LabWest/Westcliff

By 2004, Westcliff Medical Laboratories had grown into the largest independent clinical lab in Southern California. However, this growth revealed inefficiencies such as a marginal legacy billing system with too many manual processes requiring increasing amounts of labor.

With no audit trail, compliance was nearly impossible as changes within the system could not be identified or traced to their point of origin. Westcliff realized that continued growth would be impossible without accurate revenue recognition and greater automation of the billing system. The lab's legacy billing/AR system software required manual review of claims, provided no claims visibility and could not facilitate accurate monitoring of collections for a growing list of accessions and clients. "Without the ability to accurately predict net cash flow, we had to keep a lot more cash in reserve," said then Westcliff CEO Rick Nicholson.

In addition, vendor upgrades were neither timely nor fully explained operationally. A program rewrite resulted in the system's failure to send out medical bills for sixty days. Despite a second rewrite and eventual recovery of the revenue, the lost time had delayed financial decisions and jeopardized compliance.

Without internal legacy system report functionality, the lab had to rely on vendor-run queries and Excel spreadsheets. The alternative was month-end snapshots that only showed what had been billed. With no audit trail, compliance was nearly impossible as changes within the system could not be identified or traced to their point of origin. Westcliff realized that continued growth would be impossible without accurate revenue recognition and greater automation of the billing/AR system software, so the search for a solution began before year's end.

Solution

The majority of potential vendor solutions that were reviewed made claims of improved billing/AR process and collections without quantifiable proof. However, one vendor solution, XIFIN, utilized a Web Based SaaS approach to its software. This intrigued both Mr. Nicholson and his VP of AR. "I was familiar with Lale White, XIFIN's CEO and her long track record in billing collections and coding," said Nicholson. "XIFIN made a number of definitive projections for collections and process improvements that I wasn't hearing from their competitors."

In the end, Mr. Nicholson trusted in the experienced opinions from his VP of AR and moved forward. "I believe in reports, but you have to believe in the people that run the system, and I had 100 percent trust in my accounts receivable VP," said Nicholson. "She was ultimately satisfied with the evidence and the software itself, so we moved forward."

Implementation & Rollout

Nicholson placed project control of the implementation and rollout under the CIO and VP of AR. Westcliff saw immediate benefits including a major reduction in IT support to manage files and run reports.

While Mr. Nicholson concentrated on management of cash flow, net revenue and financial statements, his VP of AR monitored collections, bad debt metrics, auditing and process flow via system reporting capability. Over the next several months, the lab gained the ability to accurately predict net revenue from XIFIN's detailed payment posting capabilities. "The reports gave us predictability and the ability to manage the growth of the company through confident revenue recognition," said Nicholson.

The rules-based workflow of XIFIN's system demanded and facilitated more upfront compliance through prompts and information requirements for the billing and claims process. A daily summary report showed error queue billings as well as notification of filing limits for those claims with missing billing information. Additionally, the XIFIN system automatically generated work lists for the certified coders. It also allowed input of narratives that lacked the specific ICD-9 codes so that they could be matched to proper codes.

Over the next six months, XIFIN's predictions for collections, revenue increases and other metrics were met or exceeded. Between the time of post implementation and acquisition, revenue increased by 15 percent while days outstanding were reduced by 52. Billing department productivity increased by 40 percent, allowing repurposing of some employees to other departments.