Hello, Neighbor – The Growing Role of Lab Services in the Medical Neighborhood

AUG 19

Laboratory testing is not only the single highest-volume medical activity, with an estimated 13 billion tests performed in the United States each year, but is certainly one of the most important medical activities, as an estimated 70% of medical decisions rely on test results (Federal Register; Green SF; Plebani). With the value-based healthcare landscape taking shape, the laboratory has officially ’moved in‘ to the medical neighborhood as it has become increasingly clear that effective communication across the patient care continuum often starts at the laboratory and initial testing can be indicative of more costly downstream care if left unmanaged.

With the laboratory now integrated into the medical neighborhood alongside the Patient-Centered Medical Home, Pharmacy, and Ambulatory Care, opportunities exist for laboratory personnel—from pathologists to quality leads—to optimize the laboratory and improve quality and service levels.  This optimization of laboratory practices can be accomplished by focusing on several key areas:

  • Controlling Utilization: Inappropriate testing may take on a variety of forms, from overutilization at the initial point of patient evaluation to underutilization when patient symptoms change.  As a recent Wall Street Journal article highlighted, misaligned incentives may add to the overutilization of laboratory services substantiating a 2013 study that found the rate of redundant testing to be north of 20%.  Beyond the economic costs and negative externalities (e.g. higher laboratory costs and increased resource burden to the health system), the downstream impacts are as costly, if not more so, as increased false results—whether false negatives or false positives—lead to incorrect diagnosis, prolonged hospital stays, and unnecessary surgical interventions.  In a value-based reimbursement model, controlling utilization has never been more important.
  • Identifying Risks and Controls: Identifying and controlling all phases of hospital‑based laboratory testing is mission critical if providers wish to be successful in their walk towards risk.  Although aggregate error rates have dropped over time as stakeholders have focused on quality control and analytics improvement, a 2011 Center for Disease Control survey found that 15% of the practitioner sample population was uncertain as to which laboratory test to order and 9% was uncertain about the interpretation of the laboratory test results themselves.  With the average cost related to correcting specimen errors alone approaching $1.2 million dollars a year for a 650-bed hospital, there is a persuasive argument to be made for greater focus on identifying risks and controls.
  • Coordinated and Effective Communication: George Lundberg in 1975 memorialized the importance of end-to-end workflow integrity in the laboratory, from the initial question that a clinician may address to decisions regarding patient management.  A misstep at any point of the loop renders the entire testing process largely inconclusive.  Unfortunately, breakdowns often occur at one of the most critical steps—taking appropriate action based upon a given lab result.  Recent literature suggests that ineffective communication between caregivers and other members of the medical neighborhood is the most common root cause of delayed treatment or failure to follow-up.  Despite the rapid adoption of new technology tools on the heels of the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009, delay or failure to report laboratory test results to the ordering physician remains the root cause of more than 10% of error events.  The communication breakdowns often stem from an inadequate interface between Electronic Health Records (EHRs) systems and laboratory systems, provider-to-clinician communication gaps, and staffing or training failures within a practice regarding messaging.

A number of solutions have emerged to address utilization, identify risks and controls, and improve communication in the laboratory and across the medical neighborhood.  Physician education around laboratory test costs, decision support laboratory ordering systems, and lean tools and processes are only a few ways that laboratories can enable providers to successfully navigate the walk towards risk in a value-based care environment.  Market-leading laboratory diagnostic companies have already recognized this opportunity and are responding accordingly.  Quest Diagnostics, for example, launched a multi-year program named Invigorate aimed at improving performance and driving savings across the customer value chain by delivering organizational, technological, and laboratory excellence.  Another example is Accumenbacked by private equity company Accretive, which takes a differentiated approach by partnering with hospital and health system clients to operate their laboratories, instead of providing independent or outsourced laboratory services.  This approach helps clients retain the locus of control across the continuum of care and achieve measurable improvements and efficiency through a comprehensive approach to people, process, and technology that both optimizes and modernizes hospital laboratory operations.

TripleTree continues to look for innovative solutions and companies that enable providers to address risk in today’s post-reform realities and we welcome trading notes on the laboratory market or any other relevant discussion topics.

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