2009 Joe Miles2in
Joe Miles, MT(ASCP), MHS

Tracking developments and strategies for labs


       In the fall of 2011, Joe Miles, MT(ASCP), MHS, sat down with CLP. Then, Miles, senior consultant, outreach development, ARUP Laboratories, Salt Lake City, discussed the introduction of accountable care organizations (ACOs) and how clinical labs were changing. Now, 18 months later, there are nearly 260 Medicare ACOs that provide coverage for an estimated four million Medicare beneficiaries and labs are understanding their new role, often at the center of care. CLP circled back with Miles to track developments on these and other subjects.

CLP: Tell us about your background and current role at ARUP.
Miles: For more than 20 years, I was a laboratory manager in a large, public health system, a new suburban hospital, and a sole-provider, community hospital. For 9 years prior to joining ARUP, I served as the general manager of a network of hospital-based laboratories formed primarily to secure managed care contracts. With ARUP I work in a consultative role helping our clients who are engaged in or developing outreach programs. In addition, I have been working with the business innovations team on the development of tools to support our clients in the areas of decision support, formulary development, and informatics.

CLP: What are the most significant developments in the evolution of diagnostic labs since late 2011 under the ACO model?
Miles: Forward-looking laboratories have begun focusing on providing services and test results in ambulatory settings. Many laboratories are working with affiliated physicians by enhancing their abilities to communicate electronically with physician-practice EMRs, mobile physicians, and even patients. This development is not universal, however, and we see many hospital-based laboratories still struggling to gain the commitment and investment funding needed to support outreach developments.
       There is a strong awareness among laboratory management that the future of diagnostic testing in terms of access points and volumes will be in ambulatory care settings. That being said, many health systems are still grappling with their strategies for comprehensive diagnostic services. In addition, current estimates indicate there are almost 260 Medicare ACOs that provide coverage for an estimated four million Medicare beneficiaries. With rapid adoption of this new model of integrated health care, clinical laboratories and pathology groups need to proactively develop strategies to sell the value of laboratory services to ACOs in their local markets.

CLP: One of the shifts you discussed earlier concerned labs playing a larger role in the decision-making process/test selection. Has this trend continued? To what effect?
Miles: We see more laboratory professionals getting involved with the development of CPOE order sets and test algorithms that guide the selection of appropriate tests at the appropriate time. The rate of adoption of physician electronic order entry has passed a tipping point. As a result, one of the easiest ways to influence test selection is through builtin electronic prompts and well-constructed order pathways. Software vendors are becoming aware of the need for this kind of builtin functionality. The trend continues to advance, and we now see institutions developing lab formulary policies.
       Lab formulary development has the potential to manage utilization of diagnostics in a way that we have not seen before. Access to ordering privileges, approval of reference laboratories, authorization of standing orders, certification of new test developments (and retirement of antiquated tests), and development of test algorithms are a few areas in which institutions are beginning to establish policy.

CLP: The last time we spoke, you suggested labs look to establish new relationships with health care providers across the continuum of care. During the past 18 months, has this idea progressed? Do you have any examples of particularly innovative or successful solutions/relationships?
Miles: With the creation of accountable care organizations health systems are beginning to do more vertical integration and create services across the entire continuum of care. As a result, many hospital-based laboratories are moving into the nursing home business again. Decisions to re-enter the nursing home theater are not often financial decisions, but rather part of an overall strategy to integrate care and services particularly in post-acute care transitions.
       In addition, “home hospitals” are emerging where hospitals manage the transition of patients in their homes following acute care episodes. Visits from home hospital nurses typically within the first 5 days of discharge include diagnostic services such as imaging and laboratory testing—performed in the patient’s home. Successful laboratories are keeping their eye on all of these patient touch points.

CLP: As technologies continue to emerge, what are some successful selection and implementation strategies you’ve seen from labs? As more options become available, how can labs of varying sizes go about crafting a strategy right for them?
Miles: We see many laboratories seeking to establish themselves as centers of excellence for a particular area of testing. For example, some laboratories offer biochemical genetic testing (mostly chemistry-based tests) to diagnose metabolic genetic disorders. DNA testing can also be performed for these same disorders, but it is usually more expensive and may not be necessary for the establishment of a diagnosis. DNA testing is, however, necessary for certain situations such as carrier testing for at-risk family members and prenatal diagnosis. ARUP is focused on developing a complete menu of both biochemical and DNA tests for metabolic disorders so we can be a “one-stop shop” for our clients who need this testing.
       Another consideration for test development is what other laboratories are offering the test. If there are six genetic laboratories offering the same test, it may not be beneficial to spend the resources and professional support to add it to your menu. In regard to new technology, it is also important to look at the methodology and whether the laboratory has the platforms necessary to run the test or if an investment in new equipment would be needed. Additional test platforms can impact staffing, turnaround times, cost, etc.
       In our practice, we see academic medical centers and specialty tertiary facilities teaming with their oncology departments to create personalized medicine programs. The goal in these centers is genetic testing that results in more precise diagnoses accompanied by individualized treatment options.
       We also see a movement in the outpatient sector by payors to require more preauthorization for high-dollar diagnostic tests. For several years, ARUP genetic counselors have been screening all requests for complex genetic tests for appropriateness. As a result of this screening and in consultation with the ordering providers, 30% of complex genetic test orders are either modified or cancelled.

CLP: As electronic medical records continue to become mainstream, what are the next steps in leveraging this technology for labs?
Miles: Under Stage 2 Meaningful Use requirements (MU2), laboratory data must not only be captured, but must be resulted in a form that is considered “structured.” The LOINC coding initiative has by default been embraced as the most commonly accepted system for structuring clinical laboratory data. SNOMED coding continues to be the system for anatomic tests.
       For the industry, this is a daunting undertaking. We see the end game for the creation of structured databases as the ability to create longitudinal health records and to sort large databases in order to understand best outcomes. The next steps in leveraging “big data” will be in analytics that convert clinical and claims data into meaningful outcomes knowledge. Kaiser Permanente is already establishing best practices using analytics with their very large integrated medical records. ARUP is also working with select clients to create the tools necessary for these complex analyses.

CLP: As the Affordable Care Act (ACA) continues to be rolled out, what changes should labs be aware of in the coming year?
Miles: The number one provision that everyone has their eyes on is the states rolling out health insurance exchanges in October 2013. Not only do the insurance exchanges have the potential of providing coverage for some 30 million currently uninsured citizens, but there is the added impact of increasing diagnostic test volumes considerably over the next few years.
       The impact of insurance exchanges is not yet known, but it is certain that increased test volumes matched with reduced reimbursement rates (new volumes being reimbursed at near Medicaid rates) will task the laboratory community considerably. In addition, we need to add to the equation the MU2 requirements and existing staffing challenges and laboratories will have their hands full in the next year.
       A second important trend is many health systems are actively engaged in buying independent physician practices, thus driving down the number of physicians in private practice. For laboratory outreach programs, this represents a dynamic shift from traditional outreach to an inreach model. Capturing business from owned or managed physicians and identifying leakage with affiliated physicians represents tangible market opportunity. Hospital laboratories have a competitive edge over independent laboratories in that they are the single repository for data on all patient types and can provide physicians with complete information across the continuum of care.

CLP: What are steps labs can take to continue demonstrating their value to the health care field as a whole?
Miles: We know that perhaps as much as 30% of all health care is unnecessary. Some of this is because patient conditions are complicated and reaching the right conclusions to give the right care is seldom easy. The role of laboratories is to provide diagnostic information to physicians so that reaching a correct diagnosis earlier leads to the right care at the right moment. Laboratories have a role to play in assisting physicians in selecting the right test for the right patient at the right time. In some cases this involves consultation and in others access to electronic clinical algorithms or order pathways.
       In addition to ensuring the right test is ordered, laboratories can do more to help physicians understand the clinical significance of test results. It is well understood that the current body of diagnostic medical knowledge is growing at a pace too rapid for even the most adroit practicioner to maintain mastery. The first step in the process is ensuring that test results are incorporated conveniently, timely, and electronically into physicians’ practices. The second step is to ensure that the test reports contain information that guides physician thinking.
       Another area hospital laboratories can add value to their institutions is through safety initiatives. We know from several studies including the Institutes of Medicine that hospitals are dangerous places. As we’ve said, laboratories have opportunities to influence what tests are ordered through CPOE and lab formulary policies. In addition, laboratories have key roles to play in blood utilization and infection control policies. In order to add value, laboratories need to do more than surveillance and be more proactive in identifying hazards and avoiding infectious outbreaks. There is not a hospital executive who wouldn’t be grateful to know his institution was made safer as a result of actions on the part of one of his key assets—the clinical laboratory.

CLP: What are some of the biggest challenges you anticipate labs facing in the coming year?
Miles: Medical laboratories face a number of high-demand challenges in the next year. First, laboratories must continue to extend electronic connectivity in all forms to physician practice EMRs, mobile physicians, and consumers (most likely through web-based applications). Laboratory data and communications must be secure, meeting all of the HIPPA requirements, and structured in ways that meet the MU2 requirements. Second, laboratories must be prepared to provide services in new ambulatory settings and receive an anticipated avalanche of testing following the introduction of state health insurance exchanges.      
       Third, the payor community is implementing more severely restricted provider network policies. Some laboratories will be excluded from narrower networks and more lucrative commercially insured patients unless system managed care executives act quickly to ensure the laboratory outreach program is not excluded from participation. And all of these challenges must be met while reimbursement rates in the near to midterm have been dramatically reduced. Downward payment pressures in the end have the potential to severely limit the ability of laboratories to maintain the same levels of quality and access.

       The key to maintaining the same level of quality and access may lie in increasing volumes from outreach sources because generally these revenue sources are attractive when weighed against the relatively low costs to add the new volume. Laboratories with active outreach programs know the average net revenue potential for most primary care physicians is $70,000 to $80,000 per year.

CLP: As patients are being treated more often as consumers of health care products—consumers who have a choice—how can labs adapt?
Miles: More than 20% of consumers, and soon one in four, covered by commercial insurance participate in a high-deductible health plan. This means more patients have the freedom to select their own laboratory provider rather than rely on their physician’s office to select a laboratory for them. And for these patients the choice of a laboratory may be different than for their physicians.
       The first thing medical laboratories should understand is that consumers make choices based on convenience and price. Health care is monitored by quality watchdog organizations and, therefore, consumers assume a minimum level of quality is present. Convenience involves a number of steps: how easily test orders are communicated from the ordering provider, how convenient the collection site is located, how convenient are the business hours, how easy is the registration process, how painless and quickly is the specimen collection performed, how available (and reliable) are test fees, how quickly are test results communicated to the providers, how seamless and error-free is the billing process, and how available are test results to the patient (nearly 40% of patients with chronic conditions monitor their own results)? Each of these steps requires a solution that laboratories need to evaluate and implement with a sense of urgency.

CLP: What technology/s on the horizon are you anticipating most?
Miles: The technologies that will have the greatest impact on laboratory medicine we believe are in the preanalytical and post-analytical phases. Decision-support software that is incorporated into EMRs has the potential to influence ordering behavior and reduce variation in practice patterns. As we know, there is a tremendous amount of individual practice variation associated with the diagnostic tests utilized to reach any given diagnosis. The first benefit decision-support software can have is in the elimination of obvious outliers and misdirected testing. The second benefit can be in leading physicians to best practices and, therefore, best outcomes at the lowest cost.
       The second important technology on the horizon is software informatics that can be applied to “big data.” Both clinical and claims data represent a gold mine for understanding what algorithms and protocols result in the best outcomes and best use of resources. To date we have not had analytics designed specifically to drill into clinical data and uncover meaningful knowledge about the best application of medical options.

CLP: Are you involved with the new Business Innovations Division at ARUP? If so, can you explain what innovations it hopes to drive forward?
Miles: ARUP is committed to assisting our client laboratories in meeting the challenges of the ACA and 21st century. To that end, we recognize that laboratory medicine is poised to change as much in the next 5 years as it has in its first 75 years. We believe the largest changes will occur in the preanalytical and post-analytical phases. First, pathologists need to play a larger and more visible role in the diagnostic cycle. In support of the larger role pathologists must play, the Business Innovations Division at ARUP is working to design tools that will help our clients’ efforts to understand their institutional test utilization and variation in practice patterns. We are also developing, in collaboration with several clients, decision-support tools and software that will help control variation and eliminate unnecessary orders. At the same time, we are working, also in collaboration with select clients, on diagnostic formulary development and policies. All of these tools will help our clients ensure that the right test is ordered at the right time on the right patient.
       Business Innovations are also working on establishing collaborations for the development of the informatics to analyze “big data.” We are looking for understandings that lead to earlier recognition of disease and disease potential, more effective treatments and interventions, and more efficacious use of services and resources.
       At ARUP, we believe we are just entering the golden age of diagnostic medicine. But in order to realize a new vision for laboratory medicine, we must be equipped with the right tools.

An abridged version of this interview appears in the June 2013 print issue of CLP.

Kurt Woock is the associate editor for CLP.