LabCorp 2014 Annual Report Download - page 22

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The Company’s sales force is compensated through a combination of salaries, commissions and bonuses at levels commensurate
with each individual’s qualifications, performance and responsibilities. The general sales force is responsible for both new sales
and customer retention. This general sales force is also supported by a team of clinical specialists who focus on selling esoteric
testing and meeting the unique needs of the specialty medicine markets.
The Company competes primarily on the basis of quality of testing, breadth of menu, price, innovation of services, convenience
and access points throughout the nation.
Information Systems
The Company has developed and implemented information management systems (“IS”) supporting its operations, as well as
positioning the Company as a trusted knowledge partner. The Company operates standard platforms for its core business services
including laboratory, billing, financial and reporting systems. These standard systems ensure consistency and availability on a
national scale. Additionally, the Company continues to expand its primary laboratory capabilities with services supporting digital
pathology and enhanced specialty lab solutions. With approximately 90.7% of its domestic revenue (approximately 85.9% of
consolidated revenue) processed through these systems, the Company's centralized IS platforms provide tremendous operational
efficiencies, enabling the Company to provide consistent, structured, and standardized laboratory results and superior patient care
at a national level.
In response to continued market demand for electronic laboratory data and a commitment to improving the physician and
patient experience, the Company continues to expand its LabCorp Beacon® platform with new capabilities and services. The
Company continues to leverage information technology advancements to deliver enhanced services through its LabCorp Beacon:
Patient product and expanded access to AccuDraw® and LabCorp Touch® capabilities. Additionally, the Company will continue
to expand and improve client connectivity through its LabCorp Beacon platform designed to improve lab-related workflow such
as ordering tests and sharing, viewing and analyzing lab results. The platform is also available in a mobile edition accessible via
market leading mobile devices. LabCorp Beacon is a key component of the Company's connectivity portfolio, whereby the Company
provides physicians a choice of tailored solutions that also include robust integration with electronic medical records/electronic
health records and personal health records ("PHR") applications.
The focus on the advancement of health information technology is a reflection of the growing demand for self-service, integrated
health care data and decision support capabilities. The Company's centralized analytic platform delivers enhanced analytic services
and decision support to physicians, hospitals, local communities, state agencies and national networks. The Company has a number
of new population health analytics programs in development to provide health care business intelligence tools to hospitals, physician
practices, and ACOs. These tools assist customers in their compliance and reporting requirements with respect to efficient
management of their productivity, quality and patient outcome metrics. The Company's robust rules engine maintains a large
number of clinical quality measures that are highly customizable and provide full compliance with Meaningful Use requirements
and ACO, Joint Commission and PQRS reporting requirements. Real time clinical alerts highlight gaps in care for patients and
patient populations. These industry-leading, data driven services position LabCorp as a trusted partner to health care stakeholders,
providing the knowledge to optimize decision making, improve health outcomes and reduce treatment costs.
Billing
Billing for laboratory services is a complicated process involving many payers such as MCOs, Medicare, Medicaid, physicians
and physician groups, hospitals, patients and employer groups, all of which have different billing requirements. In addition, billing
process arrangements with third-party administrators may further complicate the billing process.
The Company utilizes a centralized billing system in the collection of approximately 90.7% of its domestic revenue (85.9%
of consolidated revenue). This system generates bills to customers based on payer type. Client billing is typically generated monthly,
whereas patient and third-party billing are typically generated daily. Agings of accounts receivable are then monitored by billing
personnel and re-bills and follow-up activities are conducted as necessary. Bad debt expense is recorded within selling, general
and administrative expenses as a percentage of sales considered necessary to maintain the allowance for doubtful accounts at an
appropriate level, based on the Company's experience with its accounts receivable. The Company writes off accounts against the
allowance for doubtful accounts when accounts receivable are deemed to be uncollectible. For client billing, third party and
managed care, accounts are written off when all reasonable collection efforts prove to be unsuccessful. Patient accounts are written
off after the normal dunning cycle has occurred and the account has been transferred to a third-party collection agency.