Clinical Lab Data: Unlocking Profit Potential for Health Systems

Laboratory advocates, regulatory professionals, pathologists, scientists, and even lab owners have been sounding off on social media lately about how diagnostic laboratories are missing the mark when it comes to showing their worth to the larger health system to which they belong. In particular, labs could do a better job at highlighting the valuable data they have access to, and the benefits of that data to the health system as a whole, industry experts say.

In not putting this data to work for the health system, experts believe labs are missing out on potential profit, as well as an opportunity to compile that data to benefit the patients they serve, the lab itself, and the entire health system. This is especially important given the recent increase in health systems outsourcing lab services to large, for-profit reference laboratories—a move many in the industry believe may be a huge mistake.

Profit and impact to the whole health system

Khosrow Shotorbani, president and CEO of the Project Santa Fe Foundation, which also encompasses Clinical Lab 2.0, describes a hospital’s clinical laboratory as the “highest yield asset for a health system managing clinical risks.” However, he agrees that most labs do not do a great job showing their value. One of Clinical Lab 2.0’s missions is to move the laboratory industry from a reactive confirmation stance once diagnosis is made to a proactive prediction, risk-based stratification approach, Shotorbani says. He adds that labs are sitting on the very longitudinal data that, coupled with metadata, would make such a shift possible. Such data includes that which would predict patients’ risks of developing certain disorders and diseases, as well as aid in stratification, identifying gaps in patient care, and identifying high-risk patients early. Using data in this way, the lab would function as a targeted intervention itself.

Though laboratories often have access to this data, they struggle to aggregate it to promote population health or for introducing additional potential revenue to their health system, Shotorbani says. He advocates strongly against outsourcing the lab, saying it would lead to “drastic fragmentation” of longitudinal data that could cause fragmentation of care.

Currently, laboratory testing informs about 70 percent of all medical decisions.¹ However, today’s care models offer a reactive approach to healthcare: Lab testing indicates the need for intervention; thus, intervention is then recommended by providers.

Shotorbani believes longitudinal lab data is the “holy grail” of laboratory medicine, and the potential value of a clinical lab does not end when it releases a result. Shotorbani wants to see laboratories implement an aggregation of their data to identify clinical risk, not just indicate when a problem has already emerged. Identifying risk proactively will assist in targeted clinical and lifestyle interventions. However, this proactive model requires a different business approach. Exactly how does this move to identifying risk equate to profit for the health system? Simply put, when assisting patients by offering risk assessment of longitudinal data to inform their medical and lifestyle decisions, many patients will not fully develop the disorders and diseases for which they are at risk, thus lessening the burden on an already overtaxed healthcare system.

A commenter on a recent post by Shotorbani on LinkedIn noted that running a laboratory test in-house at a loss for the lab may actually result in saving a day of hospitalization and associated care costs for the hospital.² Unfortunately, this scenario is oftentimes only seen as a profit loss for the lab, and the bigger implication for the health system’s profit is overlooked. Moving from a focus on siloed parts of the health system to the overall impact is imperative for labs to demonstrate their true worth.

Benefits for the health system and its patients

Many hospital systems have recently outsourced their laboratory operations to large, independent reference labs. This may be a direct result of the siloed approach to looking at the various parts of a health system. If a lab is not profitable in and of itself, it might make sense on paper to outsource it to save on operational costs, but that is true only if you ignore the bigger picture of the lab’s impact on the health system as a whole. Shotorbani believes that this approach and the resulting outsourcing of laboratory testing to reference labs leads to the fragmentation of care, which can not only cost the health system more money but may also lead to poorer patient outcomes.

Jorge Navarro, medical laboratory scientist and regional manager of laboratory informatics at the U.S. Department of Veteran Affairs, believes that lab decision-makers are oftentimes presented with specific data that does not encapsulate the true, full picture of the lab’s impact to the health system. This, he says, is what often leads to the outsourcing of laboratory services. He argues, however, that health care is not a set of siloed services but rather a continuum of care; outsourcing the lab interrupts said continuum and weakens both the health system and the patient outcome.

Experts agree that, for better patient outcomes, providing care as close to the patient as possible is of the utmost importance. This includes laboratory testing, as shown by recent examples of outsourcing laboratory services going awry.³ If a laboratory does not have the expertise, equipment, or volume to offer a certain test in-house, utilizing a reference lab partner does make more sense to better serve patients. But if it’s reasonable to perform a test in-house, this is usually best for patient care and likely the health system itself, many in the industry say.

Steps labs can take to better show their value

Shotorbani says that the best things laboratories can do to show their true worth and move toward the proactive approach he champions, is to compile longitudinal data, couple it with metadata, and begin risk stratification for the patients they serve. He believes lab leaders need to step up and help organize a plan for the future that includes a more risk-based stratification approach by occupying a seat at the leadership table, assisting with designing care models to support a future risk-based healthcare approach. He acknowledges that this is not easy, as it encompasses a completely different value proposition than the current reactive approach to laboratory testing. However, he says lab and health system leadership needs to prioritize developing a strategic plan to reimagine the future of lab diagnostics for early detection and intervention and to determine what their value proposition will be moving forward in the era of value-based care.

Navarro says such a plan will require lab leaders to step outside of the laboratory to be seen, heard, and included in the health system’s adoption of initiatives that address the future. He adds that establishing better succession planning in the lab will also help prepare labs for the future, alleviating some of the burden felt when turnover exists and is exacerbated by the laboratorian shortage.⁴ Data is also the key to showing a lab’s worth, if leaders follow some key steps, Navarro says.

The first step, he says, is ensuring that your lab’s data is of good quality, as utilizing bad data won’t help anyone. Once that is verified, pulling data on the number of staff and workload of the lab services department can show your lab’s efficiency and productivity. This is important, as not all labs look at this data and, instead, will oftentimes rely on the updated fee schedules and reimbursement data, which Navarro says is not a true indicator of the return on investment of the lab. Pulling data that shows the effect on the entire health system, such as when laboratory services resulted in a shorter hospital stay, is key to showcasing the lab’s true impact and to inform future planning for the entire healthcare ecosystem.

References:

1. 1. https://www.cdc.gov/csels/dls/strengthening-clinical-labs.html
   2. https://www.linkedin.com/posts/khosrow-shotorbani-8a64854_union-doctors-call-allina-lab-transfer-a-activity-7244865177727238144-oaO3/
   3. https://www.startribune.com/allina-qwest-outsourcing-lab-work-problems/601150317
   4. https://ascls.org/workforce