Many pathology groups report shrinking revenue, yet some innovative pathology groups continue to grow through savvy pricing and by adding value to payers and physicians

Times are tough for anatomic pathologists in private practice. Medicare programs and private payers regularly slash prices for both technical component and professional component services. In addition, the growing number of narrow networks means that pathology groups find themselves excluded from access to an ever-larger proportion of patients.

This is not news for the typical anatomic pathologist working in a private practice setting, who today may be making substantially less personal income than just a few years ago. Over the past decade, pathologists have seen multiple assaults to their revenue by client physicians, health insurers, and consumers.

Revenue Shrinkage, Condo Labs, and Narrow Networks

The introduction of anatomic pathology condominium laboratory complexes in 2004-2005 was a way for urologists and gastroenterologists (GIs) to set up their own histology labs to do the anatomic pathology (AP) work for their own patients—thus capturing that revenue and profit for themselves. (See The Dark Report, “Pathology “Condo Labs” Are New Business Ploy,” July 19, 2004.)

These AP condo labs fell out of favor a year or two later, after the government published opinions that classified them as non-compliant with federal law. The larger urology and GI groups simply closed their AP condo labs and built a regular histology laboratory within their group practices. This caused many pathology groups in many cities throughout the nation to lose a high volume of case referrals from these same urologists and GIs, as well as the substantial revenue that came with those specimens.

Another attack on anatomic pathology revenue has been the steady reduction in what Medicare, Medicaid, and private health insurers pay for Technical Component services. During these same years, a similar trend of ongoing price cuts to pathology Professional Component services occurred. It meant that pathologists were often working harder, but practice revenues continually declined. In turn, that caused the personal income of pathologists at these groups to shrink.

These price-cutting trends that hit private pathology groups were exacerbated by another powerful healthcare trend during recent years—the growth of narrow networks. Health insurers that were under pressure to cut the cost of care decided that excluding higher-priced providers from their networks would be a way to better manage the yearly increase in healthcare costs.

Thus, local clinical laboratories and independent pathology groups found themselves often excluded from the provider networks of both regional and national health insurers. That status denied them access to patients covered by these health plans. In turn, this often caused a sizeable drop in revenue to these pathology groups.

These trends continued and within a few years most small and mid-sized pathology groups found their histology labs to be money losers or, at best, marginally profitable.

Robert Michel (above), Editor-In-Chief of The Dark Report, recommends this critical webinar for anatomic pathology groups that wish to increase their market share, generate more specimens; lift practice revenue; and boost their pathologist’s income. (Photo copyright: Dark Intelligence Group.)

Robert Michel (above), Editor-In-Chief of The Dark Report, recommends this critical webinar for anatomic pathology groups that wish to increase their market share, generate more specimens; lift practice revenue; and boost their pathologist’s income. (Photo copyright: Dark Intelligence Group.)

Pathology Groups That Adapt to Payer Changes Can Increase Revenue, Profit

According to Robert L. Michel, Editor-In-Chief of The Dark Report, having the right prices and providing price transparency is one reason why savvy pathology groups are still growing, adding market share, and bolstering the finances of their practice.

“Over the past five to eight years, Medicare and private payers have changed their business practices in ways that can financially cripple any pathology group that refuses to adapt to these changes,” Michel observed. “This is why—during this same period—some pathology groups continued to grow specimen volume and revenue, while others saw revenue shrinkage and were forced to cut back the income earned by their pathologists.

“But for every pathology group that is changing their pricing policies to meet the new needs of payers, physicians, and patients, there are 100 pathology groups doing things the way they always have and wondering why they keep seeing less revenue,” noted Michel. “This is one factor in the financial success of innovative pathology groups.”

Tighter Management of Outside Pathology Billing Services Produces More Profit

Another place where savvy groups make up additional revenue that slips through the fingers of less successful groups is in billing and collections. Michel believes that most pathology groups do not manage their outsourced billing and collections vendors with the same diligence that they manage, for example, the quality of their diagnostic services.

“Here is an easy place to pick up additional revenue,” stated Michel. “Not all billing services are equal and so they often don’t collect all the dollars legitimately owed to the pathology group. This is true when collecting from Medicare, private payers, and patients. It is a well-established principle in business and pathology that the closer you manage a process, the better the outcomes from this process.

“Said differently, when a pathology group manages its outside billing service with greater attention to detail, it receives more dollars collected from the claims that are submitted. For a group with annual gross billings of, say, $8 million, every additional 1% of that money collected (and not written off) generates $80,000 more for the pathologists in the group. And that’s all profit, which falls directly to the bottom line for distribution to the partners.”

Building Revenue, Increasing Pathologist Income

To help pathologists and their group practice administrators stay up to speed on the latest market developments that help groups build more revenue and increase pathologist income, Dark Daily is offering a unique webinar titled: “Boosting Revenue and Pathologist Income during 2017 with Creative Strategies for Pricing, Pathologist Productivity, and Market Share Growth.” This 90-minute webinar will take place on Wednesday, January 25, at 1 PM Eastern.

Two experts will lead the webinar:

Robert H. Tessier, Senior Reimbursement Consultant with HBP Services, will share the best strategies his pathology group clients use to increase group revenue and optimize the income of individual pathologists.

Josh Yelen, Vice Chairman for Administration, Department of Pathology at University of Miami Miller School of Medicine, will discuss significant changes in healthcare delivery and managed care contracting in Miami and along Florida’s East Coast. He will then discuss the clinical and business initiatives used by his pathology group to protect and expand market share, particularly in the outreach market.

These five primary ways to sustain revenue and increase pathologist income will be discussed:

• Understanding the competitive dynamics for pathology services in your regional market.

• Effective strategies for pricing anatomic pathology services and why your pathology group needs price transparency.

• What’s changing in billing/collections for AP services and how to create a “billing scorecard” that enables your group to increase the collected revenue from your billing service.

• Pathologist productivity is now a critical success factor for every group. You’ll see the productivity numbers for a national study involving pathology groups. You’ll also gain insights into how (when a pathologist retires) to assess the “replace or don’t replace” options that will work best for your group.

• Building market share is the cornerstone for every group’s financial stability. This webinar will provide you with what’s working and what’s not for the nation’s top-performing pathology groups.

This webinar is timely for other reasons as well.

• First, the federal Centers for Medicare and Medicaid Services (CMS) is now gathering the Protected Access to Medicare Act (PAMA) private payer market price data and plans to use this data to set Medicare Part B prices, effective on January 1, 2018. CMS estimates that the fee cuts it implements will reduce payments to labs by $400 million in 2018 alone.

• Second, many pathologists and their practice administrators still are not fully informed about the Merit-based Incentive Payment System (MIPS), authorized by the Medicare Access and CHIP Reauthorization Act (MACRA) statute, and how it will either reward or penalize all physicians—including pathologists—in 2018.

Both these reasons make it imperative that pathologists and practice administrators take effective action today to position their group for clinical and financial success. Dark Daily’s webinar on January 25 is designed to help you identify and implement winning strategies that:

• Increase market share;

• Generate more specimens;

• Lift revenue; and

• Boost pathologist income.

Ensure your place at this timely webinar. Register now with this link. (Or copy and paste this URL into your browser: https://store.darkdaily.com/audioconferences.aspx?id=75).

 

Related Information:

Webinar Topics, Speakers, Agenda

Webinar Registration

Medscape Pathologist Compensation Report 2016

A Pathologist’s Observations About In-Office AP Labs

Pathology “Condo Labs” Are New Business Ploy

A CEO’s Guide to Increasing Laboratory Valuation: Effective Revenue Cycle and Compliance Management are Critical Success Factors

Medscape Ranks Physician Compensation for 2015: How Do Pathologists Fare?

Boosting Your Pathology Lab’s Revenue in 2016: Three Essential Business and Clinical Strategies to Increase Pathologist Income

Failure to Pay for New Molecular CPT Codes Creates Money Crisis for Clinical Laboratories and Pathology Groups

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