Overutilized or underutilized: Lab analytics help hospitals get it right

In a single year, the Institute of Medicine estimated that $750 billion was spent in the U.S. on unnecessary healthcare services. A major piece of the expense? Unnecessary medical tests, which cost the average American hospital $1.7 million in 2009.

Too much or not enough?
The massive volume of orders and results that pass through a medical laboratory make it a valuable place to identify and eliminate waste — by flagging outdated tests, for example, or by pinpointing tests which were not appropriate for the situation. With a recent survey indicating that three out of four physicians believe unnecessary testing to be a major problem in health care, overutilization may be the most pressing issue in the lab space.

Underutilization, however, is even more critical to patient care and safety: while unnecessary tests drive costs up across the health care system, a single missed test can have dire consequences for an individual patient. And that same missed test can cost the hospital several thousand dollars per day in preventable inpatient stays.

Searching for "just right"
Underutilization receives little national attention, but providers, medical societies, and various advocacy groups are actively grappling with overutilization, creating lab formularies modeled on pharmacy formularies and mounting initiatives such as Choosing Wisely. For instance, neurosurgery residents at the University of California, San Francisco medical center reported a $2 million savings, including $75,000 in direct costs for their medical center, by cutting the use of five laboratory tests in half—without affecting patient care.

Similar efforts will certainly gain momentum as spending on genetic testing and molecular diagnostics increases by billions over the next decade.

No matter which form it takes, however, inappropriate utilization is determined by its relationship to appropriate utilization — something the laboratory is uniquely positioned to define and drive. Without concrete metrics, how does a lab—or the hospital's leadership, or even CMS — determine which tests are "unnecessary" and which tests were "missed"?

Determining appropriate utilization
Data analytics solutions translate the vast information that passes through the lab, including patients' demographic information and historical outcomes, physicians' ordering practices and accompanying results, and trends in specific test utilization over time, into useful forms of evidence. That evidence is critical for answering fundamental clinical questions about a test's value, and can also illuminate differences among physicians:

- Which medical tests correlate with increased length of stay (LOS) for which patients?
- Can a $50 test be administered earlier in a patient's visit to minimize LOS (which can cost up to 1000 times that amount, daily)?
- Compared to their peers, which physicians are ordering expensive tests more frequently—but getting fewer abnormal results?

Appropriate utilization at the physician level
Stark comparisons of physician-by-physician ordering patterns may seem like they would put clinicians on the defensive. In fact, the opposite has been shown to be the case: in a broad survey of primary care physicians, 76% were eager to learn how aggressive or conservative their care was compared to their peers'.1

Still, merely telling a physician how his or her ordering compares to others' tends not to drive behavior change. It is critical to have a multivariate approach to utilization management: nuances in a physician's patient population and case complexity, as well as a broader view of each individual patient, are key criteria to include in the analyses. Providing them with accurate data comparing them to an appropriate peer group is much more effective.

This wisdom holds true in practice. Across the Group Health Cooperative in Seattle, for instance, data analytics were used to show physicians their test ordering idiosyncrasies. Kim Riddell, MD, a section chief in the clinical laboratory at Group Health, reported that, "Just by creating awareness about the overuse of testing, we saw a drop in utilization... Still, we had some outliers. So we sent them reminder post cards and then we saw another drop in ordering."

Making immediate change
One crucial piece of actionable data exists at the intersection of utilization trends and cost information: when should a lab move a test in-house? Sending an expensive test to be processed outside the hospital makes sense if it's one that's rarely ordered, but at a certain point the costs may justify bringing it back into the lab, or else drive physicians to order a just-as-effective test that's already performed in-house. On the other hand, a test that's been done in-house might be done cheaper and as quickly at an outside facility.

Labs can help hospital leadership use this same data to make important decisions about testing protocols. Once they understand which tests are sent out, administrators can educate physicians about different tests that are done in-house better, faster, and cheaper.

Without the analytical resources to answer those questions, labs and hospitals leave those decisions and protocols to precedent.

Lab as new decision-driver
As new information about clinical efficacy emerges, healthcare providers respond by changing protocols and adjusting their interventions. With the vast trove of clinical, patient, and cost information, medical labs should be among the primary generators of that new information.

Conversations about utilization management are raising questions, making news, and yielding hundreds of thousands of dollars in savings.2 With the right tools and analyses, labs have the information to drive those conversation and catalyze process change.


1-Brenda E. Sirovich, Steven Woloshin, Lisa M. Schwartz. "Too Little? Too Much? Primary Care Physicians' Views on US Health Care." Arch Intern Med. 2011; 171(17): 1582-1585.

2-Serrano, Leo, FACHE, DLM (ASCP). Broward Health. Combining Test Formularies, Algorithms, and CPOE to Significantly Reduce Lab Test Utilization.

Based in the heart of Silicon Valley, Viewics, Inc. is an innovator in healthcare analytics and business intelligence. Viewics enables organizations to aggregate, extract and share insights from the vast amounts of data in their information systems. The company's flagship product, Viewics Health Insighter (VHI), is a cloud-based, software-as-a-service platform that delivers an immediate ROI for organizations through enhanced operational, clinical and financial outcomes. To learn more about Viewics, please visit www.viewics.com.

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