News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
Sign In

Speakers from the United Kingdom, the United States, and Canada provide useful prospectives

Too often, pathology laboratory testing is treated as a commodity by government health officials in the United States and other countries. But treating lab testing as a commodity has negative long-term consequences for health systems which try to pay the cheapest price for medical laboratory testing.

As pathologists and clinical laboratory managers know all too well, clinical pathology laboratory testing delivers incredible value when physicians order the right test and do the appropriate thing with the lab test results. Examples abound where proper use of laboratory testing contributes to improved patient outcomes while reducing the overall cost per episode of care.

Commodity pricing for clinical laboratory testing was one theme of a special international session this week at the AACC/ASCLS annual meeting in Anaheim, California. Speakers from the United Kingdom, Canada, and the United States tackled the serious issue of commodity pricing for medical laboratory testing. The news is not positive for advocates of added value reimbursement for clinical laboratory testing and anatomic pathology professional services.

Opening the session was moderator Dr. Danielle B. Freedman, who is Medical Director at the Luton and Dunstable Hospital in Luton, England. Freedman presented the findings from the Commonwealth Fund’s newly-released comparative study of major national health systems.

“In its health rankings, Commonwealth Fund placed the United States at number seven overall, compared to such countries as the Netherlands (ranked number one), the United Kingdom (number two), and Australia (ranked number three),” she stated. “What is notable about this assessment is that the United States spends twice as much per capita on health services as these other countries. This disparity in spending versus health outcomes provides an example of how better use of laboratory testing in each of the countries could make an important contribution to improving health outcomes.”

Next to speak was Dr. Eric Kilpatrick of the Department of Clinical Biochemistry, Hull Royal Infirmary and Hull York Medical School,  in Hull, England. “Our new coalition government took office this spring and it didn’t take long to announce plans to control government spending,” noted Kilpatrick. “For the National Health Service, the overall target is a £30 billion reduction in its budget, which represents about a 20% cut. The pathology and laboratory testing sector is being asked to cut £750 million.

“Other proposals to change pathology in the United Kingdom are being discussed,” continued Kilpatrick. “These include the formation of more integrated pathology networks in selected regions of the country, along with greater involvement of private sector companies in laboratory testing. There is much uncertainty on how different proposals may change the face of pathology in our country.”

Perspectives about the United States were offered by Robert L. Michel, Editor-In-Chief of The Dark Report and Dark Daily. Michel tackled the question of clinical laboratory testing as a commodity versus an added value service head on. “No government will be able to control utilization of clinical laboratory testing by simply reducing prices or the reimbursement it pays for such tests,” he declared.

“Demographics of aging populations and the higher incidence of chronic diseases mean that physicians will be ordering more tests for all the right clinical and ethical reasons.”

Michel pointed out that, in the United States, it is estimated that about 40 million Americans have adult-onset diabetes. “Experts believe that only half of these people—about 20 million—are diagnosed,” he observed. “Assume that, today, in the United States, about 50% of them get an annual HbA1c test. That represents about 10 million tests per year. Now, if doctors responded to guidelines and did better at giving every diagnosed diabetic an annual HbA1c test, it would double the annual total of HbA1c tests to about 20 million tests per year.

“Further, the American health system is encouraging physicians to do better at diagnosing those undiagnosed diabetics—as many as 20 million people,” explained Michel. “If physicians were to do HbA1c tests on half of the people suspected of having undiagnosed diabetes, it would increase utilization of HbA1c testing by another 10 million tests per year. This simple example, using one disease, demonstrates why the utilization of clinical laboratory testing is going to outrun efforts of government health officials to control spending on lab testing services.”

This panel of speakers provided prospectives about how government health plans treat clinical laboratory testing as a commodity and not as an added value resource at this week’s AACC/ASCLS annual meeting in Anaheim, California. From left: Dr. Eric Kilpatrick, Robert L. Michel, Dr. Danielle Freedman, Dr. Vince D’Mello.

Canada’s complex situation was addressed by the session’s third speaker, Dr. Vincent D’Mello, President of D’Mello LabMed Consultants, based in Mississauga, Ontario. “In my country, each province has organized its own health program to provide universal health coverage as mandated by federal law,” stated D’Mello. “Over the past 20 years, each province has pursued a different strategy to control spending on pathology and clinical laboratory testing.

“For example, in the last half of the 1990s, the province of Alberta slashed the laboratory testing budget by 40% in just a couple of years,” he noted. “Over in Ontario, the formation of integrated laboratory networks in different regions was a primary strategy. However, viewed retrospectively, these different strategies have not fully met the goals of health program officials at moderating physician demand for lab testing.

“In fact, it is being recognized by the media that, in situations where laboratory testing capabilities are inadequate to properly serve physicians and patients in that community, the consequence is often longer wait times and even adverse patient outcomes,” said D’Mello. “It is unlikely that Canada will see value-based reimbursement for clinical laboratory testing any time soon.”

In fielding questions from the audience following these presentations, Freedman summarized the experiences of the United Kingdom, the United States, and Canada in a succinct observation: “At a strategic level, it is obvious that health policy makers in each of these countries find it difficult—if not impossible—to tap the potential for pathology services and clinical laboratory testing to play a major role in raising the health outcomes of patients in their respective countries. With more rounds of budget cutbacks for lab testing announced in each of these countries, it is not likely that this situation will soon improve.”

On the question of treating laboratory testing as a commodity versus an added value resource, the consensus of this expert panel at AACC/ASCLS was that government health policymakers in their respective nations were not likely to change their thinking of the past two decades. Yet, it is precisely a change in this type of thinking that is required if the full potential of clinical pathology laboratory testing is to be tapped to the benefit of the citizens of these three countries.

Related Information:

Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care

AACC/ASCLS annual meeting in Anaheim

The Dark Report and Dark Daily laboratory resources