Stepping Up

Vol. 25 • Issue 4 • Page 38


The U.S. healthcare system is in the midst of an unprecedented, much needed change due to escalating costs, unacceptable medical error rates and the promise that health information technology (HIT) can be leveraged to improve the status quo. Because laboratories are crucial to diagnostics, they remain valuable in the new outcomes-based system; however, for the lab, changes involve test menus, testing locations and finding new ways to support providers in their patient care. This means labs are looking at a new value proposition and should be thinking in these terms.

The Evolving Healthcare Landscape

Much of the escalating cost and questionable care is attributed to the misaligned fee-for-service reimbursement model incentives. Therefore, the new focus in healthcare centers reimbursements should revolve around improving patient outcomes while simultaneously decreasing costs. New payment models, such as those within Patient-centered Medical Homes (PCMHs), accountable care organizations (ACOs) or other value-based purchasing systems involve providers sharing risk with payers, consequently resting more responsibility for care improvements on the healthcare organization (HCO). This is leading to a system that centers on patient needs and requires more active patient engagement.

New payment models focused on rewarding excellence in care delivery require the ability to measure the improvements in the health of their assigned population. For example, in a shared savings ACO, HCOs share in the savings they create by more efficiently and effectively treating patients. This requires that HCOs understand and respond accordingly to the health of their patient population-population health management. Laboratorians need to familiarize themselves with these concepts and understand the underlying reasons behind the payment model transition.

Labs Become Cost Centers

No lab will be able to keep their head in the sand regarding the repercussions of these changes once the industry begins to feel the effects of the Protecting Access to Medicare Act (PAMA), which mandates that future Medicare reimbursements will be based on median payer reimbursements. The Centers for Medicare & Medicaid Services (CMS) estimate that, once PAMA is implemented, lab reimbursements will decline by more than $2.9 billion over the next ten years. If not already the case, labs that have been profit centers will shift to being a cost of doing business. This means labs have to realign their goals with the overall HCO goals and actively pursue ways to increase the success of the organization by contributing to positive patient outcomes.

Even before PAMA, hospital labs faced reimbursement shifts when CMS began bundling payments for hospital outpatient visits. Tests are reimbursed according to the Hospital Outpatient Prospective Payment ðSystem (OPPS), and are billed by the hospital rather than the lab. Going forward, this means that lab budgeting has to take these bundled payments and expected PAMA cuts into account.

Step One: Internal Efficiency

In spite of the fact that laboratories are inherently efficient and focused on quality, there may be some untapped opportunities to boost efficiency. In the new face of healthcare, efficiency efforts needs to be taken to the next level. Many labs are looking to Lean and Six Sigma as powerful tools for the redesign of workflow and work areas to eliminate waste and unnecessary steps. For example, labs that have been reluctant to employ auto verification of normal results can implement this process. Depending on the patient population and testing performed, auto verification can result in 40-80% of lab results being auto-released into the EHR without technologist intervention.

Step Two: Drive Appropriate Test Utilization

Branching out a bit, but still well within the lab’s purview, laboratorians can be involved in the promotion of best test utilization in several ways. This can be as simple as thinking through the presentation of order choices and making the best orders easy to select or looking at test groups that are commonly ordered conjointly. Yet, one of the tests may be unnecessary according to best practice recommendations. From there, labs can be involved with committees that develop best choice order sets, track provider variation to improve orders or participate in the setup and maintenance of a test formulary. LIS tools can be implemented to automate appropriate testing cascades or reflexes that reduce unnecessary testing.

Step Three: Rethink the Menu

Taking this a step further, labs need to rethink their menu with patient outcomes in mind. The good news is that, of the $3.2 trillion price tag on healthcare spending, the lab accounts for only about 3-4%. Even better, the results can have a tremendous impact on other costly procedures, such as imaging, admissions and length-of-stay (LOS). This is how labs need to begin to think about their cost per test.

Is there a test methodology that, although considered expensive, can have a significant impact on decreasing downstream costs? Perhaps there is a molecular or point-of-care test (POCT) that otherwise would be considered too costly, but when the faster TAT or more reliable results can eliminate an expensive MRI or allow a patient to be discharged earlier, this outweighs the price tag of the lab test. Remember to look at the big picture of patient outcomes and organization-wide costs.

Step Four: Medical Analytics

Another big focus in value-based healthcare is analytics. In order to prove that patient outcomes show improvement, there must a way to measure these outcomes. Since the lab is the hub of a vast amount of clinical data, it holds much of the data needed to perform medical analytics. Find out what data your lab has that can be mined for useful information that supports value-based care.

Step 5: Collaboration Beyond the Lab

Finally, laboratorians must understand the importance of stepping outside of the lab and forming collaborative relationships with other departments and providers to drive analytic projects and brainstorm new ways to improve patient care and reduce costs. At a minimum, strong relationships with the finance and IT departments can help with analytics and CPOE setup in the EHR. In larger facilities, the lab can partner with pharmacy or radiology to find even bigger cost savings.

Innovation and Adaptability

Wrap your mind around these changes. Once you begin this journey with a fresh perspective and begin to feel the positive effects, your lab will become adept at changing and implementing innovative concepts to stay relevant and retain your value, no matter what challenges the future brings.

Kim Futrell, BS, MT(ASCP) is products marketing manager at Orchard Software.

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