‘Best of class’ clinical laboratories and anatomic pathology groups shared case studies in effective cost-cutting and steps they are taking to add value to lab testing services

NEW ORLEANS, LOUISIANA—Here in the Crescent City this week, almost 300 clinical laboratory managers and pathologists gathered to learn and master the latest innovations in managing cost in medical laboratories, while introducing high-value medical laboratory testing services that help physicians deliver better outcomes for their patients.

This is not an easy tightrope to walk for clinical lab leaders. Across the United States, most medical labs and pathology groups are dealing with shrinking budgets and falling prices for lab testing. This means less money to perform the same or growing volume of patient specimens arriving daily at their labs.

Clinical Laboratories Evolving to Serve Needs of ACOs, Medical Homes

At the same time that the lab’s budgets are declining, hospitals, ACOs, and medical homes are shifting clinical emphasis toward early detection of disease and proactive management of patients with chronic disease. Their common goal is to reduce or prevent acute events, which might require hospitalization of the patients. As this happens, physicians need more sophisticated support from clinical laboratories because they are being evaluated on their ability to deliver appropriate care that keeps patients healthier and reduces the overall cost of care.

These themes were central to the eighth annual Lab Quality Confab that took place in New Orleans this week. At the opening general session on Tuesday, pathologists from Henry Ford Health System in Detroit, Michigan, shared a case study of how they have positioned their integrated clinical laboratory and anatomic pathology service to better meet the diagnostic needs of clinicians practicing in the health system’s hospitals, clinics, and specialty care settings by delivering more value with lab testing services.

One keynote speaker at the eighth annual Lab Quality Confab in New Orleans, Louisiana, this week was Richard Zarbo, M.D. (pictured above). He is Chair of Pathology and Laboratory Medicine at Henry Ford Health System in Detroit, Michigan.  Zarbo shared the successes of his laboratory in working with physicians to create lab test formulary committees. One benefit to these committees is that more precise use of molecular tests for diagnosing cancer have reduced the unnecessary use of cancer drugs by millions of dollars annually. (Photo by Duane Stork, copyright The Dark Report.)

One keynote speaker at the eighth annual Lab Quality Confab in New Orleans, Louisiana, this week was Richard Zarbo, M.D. (pictured above). He is Chair of Pathology and Laboratory Medicine at Henry Ford Health System in Detroit, Michigan. Zarbo shared the successes of his laboratory in working with physicians to create lab test formulary committees. One benefit to these committees is that more precise use of molecular tests for diagnosing cancer have reduced the unnecessary use of cancer drugs by millions of dollars annually. (Photo by Duane Stork, copyright The Dark Report.)

This presentation was made by Richard Zarbo, M.D., D.M.D., Senior Vice President and Chair of Pathology and Laboratory Medicine and Gaurav Sharma, M.D., Director, Regional Medical Laboratory and Associate Medical Director, Core Laboratory, Quality Systems and Regulatory Affairs. The two pathologists emphasized that what the laboratory at Henry Ford Health is doing today comes after 10 years of intense effort to introduce Lean and a system of prevention, accompanied by helping the lab staff and pathologists embrace the culture of continuous improvement.

Big Payoff for Health System from More Effective Lab Test Utilization

The payoff from this quality management journey is substantial. After showing the audience the context and structure of the integrated clinical laboratory and anatomic pathology service, Zarbo and Sharma explained how the creation of medical laboratory test formulary was delivering huge economic benefits. Part of this project involved organizing two lab formulary committees involving physicians and other stakeholders.

These committees review different clinical lab assays and develop guidelines for appropriate utilization. It is noteworthy that pathologists and lab professionals are not voting members of these committees. According to Zarbo and Sharma, the reason is that the lab leadership wanted physicians on the committee to understand that they were making the decisions about when and how to use these tests.

Pathologist Gaurav Sharma, M.D. (pictured above) explained how clinical laboratory and anatomic pathology services have been integrated in recent years at Henry Ford Health System in Detroit, Michigan. He described the use of daily management within the laboratory and how it helps lab staff identify recurring sources of errors and reduce or eliminate them. Sharma is Director of the, Regional Medical Laboratory and Associate Medical Director, Core Laboratory, Quality Systems and Regulatory Affairs. (Photo by Duane Stork, copyright The Dark Report.)

Pathologist Gaurav Sharma, M.D. (pictured above) explained how clinical laboratory and anatomic pathology services have been integrated in recent years at Henry Ford Health System in Detroit, Michigan. He described the use of daily management within the laboratory and how it helps lab staff identify recurring sources of errors and reduce or eliminate them. Sharma is Director of the, Regional Medical Laboratory and Associate Medical Director, Core Laboratory, Quality Systems and Regulatory Affairs. (Photo by Duane Stork, copyright The Dark Report.)

What caught the attention of the Lab Quality Confab audience was the magnitude of savings that better use of companion diagnostics tests had produced for the health system. Presented below is a list of three molecular tests and targeted therapeutics where engagement with physicians through the laboratory test formulary committees resulted in a substantial reduction in pharmaceutical costs at Henry Ford Health due to more precise utilization of clinical laboratory tests:

Molecular Profile
(& Targeted Therapeutic)
Type of Cancer Cost of Treatment Pharma Cost Saving-2013 Pharma Cost Saving-2014
Her2 FISH (Herceptin)  breast $70k $12,800,000 $13,248,00
BRAF (Ipilimumab) melanoma $12k $1,560,000 $2,880.000
EGFR (Gefitinib) lung $72k $14,184,000 $14,823,000

Zarbo and Sharma recommended that clinical laboratory managers learn to speak the language of the hospital and health system C-Suite. “Every day, hospital administrators put time and attention into monitoring and understanding key clinical and operational measures,” advised Zarbo. “Three examples are risk-adjusted length of stay (LOS), emergency room LOS, and pharmacy cost per DRG.”

Clinical Lab Managers Learn to Speak the Language of the C-Suite

“This is one way that you can get more visibility for your laboratory,” added Sharma. “By speaking the same language as the administrators, and by showing them metrics that document how the laboratory is contributing to positive improvement in these factors, you will elevate recognition of your lab’s contribution to improved patient care at less cost.”

Over the three days of Lab Quality Confab, there were more than 40 sessions and 60 expert speakers. Participants heard presentations dealing with achieving best practices in core lab automation and hematology from lab organizations serving multiple hospitals. Advanced training with certificates of completion were offered in such quality management techniques as value steam mapping, DMAIC, and mistake-proofing the lab.

For clinical lab managers and pathologists who would like to learn more about the different presentations and speakers, the agenda can be found at this link. (Or copy and paste this URL into your browser: http://www.labqualityconfab.com/agenda.) Digital audio recordings can be viewed and ordered with this link. (Or copy and paste this URL into your browser: http://www.labqualityconfab.com/2014-audio-recordings.)

 

Related Information:

Lab Quality Confab 2014: Live Digital Audio Recording Set

Agenda for Lab Quality Confab 2014 

Most Clinical Laboratories and Pathology Groups are Under Pressure to Cut Costs and Deal with Shrinking Budgets for 2015

Effective Lab Cost-Cutting and Budget Strategies for 2015: webinar information and webinar CD

Hit by Lower Lab Test Prices, Nation’s Clinical Pathology Laboratories Embark on Cost-Cutting Programs

Clinical Pathology Laboratory Leaders Reported Big Savings from Cost-Cutting Programs during Last Week’s Lab Quality Confab

When Cost-Cutting in the Clinical Pathology Laboratory Collides with Effective QA/QC: How Savvy Labs Sustain the Accuracy and Quality of their Lab Test Results

Clinical Laboratory Industry’s Best Cost-Cutters to Share Success Stories Studies, at Lab Quality Confab in New Orleans October 1-2, 2013