Why your laboratory is your best asset for growth in 2016 and beyond

Much has been written about the rapid transformative nature of healthcare occurring over the last few years. The drivers that have triggered this transformation are due to a convergence of market and technological progress, including HITECH, Meaningful Use, "big data" access, EMR adoption, the increased application of precision medicine and ACOs.

The last of these is arguably the most significant. Created under the 2010 Affordable Care Act, ACOs underpin an enormous initiative to shift to a "fee for value" model versus a "fee for service" model, which is incentivizing health systems to adopt and implement entirely new programs. While ACOs do not remove fees for services, the incentives created motivate volunteer organizations to meet specific quality benchmarks that demonstrate that they have saved healthcare dollars (and ultimately improved patient care.) It could be said that the the fee for service model kept patients in the hospital, but the ACO model will keep them out.

One major challenge, however, is that while volume is easy to measure (the more you do, the more you get paid,) proving value with quality metrics (the healthier you keep the population, the better) is more difficult.

The clinical laboratory is one resource that can help overcome this challenge. It should no longer remain as simply the production engine of vast amounts of test result data, but instead, fulfill its potential by better enabling consolidation, test ordering guidance, and admissions and discharges.


In the ACO environment, hospitals have been rapidly consolidating. There has been a significant increase in the rate at which physician practices are being acquired, and outpatient care has been predicted to significantly outpace inpatient care through 20201. As care shifts to outside the four walls of the hospital, diagnostic data must be as close to real time as possible, patients must be correctly identified and records must not be duplicated. A seamlessly integrated laboratory information system within that community is not only critical, but it also creates opportunity to leverage the hospital laboratory for outreach business during low throughput hours. Strategically this can also position the healthcare system to capture future complex testing business (such as molecular and genetic testing) from specialized outpatient clinics.

Test Ordering Guidance

The diverse network of physicians described above must also be provided with accurate testing and a rapid turnaround time of results. Test menus have expanded rapidly and continue to do so, particularly in molecular diagnostics. The sheer number of tests make it unreasonable to expect a physician to understand all of the correct ordering practices. Both over-utilization (unnecessary ordering) and underutilization (missed ordering) can lead to problems with misdiagnosis and put ACO success at risk.

Just as pharmacists can influence physicians' drug ordering, the lab can influence their test ordering to prevent such issues. One method is to create a lab test formulary for ordering physicians and include offered tests as formulary products. Some may require review by pathology or infectious disease control before being approved. This approach also aligns with other industry efforts, such as the American Board of Internal Medicine's "Choose Wisely" campaign which focuses on overutilization2. Even when ordering does not include an approval step, the lab test formulary can provide directed assistance when needed.

The laboratory can then be leveraged by providing business intelligence to alert the ACO of its cost per diagnosis (as opposed to per test) in synchronization with ACO goals. With the right data, BI tools can support benchmarking goals for future ordering control to the ACO in an interactive feedback loop to establish the effectiveness of the formulary approach.

Admissions and Discharges

Under the Affordable Care Act, reimbursements may be cut when patients are readmitted within 30 days of being discharged, based on national averages for certain conditions. From the laboratory's perspective, protocols can be developed based on the patient's admitting diagnosis and help determine whether they should even be admitted. Outpatient testing can help identify whether inpatient or ambulatory treatment is most suitable. Secondly, the laboratory can run batteries of tests following treatment to determine whether the patient really should be discharged. Both approaches can help minimize readmission penalties.


The potential for the lab to support ACO objectives is clear. While we are already seeing some early success in the areas of consolidation, test ordering and reduced readmissions, the value of this approach must be well understood by physicians, pathologists, the hospital administration and, of course, patients.

Jonathan Northover is Senior Product Manager for Sunquest Information Systems.

1 See for example: http://www.bls.gov/opub/mlr/2013/article/industry-employment-and-output-projections-to-2022.htm
2 See: http://www.ascp.org/Newsroom/ASCP-Joins-Campaign-to-Improve-Use-of-Medical-Tests.html; other examples include: http://www.mayomedicallaboratories.com/articles/administrator-tools/index.html

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