab is a lab that serves not only inpatients, but also outpatients referred by physicians, practices and surgery centers in the community. Positioning a lab as an outreach lab therefore depends largely on building and maintaining relationships with those stakeholders, as well as on the capacity to segregate relevant data. "Being able to separately monitor what's happening in your outreach space is going to help you understand what opportunity exists and how well you're capitalizing on it," Ms. Denham said.


To enable this process, it is important to "slice and dice" the data by role and dataset:

  • Revenue cycle team monitoring billing and accounts receivable data
  • Lab management monitoring volume, turnaround times, referrals and relationships data
  • Finance team monitoring trends, KPIs and forecast data

In a healthcare environment marked by increased regulation and competition, leaders can set up hospital outreach labs for success by:

  • Seeking out subject matter expertise
  • Building or acquiring role-specific reporting capabilities for finance leadership, RCM management, lab directors, and sales
  • Conducting a gap analysis to identify optimization opportunities
  • Forging collaboration across key internal teams
  • Segmenting payer and client data to inform forecasts and drive growth for the larger health system.

To register for upcoming webinars, click here.

Copyright © 2023 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars