Management of Pathology Practices

February 2009

Management Home Page


The New Year Offerings

By Mick Raich, Vachette Pathology


Every year seems to bring more change. †This year, pathologists got some good news as CMS has actually projected an increase in the payment for 88305. †This will help offset the 5% loss that groups saw last year from CMS. †We know that many managed care plans gave this pay cut to their practices through their contractual relationships. †It should be interesting to see if they give the same pay raise to the practices as CMS does. †

This year will present some interesting challenges for pathology businesses. †First and foremost we must understand how the economy will affect the bottom line.  


We need to examine the big picture. †Many health systems are closing borderline profitable ventures as the interest in bond structures becomes more intense. †This means that any hospital site that is in the red will be looked at closely and in many cases closed.† These closures mean some unprofitable work will be driven back into main tertiary hospitals. †This can equal higher self pay volumes. †In some cities, health systems have closed entire hospitals, further concentrating Medicare, Medicaid and self pay volumes. †In one case, one of our practices saw a double digit increase in self pay volumes over a three month period of time.† Also, hospitals are examining their fixed costs as variable costs rise. †This can mean more hospitals and health systems will tighten down on their Part A compensation, or in extreme cases, will actually look for providers as a revenue stream.


Next, many employers are feeling the crunch of the economy. †This means they are looking at costs. †Health care premiums are rising at a rate of 14%-25% per year in some sectors. †According to The Wall Street Journal, by 2016 the average premiums paid by employers and their workers for family coverage could top $24,000. †That amount would put the cost for family health insurance at 45% of median household income. †Many companies cannot handle this expense. †To offset this increase, employers are looking at basic policies with large deductibles. †After holding steady at $500 for seven years running, the median deductible for traditional PPO plans, the most common type of insurance offered by employers, doubled to $1,000 in 2008, according to a survey from the HR consulting firm Mercer. 


These deductibles are harder to collect as they fall into the self pay category, but having an aggressive self pay plan is vital to success. †Health saving accounts are now much more prevalent this year than the last few years and will only increase. †These are quasi-self pay type plans that actually put some of the responsibility back into the patientís hands. †Again, collections here could suffer. †The National Center for Policy Analysis published a survey indicating that the number of HSA-covered lives and accounts will double from January 2008 to January 2009, and reporting that financial advisors have started warming to HSAs. †Mercer LLC estimates 19% of employers will offer HSA-eligible plans in 2009.† Finally, the United States Postal Service lost $6 billion last year, so they are thinking of delivering mail only five days a week.† The bottom line is that it looks like 2009 will be the year of some distinct changes. †


One area where pathologists and laboratories can fight back is the self pay billing process. †A strong self pay billing cycle is vital as these changes take place. †Here are some solutions to help you be aggressive as these changes take place:


● Take credit card payments.

● Provide self pay discounts for quick payment.

● Pre-pay one time payment costs.

● Use pre-collection notices in your bill cycle.

● Implement a phone call process to self pay patients to set up payment arrangements.

● Authorize your billing agency to offer a discounted rate or negotiate with the patient for payment while they have the patient on the phone.

● Include information about online payments in your statements. †Many patients prefer to pay a bill without having to speak directly to a person.

● Use resources available to update bad address information.  This could be from the hospital or even at  


In summary, we all know that there are direct market changes affecting pathologists and laboratories in 2009.  It is vitally important to have aggressive self pay billing, with a proactive and not a reactive plan to combat the changes that are coming.



Mick Raich is President / CEO of Vachette Pathology, a national pathology and laboratory management and consulting firm. †He can be reached for further inquiry toll free at 866-407-0763 or e-mail