Inside the Diagnostics Industry: Laboratory Data Core to Value-Based Health Care

To thrive in the present challenging environment, laboratories need to deliberately focus on how they can create value outside of their own walls. The key to achieving this is in their data.

Speakers at G2's 35th annual Lab Institute conference (Washington D.C.; Oct. 25-27) envisioned a future health care system where laboratories play a critical role in driving system-wide efficiencies and improving patient outcomes by unlocking value in laboratory-generated data. The data already exists, but new efforts are underway at the intersection of information technology and laboratory medicine to harness new insights.

As the keepers of this data, laboratories have an exciting opportunity to redefine themselves as a "strategic asset" within the health care system, particularly to health care payers and hospital administrators eager to capitalize on the value behind the data-driven evidence.

Previous Shortsighted Focus
For too long, says Keith Laughman, CEO of Viewics, laboratories' emphasis has been on measuring line-item costs, like test prices, rather than measuring the total value laboratories deliver towards patient care. For instance, he told the Lab Institute audience, that test prices have been viewed in isolation rather than considering the possible negative impact cheap tests might have on clinical decision-making, like delaying care.

The opportunity exists, in part, he says, because laboratories see patients across the entire care continuum, including out in the community. This full clinical picture enables laboratories to play a central role in a data-driven clinical diagnostic improvement process. Most of the value to be realized by laboratory data is actually to be realized outside of the laboratory's walls. But, to unlock this value, laboratories need to position themselves as health care partners to "drive diagnostic optimization and diagnostic integration."

How Valuable Are Laboratory Test Results?
It is widely recognized that laboratories "touch" the majority of patients. But, when looking through a value-based lens, there is increasing scrutiny on the widely used claim that "laboratory tests are the basis of 70 percent of medical decisions."

Andy Ngo, M.D., from Virginia Commonwealth University in Richmond, published an article in the January issue of the Journal of Applied Laboratory Medicine that attempted to estimate the influence of laboratory tests on medical decisions. Based on data from more than 70,000 patient encounters, Ngo and colleagues came to the conclusion no single number can categorize the frequency with which laboratory tests occur in patient encounters. They found that overall 35 percent of encounters had at least one laboratory tests ordered. However, the percent varied markedly depending on the care setting. Nearly all inpatients (98 percent) had a least one laboratory test ordered, as did 56 percent of patients seen in the emergency department. However, in the outpatient population, only 29 percent of patients had at least one laboratory test ordered.

"Although a useful surrogate, the number of encounters with laboratory testing has a number of limitations," says Timothy Amukele in an accompanying editorial. "For one, many studies have reported a striking lack of follow-up on noncritical laboratory results. … Value must be established through careful, thoughtful studies designed to establish an impact on patient outcomes (benefit), balanced by the resources expended (costs), because in the end, this is what represents the true value of tests."

Laboratory Value Has Many Components
At the most basic level, a laboratory provides a valuable service if it can deliver technically valid test results—is the analyte of interest measured accurately and reliably? This criteria, though, doesn't guarantee a test result has clinical value.

A test has clinical value if it is accurate for guiding a diagnosis and has predictive value—clinical validity. Taking the value of the test one step further, is the notion of clinical utility: Does the result aid in clinical decision-making and ultimately improve health outcomes?

But, in this era of health reform and the Triple Aim, value is still defined more broadly—the overall outcome or result in terms of cost. This definition still, of course, incorporates clinical value, but also includes broader factors relating to economic considerations.

"The new challenge is a value-based world is connecting laboratories to the outcomes," said Mike Hallworth, chair of the International Federation of Clinical Chemistry and Laboratory Medicine's Task Force on the Impact of Laboratory Medicine on Clinical Management and Outcomes, speaking at the International Congress on Quality in Laboratory Medicine (Helsinki, Finland; February 2017). "In order to improve outcomes, a laboratory test must be appropriately ordered, conducted, returned with results on a timely basis, correctly interpreted and affect a decision for further diagnosis and treatment."

Linking laboratory testing to outcomes means that in the near future a laboratory's value will not be measured on how much profit it made on a test, but on how much savings that test generated for the episode of care or by enabling early detection.

Linking Laboratories to Care
Connecting laboratories to outcomes requires increasing coordination and communication between the laboratory and patients, as well as other providers across the continuum of care. Delivering timely results will no longer be enough. But forward thinkers have begun to explore strategies laboratories can take to be a partner in clinical decision-making.

Among these forward thinkers are participants in Project Santa Fe, a coalition of major regional laboratories that have come together for the purpose of defining the future economic valuation and placement of laboratory diagnostic services in the American health care system.

"The evidence base for laboratory valuation must be established in a proximate time frame, including bringing institutional demonstration projects forward in the peer-review literature," write Project Santa Fe members, led by James Crawford, M.D., Ph.D., from Northwell Health Laboratories, Lake Success, N.Y., in the April issue of Academic Pathology. "In the ambulatory setting, laboratory services can constitute a driver for continuity in care, both through the longitudinal continuity of laboratory testing performed on patients with chronic diseases and through informing providers about evolving risk conditions and potential gaps in care."

In the Academic Pathology article, Crawford and colleagues detail the many activities that laboratories can undertake that will meaningfully connect them to clinical decision-making and value-based care decisions. G2 has categorized the activities based on their ability to influence on test utilization, create added value for laboratories, generate population-based insights, or provide added value to provider partners.

Test Utilization Management

• Establish institution-wide laboratory test formularies

• Manage utilization of expensive and esoteric testing in both inpatient and ambulatory settings

• Document and educate providers on their test utilization patterns and cost of laboratory testing through peer-to-peer benchmark comparative reports

Laboratory-Focused Applications of the Data

• Reduce of out-of-network leakage of laboratory testing for both cost-savings and to attain comprehensive laboratory data on covered populations

Population-Based Insights

• Assist providers in identifying, monitoring, and following up on patients with chronic and costly conditions

• Work with payers and accountable care organizations to identify and manage patients enrolled in disease management and care management programs

• Stratify covered populations by risk and use predictive modeling of chronic disease states in those covered populations

Added Value/Partnership With Providers

• Provide analytical services to reduce physician burden in quality measurement and reporting (e.g., HEDIS, MIPS, accountable care organization metrics)

• Aid in test interpretation of complex test results

• Provide useful patient-specific interpretations of test results

These activities collectively have the benefits of increasing efficiencies and cost savings throughout the health care system; optimizing testing by reducing duplication, managing appropriateness of testing, and where needed, driving increased testing, particularly of patients falling through the cracks in monitoring chronic conditions.

Improving test interpretation (through improved reports and increasing consultative services), as well as test utilization management are the methods most actively employed today. However, merely adding alerts to an electronic ordering system is likely not enough. Thomas Joseph, president of Visiun, told Lab Institute attendees that laboratories could take further action by closely examining their menu. He suggested they stop offering obsolete tests; redesign requisitions to minimize bundling; and limit certain tests to require a consultation with a genetics counselor or pathologist. This must be reinforced with provider education and audits of provider ordering patterns.

Full integration and improved mining of laboratory data, including longitudinal data, using artificial intelligence will enable quicker diagnosis, better test ordering decisions, and better prediction of care needs.

What Will The Value-Based Laboratory Look Like?
Forward thinking laboratories are embarking on a transition period. Laboratories able to rethink their role and position themselves as a clinical decision-making partner will help to foster in a new era in health care marked by efficiency, and quality improvement.

"The value of laboratory medicine is extensive and greatly exceeds the laboratory's budget!" Viewics' Laughman told Lab Institute attendees. "Take lab data and use in new ways. Very standardized, clean, combinable data can create enormous value in clinical improvement and population health. This is where dollars are saved, not pennies from lab tests."

Laughman envisions laboratories in the post-transition as known not for utilization management, but rather diagnostic optimization. Lab outreach will be replaced with diagnostic integration. And most importantly, laboratories will be viewed as a trusted partner in driving clinical decisions and stewardship of health care dollars.

Takeaway: To thrive in a challenging environment, laboratories need to deliberately focus on how they can create value outside of their own walls. To do this, laboratories must use their data to demonstrate their systemwide value to health care payers and administrators, while becoming a clinical decision-making partner to providers.