As the healthcare industry evolves toward “pay for value” vs. todays “pay for volume”, some pathology and laboratory leaders are looking for a larger role in this new world. Some have called it Laboratory 2.0. In this article, we highlight the challenges and the opportunity.
How will Pathologists survive shift to value based care?
The expansion of bundled payments, physician employment, and unconventional competitors continue to pressure the volume-based business model of laboratory medicine.And since they only account for 3% of health system spending, Labs don’t have enough leverage to play a central role in health reform initiatives.
Changing this picture is the ambitious goal of invitation-only brainstorming sessions among two dozen leading healthcare thinkers. The think-tank-style effort, named Project Santa Fe, includes leaders from five of the most innovative clinical laboratory operations in the country: TriCore; the Henry Ford, Geisinger, and Kaiser Permanente Northern California health systems; and New York’s Northwell Health.
At this time, there is no “current playbook on how to do business under bundled payment or under accountable care,” said TriCore Reference Laboratories CEO Khosrow Shotorbani, MT (ASCP) in an interview with CAP TODAY.
“The laboratory industry is reaching Six Sigma performance in the analytical stage” – 3.2 defects per 1 million transactions. “That’s almost perfect. The sad part is that on the pre-analytical we do a lousy job of really helping the physicians choose the right test. And on the back end, we do an equally poor job of helping them interpret the test and to map it onto the next stages of therapeutic treatment,” Shotorbani said. “Our current payment is tied to the analytical stage, yet our customers are moving toward pay for performance.”
Additionally, outside factors add to these shortcomings:
- Physicians do not follow up on about 6 in 10 outpatient test results
- Tests are overused about 30% of the time and underused about as often
- Tests are misused between 5%-50% of the time depending on disease
- Physicians’ failure to order the right test contributes to 55% of costly and possibly deadly medical errors
- Clinicians’ incorrect interpretation of diagnostic tests is a factor in nearly 40% of malpractice cases
“When we talk about value, it means people being willing to pay for outcomes, not just for efforts,” Shotorbani added. The main issue, he said, is that there is little capacity for labs to improve and create health care value within the domain over which they exert direct control. Current payment is tied to the analytical stage and the move to value based care further highlights lab inadequacies.
“The lab of today is by no means in a position to deal with the world of value-based health care,” Shotorbani continued. “The laboratories of the past focused on patient service centers, the cost per unit, their turnaround time, their contribution margins, and their test menus. We think that lab 2.0 should focus on cost per care episode or cost per population, moving from volume to value. That requires a whole new business model. . . . That’s not just going to require grabbing something off the shelf and you’re there. It will be a significant challenge to move from this model to the other one.”
The Project Santa Fee team is working to identify opportunities for labs to demonstrate clear value in ways that would bring the financial solvency laboratories need to operate and establish a recognized role for pathologists, clinical chemists, and laboratory scientists in how health care providers draw upon their knowledge and expertise.
“One of the opportunities,” Shotorbani said, “is a continuous diagnostic process.” That is, laboratories should vigorously seek moments in the continuum of care where they can—through use of their clinical data and expertise—intervene to help clinicians achieve better patient outcomes while improving the bottom line.
Creating Opportunities for Success
An example of how data can be used to predict health trends across a population and enable clinicians to target interventions comes from New York based Northwell. Northwell Health implemented a system wide clinical decision support alert for acute kidney injury (AKI) that increased by 75% the number of AKI cases identified over the course of a year. The secondary inpatient diagnosis of AKI can be added to the bills the hospital sends to payers, and added an average of $700 in hospital revenue per patient.
The new lab-driven system increased monthly secondary diagnoses of AKI from 615 in 2014 to 930 in 2015. This represented a $220,500 monthly increase in revenue for Northwell Health. But the overall system savings were much larger and patients suffered fewer AKI cases, lowering total costs and improving outcomes.
The acute kidney injury undertaking is “what we [in laboratories] need to be doing,” said Dr. James Crawford, MD, PhD, executive director and senior vice president for laboratory services at Northwell. “We need to break through this looking glass and be on the other side. . . . It’s hard to get going in this space. But once you get going, you realize how little you’ve done and how much you have to do.”
AKI affects between 5 and 7% of inpatients, and most of those patients are treated by non-nephrologists who may be slow to make a diagnosis that relies on noting an incremental uptick in hospitalized patients’ creatinine values over baseline. The diagnostic criteria are complex and hard to apply without clinical decision support, Dr. Crawford said, yet AKI increases hospitalized patients’ mortality rate between 6- and 30-fold and patients with AKI have increased length of stays from 3 up to to 7 days. Hospitalization costs rise between $4,000 and $10,000 per day per patient, he noted. AKI costs the U.S. health system $10 billion a year.
“A modest literature indicates that there’s a substantial increase in hospital mortality, increased transition to chronic kidney disease is substantial, and a substantial increase in hospitalization costs,” said Dr. Crawford, who is also chair of the Department of Pathology and Laboratory Medicine at Hofstra Northwell School of Medicine in Manhasset, NY. “So, if you scale this up, it is on the radar screen for health care costs in the United States.”
Laboratory data can be a significant aide in that it provides better sensitivity and specificity than other clinical criteria and can be applied in routine hospital practice. At Northwell Health, once the delta criteria are met, an AKI electronic alert is fired to prompt clinicians to act on the rising trend before the creatinine value goes outside the reference range. By using laboratory data to create an early-warning system for AKI, physicians were able to intervene more quickly. Due to the substantial results it has produced, the program has been rolled out to the other nine hospitals in the Northwell system, with similarly impressive results.
“Since we began this, it includes daily AKI reporting and an education program for physicians,” Dr. Crawford said. “We don’t have rounding teams now because physicians are notified directly. The alert also goes to the chief medical officer’s office, but it’s the clinicians’ responsibility to respond to this.”
Creating Value in Health Care
Success stories such as Norwell’s are proof labs can provide better and innovative health care and improve total costs.
A final example comes from For Gaurav Sharma, MD, senior staff pathologist and director of the Henry Ford Regional Medical Laboratory. He says the laboratory’s role in health care is analogous to that of a military transport plane that has the additional capacity to refuel fighter jets in midair, thereby extending the jets’ range and capabilities.
“We have a repository of data in the laboratory. We can reduce cost, we can improve outcomes, and then we create value. But what we cannot do is stay a transport plane. We have to upgrade to new capabilities.” He envisions a future in which the laboratory, as a repository of clinical data, will refuel its users with actionable information and direct them to the problem spots, increasing their effectiveness.
“This is about systems more than people,” he said.
Source(s): O’Reilly, Kevin, “Laboratory 2.0: Changing the Conversation,” CAP Today Online, July 2016