Departments of pathology and clinical laboratory medicine at nation’s academic medical centers are uniquely positioned to deliver value—but only if they act in a timely fashion
DATELINE: BOSTON, MASSACHUSETTS—Today the Association of Pathology Chairs (APC) concluded its annual meeting, and transformation of the U.S. healthcare systems was front and center as the topic of primary interest. This transformation presents pathology departments at the nation’s academic centers with a range of unique opportunities, along with some serious challenges.
On the upside, academic departments of pathology and clinical laboratory medicine are well positioned to be the leaders in clinical diagnostics that utilize the latest genetic knowledge and incorporate state-of-the-art molecular technologies. Not only are they teaching this knew knowledge to the next generation of physicians and pathologists, they are often the only locally based laboratory organization in a city or region that offers these advanced medical laboratory testing services.
Subspecialist Pathologists Are Assets for Academic Pathology Labs
Second, academic pathology departments have pre-eminent subspecialist pathologists who bring deep clinical knowledge and experience to such fields as urology, gastroenterology, cytology, and oncology, among others. Such capabilities position an academic pathology laboratory to be a regional, national, and even international provider of its subspecialty pathology expertise.
Third, as centers of diagnostic research and clinical studies, academic pathology laboratories are natural funnels for patients with complex or unusual health conditions. This provides pathologists and clinical laboratory scientists within these organizations with a broad range of experience that encourages patient referrals from community hospitals and other sources. In turn, this expertise can be leveraged by academic pathology groups to gain competitive advantages in the marketplace.
These are just a few of the assets that academic pathology departments can use to differentiate themselves from other laboratory competitors. But there are hurdles and challenges that academic pathology laboratories must address before they can be successful during healthcare’s coming cycle of change.
Health Insurers Want to Narrow Networks to Exclude High-Cost Providers
For example, a growing trend is for private health insurers to narrow their provider networks as a way to exclude high-cost hospitals and physicians. Academic centers generally care for the sickest patients, but are viewed by some insurers as high-cost providers. Therefore, many of them are being excluded as contract providers from certain payer networks operating within their communities. In turn, that means that the academic pathology group within that medical center has a more difficult time gaining access to patients who are covered by those health insurers.
Another hurdle that slows down the ability of an academic pathology group to enter the outreach market and acquire new clients is the lack of flexibility to move quickly to customize anatomic pathology testing services for different office-based physicians. During this APC conference, speakers emphasized the need for academic pathology laboratories to be become more nimble in their decision-making as a way to gain new client physicians and win new outreach business.
In his presentation, Philip Chen, M.D., Ph.D., Vice Chair and Chief of Clinical Pathology at the University of Miami Health System, addressed these opportunities. “Healthcare’s transformation is likely to be an evolution and not a revolution,” he stated. “This will give academic pathology laboratories time to adapt to these developments.”
New Models of Reimbursement Will Challenge Academic Pathology
As part of healthcare’s evolution, academic pathology labs must be prepared for new models of reimbursement that are associated with risk for providers. “As healthcare moves away from fee-for-service payment, labs will see different payment arrangements, each of which will require the provider to go at-risk to some degree,” explained Chen. “Accountable care organizations (ACOs), bundled payments, and episode of care (EOC) models are examples and will likely cause hospitals and health systems to drive internalization of clinical laboratory testing services.
“At the same time, health systems will be looking to achieve better care coordination,” he said. “That will include improved utilization of lab testing and other clinical services with the goal of achieving better patient management.”
A point of interest was Chen’s prediction that, as health systems develop these integrated clinical care organizations (and internalize clinical laboratory testing as part of this process), this would help health systems capture more lab testing business.
“On this point, there is likely to be some disruption to the national laboratory contracts that exist with the major health insurance corporations,” concluded Chen, who believes that academic pathology groups have a natural opportunity to capture some of this business.
Estimating the Economic Clout of Academic Pathology Departments
Another pathology chair argued that academic pathology departments do have economic clout. James M. Crawford, M.D., Ph.D., Chair, Department of Pathology, Hofstra North Shore-LIJ School of Medicine in Manhasset, New York, in his presentation, noted that the direct economic impact of academic health centers is about $260 billion, and that represents about 10% of the $2.6 trillion in U.S. healthcare spending in 2010.
“The total U.S. spend on laboratory diagnostics is $62 billion, of which 62% occurs in hospitals,” explained Crawford “That translates into about $6.2 billion annually in revenue for academic center departments of pathology and clinical laboratory. Of this amount, about $3.7 billion would represent the amount spent on hospital-based academic pathology.
“The balance, about $2.5 billion, is an estimate of the annual revenue that academic center pathology departments could generate from ambulatory diagnostics, more popularly known as the outreach market,” continued Crawford. “Collectively, academic pathology departments across the nation have a strong position from which to deliver additional value as healthcare continues evolving.”
Academic Pathology Often Key to Validating New Molecular Technologies
Across the medical laboratory testing industry, the role of academic departments of pathology and clinical laboratory medicine tends to get much less attention than the business moves of national lab companies, for example. On the other hand, these academic pathology labs are the engine for validating new molecular technologies and working with other medical specialties to innovate in patient care.
Like all clinical labs and pathology groups in the United States, academic medical center pathology departments are dealing directly with the rapid changes in reimbursement, care delivery, and technology now unfolding within healthcare. What was true at this week’s meeting of the Association of Pathology Chairs is the general optimism that individual organizations can leverage their unique expertise and resources to be the source of substantial value in improving patient outcomes.
Your DarkDaily.com editor,
Robert L. Michel