This is an excerpt of a 2,083-word article in the April 20, 2020 issue of THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.
CEO SUMMARY: In response to the coronavirus outbreak, patients stopped seeing their doctors for routine care and hospitals ceased doing elective services. With fewer test referrals, clinical labs and pathology groups were hit with a substantial decline in revenue. The Dark Report has unearthed data from one of the nation’s largest revenue cycle managers serving showing that—over the four weeks beginning in the second week of March—lab revenue for clinical labs and anatomic pathology groups dropped precipitously.
IN THE SECOND HALF OF MARCH, clinical laboratories and pathology groups experienced a sharp decline in daily lab testing volume and revenue that was unprecedented in American history. The drop in routine test volume ranged from a low of 44% for some AP groups to almost 60% for some clinical labs, according to data from XIFIN, a company in San Diego that provides lab revenue cycle management services.
Fewer Patient Visits
As the COVID-19 pandemic widened, government officials issued shelter-in-place orders in cities and states nationwide. In response, patients stopped making routine visits to physicians and hospitals canceled elective procedures. Beginning about Monday, March 9, the volume of routine tests and regular anatomic pathology specimens dropped sharply.
At the same time, the SARS-CoV-2 pandemic also required labs to run large volumes of virus tests. Payment for these tests has helped to offset some of the revenue lost from the decline in routine test volume, even though those payments were slow to arrive and initially barely covered lab costs, reported Kyle Fetter, XIFIN’s Executive Vice President and General Manager of Diagnostic Services.
“Starting in the third week of March, we saw labs suffer a sharp drop in routine testing,” Fetter said. “But at about the same time, many labs began to offset those revenue losses with testing for the novel coronavirus.” The steep decline in routine testing led to a fall-off in lab revenue that ranged from 44% for some AP specimens to 70% to 80% for some specialty AP work, Fetter said. Clinical labs had a drop in routine testing volume of 58%, hospital outreach testing declined by 61%, and molecular lab volume went down by 52%.
Not Business as Usual
“The outbreak of COVID-19 caused providers to shift away from business as usual,” noted Fetter. As physicians sought to reduce the risk of exposure to the virus, they limited office visits when possible, and hospitals stopped elective surgeries and routine inpatient and outpatient care.
“The changes physicians and hospitals made showed up in the number of lab transactions we saw,” said Fetter. “Over four weeks beginning March 9, we saw a cumulative drop in test volume from all of our lab clients of just over 40%.
“The effects are being felt widely and depend on what type of testing each laboratory does,” he commented. “In anatomic pathology, testing has decreased across the board by about 50%. But for labs serving dermatologists or doing Pap tests, the volume may be down closer to 70% to 80%.”
Big Losses, Some Gains
Since the beginning of April, testing volume for clinical labs began to tick up due to an increase of requisitions for COVID-19 tests. That increase allowed labs performing those tests to recoup just under half of the volume they lost, he said. Clinical laboratories and AP groups also had trouble getting health plans to address problems with payment, according to Fetter’s analysis.
“Private payers have mostly failed to respond to labs’ questions about payment denials,” he said. “One reason is because so many staff members at billing companies, health insurers, and some clinical laboratories are working from home. The result is slower payments.”
By tracking specimen volume and lab revenue from hundreds of laboratories and pathology groups, XIFIN can show, in detail, how much lab test volume declined over each week beginning during the week of March 9 to 15.
“We track volume for our lab clients daily and weekly,” Fetter explained. “On our side of the billing transaction, we have a delay of one day or several days from when a lab gets a specimen and when we can see the billing report from the lab. So, for clinical lab testing, we can see that drop either the same day or within a couple of days. With genetic or other long-term tests, it can take a week or two for us to see those reports.
“Those numbers showed us not only the decline but also a slight increase in testing volume when labs started getting requisitions for coronavirus testing,” Fetter reported.
XIFIN’s data show the steep drop in routine test volume came approximately in mid-March, at about the same time that some clinical labs saw a slight increase in coronavirus testing.
Tracking the Volume Drop
“The requisitions for virus testing arrived just before the week ending March 15,” Fetter noted. “That coincided with when we saw the early shelter-in-place orders going out in the major populated areas. “This is right at the time when the material decrease in testing volume became visible,” he added. “For the week ending March 14, we saw test volume from our lab customers drop by about 4.5%.
Did your lab revenues drop drastically starting in mid-March? Share your experiences with us in the comments below.