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Clinical Laboratories and Pathology Groups

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Understanding Gen Z’s Approach to Healthcare Helps Clinical Laboratories Learn How to Better Meet Their Needs

Healthcare providers of all types will benefit from acknowledging Gen Z’s preference for digital interactions, self-testing, and over-the-counter medications

Each generation has its own unique connection to how it manages its health, and the latest studies into the healthcare habits of Generation Z (aka, Gen Z or Zoomers) are providing valuable insight that savvy clinical laboratory managers and pathologists—in fact all healthcare providers—can use to better serve their Gen Z patients.

According to McKinsey and Company, Gen Z’s “identity has been shaped by the digital age, climate anxiety, a shifting financial landscape, and COVID-19.” And Pew Research states that Zoomers “are also digital natives who have little or no memory of the world as it existed before smartphones.”

As the largest demographic, “Gen Z stands 2.6 billion members strong. … Globally, they hold purchasing power of more than $500 billion and mobile buying power of $143 billion,” wrote Stacy Rapacon, Managing Editor at Senior Executive Media, in an article she penned for HP’s The Garage.

Meeting Gen Zers’ healthcare needs on their terms would seem to be a judicious choice.

Bernhard Schroeder

“Gen-Z’s buying power may exceed $3 trillion,” wrote Bernhard Schroeder (above), a clinical lecturer on integrated/online marketing at San Diego State University, in Forbes. “Their spending ability exceeds the gross domestic product of all but about 25 of the world’s countries.” Thus, it behooves healthcare leaders, including clinical laboratory managers and pathologists, to consider how best to approach treating Gen Z patients. (Photo copyright: San Diego State University.)

Gen Z Leads in Digital Healthcare Use, Self-testing, OTC Drugs

“Gen Z engages in every type of digital healthcare activity more than other generations,” a recent study by PYMNTS noted. A total of 2,735 consumers were surveyed, and though all reported using digital healthcare to some degree, Gen Z stood out.

Patient portal access was the highest digital method accessed by Zoomers (62%), followed by telemedicine appointment usage (55%), the PYMNTS report found.

Knowing the direction Gen Z is trending may lead clinical laboratory leaders to expect self-testing to be on the rise, and that hunch would be correct. “There are two converging trends; the rise of women’s health technology and increased use of at-home sample collection for diagnosis tests,” Clinical Lab Products reported.

“Ongoing innovation in these areas could significantly improve the accessibility of women’s health testing. It will also have repercussions for labs, potentially changing the way samples are received and processed, and the way results are distributed. The quantity and quality of samples may be impacted, too. It’s important for labs to be aware of likely developments so they can prepare, and potentially collaborate with the health technology companies driving change,” CLP noted.

Another area feeling the impact of Gen Z’s healthcare spending is the over-the-counter (OTC) drug market.

“Since the pandemic began, more Americans are paying closer attention to their symptoms and looking for easily accessible information about over-the-counter medications, especially for allergies, coughs, and headaches,” said Kim Castro, Editor and Chief Content Officer for US News and World Report, in a press release.

Zoomers Want Healthcare on Their Own Terms

Gen Z grew up with the internet, Amazon, Netflix, Google, and social media since birth.

“The ‘norm’ they experienced as children was a world that operated at speed, scale, and scope. They developed an early facility with powerful digital tools that allowed them to be self-reliant as well as collaborative,” anthropologist Roberta Katz, PhD, a senior research scholar at Stanford’s Center for Advanced Study in the Behavioral Sciences (CASBS) told Stanford News.

As digital natives, Gen Z can be more science and data driven and yet still expect to find health advice on YouTube or TikTok. According to an article published by Harvard Pilgrim Healthcare, “Gen Z is the first generation to grow up surrounded by digital devices, and they expect their health benefits to be digital, too. From choosing a benefits package to finding a provider, Gen Z wants to take care of their health on their own terms. And that may just include video chatting with a doctor from the back of an Uber.”

In its 2022 US Digital Health Survey, research firm Insider Intelligence found that “Half of Gen Z adults turn to social media platforms for health-related purposes, either all the time or often.”

“Gen-Z will make up 31% of the world’s population by 2021 and they have deeply formed perceptions and beliefs … This has led to an amazing change in the way Gen-Z is disrupting several industries simultaneously,” wrote Bernhard Schroeder (above), a clinical lecturer on integrated/online marketing at San Diego State University, in Forbes.

What Can Clinical Laboratories Learn from These Findings

Gen Z seeks accuracy and trustworthy information. “Gen-Zers’ natural penchant for skepticism and frugality—coupled with low levels of confidence in the US healthcare system—makes them less likely to trust providers, more likely to research prices before seeking care, and more apt to worry that their health insurance won’t cover their treatment,” Insider Intelligence noted.

According to Contract Pharma, “Gen Z is concerned with holistic health and self-care, rather than a one size fits all pharmaceutical approach. They share a hesitancy for traditional healthcare models but with very interesting differences. By understanding these differences, the consumer healthcare industry can focus on agile and distinctive brands to harness Gen Z’s tremendous purchasing power.”

Savvy clinical laboratory leaders can better serve their Gen-Z client physicians and patients by better understanding why Zoomers are more inclined to order their own lab tests (without a physician), collect their own specimens to send into labs, and/or collect their own specimens to do home testing (think COVID-19 self-test kits). Zoomers may need an entirely new business model from their healthcare providers, including clinical laboratories.

Kristin Althea O’Connor

Related Information:

What is Gen Z?

On the Cusp of Adulthood and Facing an Uncertain Future: What We Know about Gen Z So Far

How Gen Z is Redefining Their World through Technology

Gen Z Is ‘Generation Digital Health’ as 62% Use Digital Patient Portals

What Self-Sampling for Women’s Health Testing Means for Labs

US News Top Recommended Over-the-Counter Health Products

Gen Z Are Not ‘Coddled.’ They Are Highly Collaborative, Self-Reliant and Pragmatic, According to New Stanford-Affiliated Research

Who is Gen Z and How Are They Shaping the Future of Health Benefits?

Generation Z: Transforming Consumer Healthcare

Gen Z’s Take on Healthcare

US Generation Z Healthcare Behaviors

Australian Researchers Develop Static Droplet Microfluidic Device That Can Detect Cancer Cells via a Simple Blood Test

This is another approach to the liquid biopsy that clinical laboratories and pathologists may use to detect cancer less invasively

Screening for cancer usually involves invasive, often painful, costly biopsies to provide samples for diagnostic clinical laboratory testing. But now, scientists at the University of Technology (UTS) in Sydney, Australia, have developed a novel approach to identifying tumorous cells in the bloodstream that uses imaging to cause cells with elevated lactase to fluoresce, according to a UTS news release.

The UTS researchers created a Static Droplet Microfluidic (SDM) device that detects circulating tumor cells (CTC) that have separated from the cancer source and entered the bloodstream. The isolation of CTCs is an intrinsic principle behind liquid biopsies, and microfluidic gadgets can improve the efficiency in which problematic cells are captured.

The University of Technology’s new SDM device could lead the way for very early detection of cancers and help medical professionals monitor and treat cancers.

The UTS researchers published their findings in the journal Biosensors and Bioelectronics titled, “Rapid Metabolomic Screening of Cancer Cells via High-Throughput Static Droplet Microfluidics.”

“Managing cancer through the assessment of tumor cells in blood samples is far less invasive than taking tissue biopsies. It allows doctors to do repeat tests and monitor a patient’s response to treatment,” explained Majid E. Warkiani, PhD, Professor, School of Biomedical Engineering, UTS, and one of the authors of the study, in a news release. Clinical laboratories and pathologists may soon have a new liquid biopsy approach to detecting cancers. (Photo copyright: University of New South Wales.)

Precision Medicine a Goal of UTS Research

The University of Technology’s new SDM device differentiates tumor cells from normal cells using a unique metabolic signature of cancer that involves the waste product lactate

“A single tumor cell can exist among billions of blood cells in just one milliliter of blood, making it very difficult to find,” explained Majid E. Warkiani, PhD, a professor in the School of Biomedical Engineering at UTS and one of the authors of the study, in the news release.

“The new [SDM] detection technology has 38,400 chambers capable of isolating and classifying the number of metabolically active tumor cells,” he added.

“In the 1920s, Otto Warburg discovered that cancer cells consume a lot of glucose and so produce more lactate. Our device monitors single cells for increased lactate using pH sensitive fluorescent dyes that detect acidification around cells,” Warkiani noted.

After the SDM device has detected the presence of questionable cells, those cells undergo further genetic testing and molecular analysis to determine the source of the cancer. Because circulating tumor cells are a precursor of metastasis, the device’s ability to identify CTCs in very small quantities can aid in the diagnosis and classification of the cancer and the establishment of personalized treatment plans, a key goal of precision medicine.

The new technology was also designed to be operated easily by medical personnel without the need for high-end equipment and tedious, lengthy training sessions. This feature should allow for easier integration into medical research, clinical laboratory diagnostics, and enable physicians to monitor cancer patients in a functional and inexpensive manner, according to the published study. 

“Managing cancer through the assessment of tumor cells in blood samples is far less invasive than taking tissue biopsies. It allows doctors to do repeat tests and monitor a patient’s response to treatment,” stated Warkiani in the press release.

The team have filed for a provisional patent for the device and plan on releasing it commercially in the future.

Other Breakthroughs in MCED Testing

Scientists around the world have been working to develop a simple blood test for diagnosing cancer and creating optimal treatment protocols for a long time. There have been some notable breakthroughs in the advancement of multi-cancer early detection (MCED) tests, which Dark Daily has covered in prior ebriefings.

In “NHS Trial Analysis Finds That Grail’s Galleri Clinical Laboratory Blood Test Can Detect 50 Cancers and Identify the Location of the Cancer,” we reported how the UK’s National Health Service (NHS) had conducted a trial study of an MCED test developed by a California-based healthcare technology company that could provide a less painful/invasive cancer test experience to UK residents.

And in “University Researchers Develop Microfluidic Device That Partitions Cancer Cells According to Size in Effort to Create a Useful Liquid Biopsy Method,” we covered how researchers at the University of Illinois at Chicago (UIC) and Queensland University of Technology (QUT) in Australia had unveiled a diagnostic device that uses microfluidic technology to identify cell types in blood by their size and isolate individual cancer cells from patient blood samples.

According to the Centers for Disease Control and Prevention (CDC), cancer ranks second in the leading causes of death in the US, just behind heart disease. There were 1,603,844 new cancer cases reported in 2020, and 602,347 people died of various cancers that year in the US. 

According to the National Cancer Institute, the most common cancers diagnosed in the US annually include:

Cancer is a force in Australia as well. It’s estimated that 151,000 Australians were diagnosed with cancer in 2021, and that nearly one in two Australians will receive a diagnosis of the illness by the age of 85, according to Cancer Council South Australia.

The population of Australia in 2021 was 25.69 million, compared to the US in the same year at 331.9 million.

The development of the University of Technology’s static droplet microfluidic device is another approach in the use of liquid biopsies as a means to detect cancer less invasively.

More research and clinical studies are needed before the device can be ready for clinical use by anatomic pathology groups and medical laboratories, but its creation may lead to faster diagnosis of cancers, especially in the early stages, which could lead to improved patient outcomes. 

—JP Schlingman

Related Information:

New Technology to Improve Cancer Detection and Treatment

This Device Can Easily, Cheaply Detect Cancer Cells in a Blood Sample

Rapid Metabolomic Screening of Cancer Cells via High-throughput Static Droplet Microfluidics

Multi-cancer Early Detection (MCED) Tests

Static Droplet Microfluidic, the Cancer Cell Analysis Device

NHS Trial Analysis Finds That Grail’s Galleri Clinical Laboratory Blood Test Can Detect 50 Cancers and Identify the Location of the Cancer

University Researchers Develop Microfluidic Device That Partitions Cancer Cells According to Size in Effort to Create a Useful Liquid Biopsy Method

Patients and Physicians Go Online to Pressure Insurers on Prior Authorization Denial of Claims, Something Genetic Testing Labs Regularly Encounter

In a handful of cases, health insurers reversed denials after physicians or patients posted complaints on social media

Prior authorization requirements by health insurers have long been a thorn in the side of medical laboratories, as well as physicians. But now, doctors and patients are employing a new tactic against the practice—turning to social media to shame payers into reversing denials, according to KFF Health News (formerly Kaiser Health News).

Genetic testing lab companies are quite familiar with prior authorization problems. They see a significant number of their genetic test requests fail to obtain a prior authorization. Thus, if the lab performs the test, the payer will likely not reimburse, leaving the lab to bill the patient for 100% of the test price, commonly $1,000 to $5,000. Then, an irate patient typically calls the doctor to complain about the huge out-of-pocket cost.

One patient highlighted in the KFF story was Sally Nix of Statesville, North Carolina. Her doctor prescribed intravenous immunoglobulin infusions to treat a combination of autoimmune diseases. But Nix’s insurer, Blue Cross Blue Shield of Illinois (BCBSIL), denied payment for the therapy, which amounted to $13,000 every four weeks, KFF Health News reported. So, she complained about the denial on Facebook and Instagram.

“There are times when you simply must call out wrongdoings,” she wrote in an Instagram post, according to the outlet. “This is one of those times.”

In response, an “escalation specialist” from BCBSIL contacted her but was unable to help. Then, after KFF Health News reached out, Nix discovered on her own that $36,000 in outstanding claims were marked “paid.”

“No one from the company had contacted her to explain why or what had changed,” KFF reported. “[Nix] also said she was informed by her hospital that the insurer will no longer require her to obtain prior authorization before her infusions, which she restarted in July.”

“I think we’re on the precipice of really improving the environment for prior authorization,” said Todd Askew, Senior Vice President, Advocacy, for the American Medical Association, in an AMA Advocacy Update. If this was to happen, it would be welcome news for clinical laboratories and anatomic pathology groups. (Photo copyright: Nashville Medical News.)

Physicians Also Take to Social Media to Complain about Denials

Some physicians have taken similar actions, KFF Health News reported. One was gastroenterologist Shehzad A. Saeed, MD, of Dayton Children’s Hospital in Ohio. Saeed posted a photo of a patient’s skin rash on Twitter in March after Anthem denied treatment for symptoms of Crohn’s disease. “Unacceptable and shameful!” he tweeted.

Two weeks later, he reported that the treatment was approved soon after the tweet. “When did Twitter become the preferred pathway for drug approval?” he wrote.

Eunice Stallman, MD, a psychiatrist from Boise, Idaho, complained on X (formerly Twitter) about Blue Cross of Idaho’s prior authorization denial of a brain cancer treatment for her nine-month-old daughter. “This is my daughter that you tried to deny care for,” she posted. “When a team of expert [doctors] recommend a treatment, your PharmD reviewers don’t get to deny her life-saving care for your profits.”

However, in this case, she posted her account after Blue Cross Idaho reversed the denial. She said she did this in part to prevent the payer from denying coverage for the drug in the future. “The power of the social media has been huge,” she told KFF Health News. The story noted that she joined X for the first time so she could share her story.

Affordable Care Act Loophole?

“We’re not going to get rid of prior authorization. Nobody is saying we should get rid of it entirely, but it needs to be right sized, it needs to be simplified, it needs to be less friction between the patient and accessing their benefits. And I think we’re on really good track to make some significant improvements in government programs, as well as in the private sector,” said Todd Askew, Senior Vice President, Advocacy, for the American Medical Association, in an AMA Advocacy Update.

However, KFF Health News reported that Kaye Pestaina, JD, a Kaiser Family Foundation VP and Co-Director of the group’s Program on Patient and Consumer Protections, noted that some “patient advocates and health policy experts” have questioned whether payers’ use of prior authorization denials may be a way to get around the Affordable Care Act’s prohibition against denial of coverage for preexisting conditions.

“They take in premiums and don’t pay claims,” family physician and healthcare consultant Linda Peeno, MD, told KFF Health News. “That’s how they make money. They just delay and delay and delay until you die. And you’re absolutely helpless as a patient.” Peeno was a medical reviewer for Humana in the 1980s and then became a whistleblower.

The issue became top-of-mind for genetic testing labs in 2017, when Anthem (now Elevance) and UnitedHealthcare established programs in which physicians needed prior authorization before the insurers would agree to pay for genetic tests.

Dark Daily’s sister publication The Dark Report covered this in “Two Largest Payers Start Lab Test Pre-Authorization.” We noted then that it was reasonable to assume that other health insurers would follow suit and institute their own programs to manage how physicians utilize genetic tests.

At least one large payer has made a move to reduce prior authorization in some cases. Effective Sept. 1, UnitedHealthcare began a phased approach to remove prior authorization requirements for hundreds of procedures, including more than 200 genetic tests under some commercial insurance plans.

However, a source close to the payer industry noted to Dark Daily that UnitedHealthcare has balked at paying hundreds of millions’ worth of genetic claims going back 24 months. The source indicated that genetic test labs are engaging attorneys to push their claims forward with the payer.

Is Complaining on Social Media an Effective Tactic?

A story in Harvard Business Review cited research suggesting that companies should avoid responding publicly to customer complaints on social media. Though public engagement may appear to be a good idea, “when companies responded publicly to negative tweets, researchers found that those companies experienced a drop in stock price and a reduction in brand image,” the authors wrote.

However, the 2023 “National Customer Rage Survey,” conducted by Customer Care Measurement and Consulting and Arizona State University, found that nearly two-thirds of people who complained on social media received a response. And “many patients and doctors believe venting online is an effective strategy, though it remains unclear how often this tactic works in reversing prior authorization denials,” KFF Health News reported.

Federal Government and States Step In

KFF Health News reported that the federal government is proposing reforms that would require some health plans “to provide more transparency about denials and to speed up their response times.” The changes, which would take effect in 2026, would apply to Medicaid, Medicare Advantage, and federal Health Insurance Marketplace plans, “but not employer-sponsored health plans.”

KFF also noted that some insurers are voluntarily revising prior authorization rules. And the American Medical Association reported in March that 30 states, including Arkansas, California, New Jersey, North Carolina, and Washington, are considering their own legislation to reform the practice. Some are modeled on legislation drafted by the AMA.

Though the states and the federal government are proposing regulations to address prior authorization complaints, reform will likely take time. Given Harvard Business Review’s suggestion to resist replying to negative customer complaints in social media, clinical labs—indeed, all healthcare providers—should carefully consider the full consequences of going to social media to describe issues they are having with health insurers.

—Stephen Beale

Related Information:

Doctors and Patients Try to Shame Insurers Online to Reverse Prior Authorization Denials

Delays Related to Prior Authorization in Inflammatory Bowel Disease

Why You Shouldn’t Engage with Customer Complaints on Twitter

Feds Move to Rein In Prior Authorization, a System That Harms and Frustrates Patients

“Damaged Care” Premiere Features HMO Whistleblower

Major Insurers to Ease Prior Authorizations Ahead of Federal Crackdown

How Labs Can Improve Their Relationships with Payers for Genomic Test Reimbursement

Payers Request More Claims Documentation

Survey Indicates Zoomers and Millennials Are Ready for Pharmacies to Play a Bigger Role in Their Primary Care

Demand for low cost, convenient access to doctors and drugs is driving transformation to decentralized medical care, and retail pharmacy chains see opportunity in offering primary care services

Retail pharmacies and pharmacists continue to play a growing role in healthcare as consumer demand for lower cost and convenience pushes the nation’s medical landscape away from centralized healthcare systems. Clinical laboratories have seen this in the increasing trend of consumers seeking vaccinations and home-health tests at their local drug stores.

Results of a pair of surveys dubbed “Pharmacy Next” conducted by Wolters Kluwer Health revealed that 58% of people are now willing to be treated for non-emergency healthcare conditions in non-traditional medical environments, such as retail pharmacies and clinics.

This is a finding that clinical laboratory managers and pathologists should incorporate into their labs’ strategic planning. It portends a shift in care away from the traditional primary care clinic—typically located in the campus around the community hospital—and toward retail pharmacies. Labs will want to capture the test referrals originating from the primary care clinics located in retail pharmacies.

This willingness to access medical care in non-traditional environments is especially true among people in Generation Y (Millennials) and Generation Z (Zoomers)—people born between 1981-1996 (Gen Y) and 1997-2012 (Gen Z), according to Journey Matters.

“As we saw in last year’s survey, primary care decentralization is continuing—the traditional one doctor-one patient, single point of coordination is vanishing, and this is especially evident in younger generations,” said Peter Bonis, MD, Wolters Kluwer’s Chief Medical Officer, in a press release

The online surveys of more than 2,000 US adults was weighted by age, gender, household income, and education to be representative of the entire population of the United States. 

“By preparing for this shift today, providers can work in concert across care sites to deliver the best care to patients,” said Peter Bonis, MD, Wolters Kluwer Health Chief Medical Officer, in a press release. “Likewise, newer care delivery models, like retail pharmacies and clinics, can ensure they’re ready to meet the expectations of healthcare consumers, who will increasingly be turning to them for a growing range of care needs.” Clinical laboratories may find new revenue opportunities working with the primary care clinics operating within local retail pharmacists and clinicians. (Photo copyright: Wolters Kluwer.)

Key Findings of the Wolters Kluwer Pharmacy Next Studies

Some key insights of the surveys include:

  • Care is rapidly decentralizing with 58% stating they are likely to visit a local pharmacy for non-emergency medical care.
  • Younger generations are signaling lasting change within the industry as they are more open to non-traditional styles of care.
  • 61% of respondents envision most primary care services being provided at pharmacies, retail clinics, or pharmacy clinics within the next five years. Of the respondents, 70% of Millennials, 66% of Gen Z, 65% of Gen X, and 43% of Baby Boomers believe this transition will occur.
  • Consumers are worried about prescription costs and availability.
  • 92% of respondents said physicians and pharmacists should inform patients of generic options.
  • 59% of surveyed consumers have concerns about drug tampering and theft when it involves mail order or subscription prescription services.
  • One in three respondents believe convenience is more important than credentials in non-emergency situations.

The survey indicates that healthcare consumers across multiple generations are open to a shift in some medical services from doctors to pharmacists. However, there were some notable differences between generations.

Respondents of the Baby Boomer (55%) and Gen X (57%) generations stated they would trust a physician assistant with medication prescriptions, while only 42% of Gen Z and 47% of Millennial respondents felt the same way. 

Additionally, Boomers (57%) and Gen X (67%) said they would feel comfortable with a nurse practitioner issuing their prescriptions, while only 44% of Gen Z and 53% of Millennials said they would. 

Increased Comfort with Genetic Testing at Pharmacies

The surveys also showed that younger generations are more open to the field of pharmacogenomics, which combines pharmacology and genomics to analyze how an individual’s genetic makeup (aka, heredity) affects the efficacy and reactions to certain drugs. This is a key component of precision medicine.

Overall, 68% of individuals polled believe their individual genomic data could guide prescription decisions, with Millennials (77%) and Gen Z (74%) being the primary believers. Additionally, 88% of respondents stated they see an incentive for health insurers to cover genomic testing, and 72% said they would be open to genetic testing for personalized medical care

But pharmacists and clinicians should be aware that advancing pharmacogenomics will require addressing privacy concerns. According to the Wolters Kluwer study, 57% of Gen Z and 53% of Millennials have apprehension surrounding genetic testing due to privacy risks, with 35% of Gen X and Boomers holding that same opinion.

Healthcare Staff Shortages, Drug Cost a Concern

Survey respondents are also concerned about pharmacy staff shortages and expenditures when seeking care at a pharmacy. Half of the participants are worried they will receive the wrong medication, half worry about getting the incorrect dosage, and almost half (47%) fear receiving the wrong directions due to overburdened pharmacy employees.

More people in Gen Z (59%) and Millennials (60%) had these concerns compared to Gen X (44%) and Boomers (38%).

Sadly, a distressing 44% of those surveyed admitted to not filling a prescription due to the costs. That number jumps to a staggering 56% among individuals with no health insurance, compared to 42% for insured patients.

“From hospitals to doctors’ offices, from pharmacies to pharma and beyond, healthcare must move to more affordable and accessible primary care models, adopt innovations that help deliver more personalized care, and address persistent safety and cost concerns that consumers have about their medications,” said Bonis in the press release.

Can Pharmacies Deliver Primary Care as Well as Doctor’s Offices?

Pharmacies may be logical setting for at least some non-emergency health services. According to the Centers for Disease Control and Prevention (CDC), approximately 90% of the US population live within five miles of a pharmacy and about 72% of visits to physician’s offices involve the prescribing and monitoring of medication therapies.

“Pharmacies did step up during the COVID-19 pandemic. The proof is there that pharmacies can do it,” noted Kevin Nicholson, JD, Vice President of Policy, Regulatory, and Legal Affairs for the National Association of Chain Drug Stores (NACDS), during this year’s Healthcare Information and Management Systems Society (HIMSS) in April,  HealthLeaders reported.

“We’re not talking about complicated services. We’re talking low-acuity, very basic care,” said Anita Patel, PharmD, Vice President of Pharmacy Services Development for Walgreens, at the HIMSS conference.

Pharmacies across the country continue to add more healthcare services to their available public offerings. This trend will likely persist into the future as healthcare becomes more expensive, wait times for physician appointments increases, and medical staff shortages rise. Thus, there may be opportunities for clinical laboratories to support pharmacists and doctors working in retail settings.

—JP Schlingman

Related Information:

What the Next Generation’s Expectations for Primary Care Mean for Pharmacists

US Survey Signals Big Shifts in Primary Care to Pharmacy and Clinic Settings as Consumers Seek Lower Medication and Healthcare Costs

Pharmacy Next: Safer, Affordable and Personalized

Pharmacy Next: Health Consumer Medication Trends

Pharmacy Next: Safety, Service, and Spending

Pharmacy Next: Consumer Trends and Industry Transformation

Wolters Kluwer’s Pharmacy Next Survey Shows 58% of Americans Likely to First Seek Non-emergency Healthcare at Pharmacies

The 7 Generations: What do we know about them?

Should a Pharmacist Be Allowed to Deliver Primary Care Services?

Community Pharmacists’ Contributions to Disease Management during the COVID-19 Pandemic

Kaufman Hall Report Says Hospitals Saw Less Inpatients and Outpatients during Summer as Bad Debt and Charity Care Rose

As a result, health system-based clinical laboratories likely saw a decline in test orders as well a decrease in outreach revenue

Bad financial news continues in the hospital industry. According to an August 2023 National Hospital Flash Report from consulting firm Kaufman Hall, hospitals’ financial performance deteriorated in July, partly due to declines in inpatient and outpatient volumes and rising bad debt and charity care.

The implication from these findings is that hospital-based clinical laboratories saw a drop in test volume and any lab revenue associated with inpatient testing.

In an analysis of data from more than 1,300 hospitals, Kaufman Hall noted a dip in hospitals’ median calendar year-to-date operating margin from 1.4% in June down to 1.3% in July. The data also showed “a greater pullback in volume on the outpatient side, which may be attributed to patients choosing not to pursue elective procedures during the summer,” a Kaufman Hall news release stated.

Kaufman Hall’s National Hospital Flash Report by Erik Swanson, Senior Vice President, Data and Analytics, and Brian Pisarsky, Senior Vice President, Strategic and Financial Planning, is an analysis of actual and budget data—sampled from Syntellis Performance Solutions—which is representative of hospitals of various sizes and areas in the US.

“It’s clear that today’s challenging financial environment is here to stay, and hospital leaders must be proactive in seeking out opportunities to refine their operations and remain competitive,” said Erik Swanson, Senior Vice President, Data and Analytics, Kaufman Hall, in a news release. Clinical laboratory leaders would be wise to follow the same advice. (Photo copyright: Kaufman Hall.)

Expenses Declined, Bad Debt and Charity Care Rose

Here are other national data Kaufman Hall reported for July 2023 as compared to June 2023:

  • Adjusted discharges per calendar day dropped 7%.
  • Operating room minutes per calendar day declined 13%.
  • Emergency department visits per calendar day fell 1%.
  • Bad debt and charity care as a percentage of hospitals’ gross operating revenue was up 7%.
  • Purchased service expense per adjusted discharge was down 3%.
  • Labor expense per adjusted discharge also fell 3%.

Even though expenses slightly declined during July, patient volume decreases “pulled down” the margins, Healthcare Innovation reported, which called the report “a gloomy one.”

Also, the uptick in bad debt and charity care while volumes decreased created a “difficult situation for hospitals,” Medical Economics observed. 

Here are the report’s “key takeaways,” according to Kaufman Hall:

  • All volume indicators were down, but operating margins were still better than 2022.
  • Outpatient volume decreased more than inpatient, possibly due to patients choosing not to have elective procedures during the summer.
  • The decline in expenses was “not enough to offset revenue losses,” and inflation will continue to take its toll on labor expenses.
  • Medicaid has been “disenrolling” members in 30 states during June and July, and bad debt and charity care have increased.  

The report also called out need for improvement in providers’ discharge of patients to skilled nursing facilities. “Hospitals that prioritize care transitions to skilled nursing facilities are performing better than institutions [that] do not,” Swanson said in the news release.

“Identifying steps that can ensure a smooth transition, such as obtaining pre-authorizations and planning discharge early, will help organizations reduce expenses and improve patients’ experience,” he continued.

For Hospitals, 2023 Not as Bad as 2022

MedCity News pointed out that though July’s operating margin index decline followed four months of growth, hospitals are still way ahead of 2022 performance when median operating margins were -0.98% in July 2022.

Still, it appears hospitals are struggling to secure financial footing after 2022, an overall bad financial year for the hospital industry.

In “Tough Times Ahead for Hospitals and Their Labs,” Dark Daily’s sister publication The Dark Report referenced a Fall 2022 Current State of Hospital Finances Report, prepared by Kaufman Hall for the American Hospital Association. The report noted that “under an optimistic scenario, hospitals would lose $53 billion in revenue [in 2022]. The loss would primarily come from a $27 billion decline in outpatient revenue and $17 billion for inpatient as well as $9 billion in emergency department revenue.”

More recently, a 2023 Becker’s Hospital CFO Report compiled a list of 81 hospitals that had cut jobs since the start of the year in response to “financial and operational challenges.”

Included was Tufts Medicine in Burlington, Massachusetts. In August, the hospital “eliminated hundreds of jobs” in an outsourcing of lab outreach services to Labcorp. The Becker’s report noted that “[Tufts] said it will work with Labcorp to have the majority of affected employees transition to a similar position with Labcorp.”

Tips for Clinical Lab Financial Viability

Medical laboratory leaders need to help ensure financial health of their labs as well as quality and efficiency of services. Advice from Kaufman Hall may be applicable.

The report writers advised providers to secure payer authorizations before a “patient comes in the door.” For clinical labs, this is comparable to the need to secure insurance company authorizations for expensive genetic tests before samples are taken and tests performed.

Another tip from Kaufman Hall is to “collect and use data to inform process improvement” and “make change.”  Along those lines, medical laboratories could leverage patient data to guide launch of new services, entry to markets, workflow improvement, and costs reduction.

—Donna Marie Pocius

Related Information:

National Hospital Flash Report: August 2023

Patient Volume and Revenue Decline in July, Challenging Hospitals’ Performance

Kaufman Hall: Hospital Margins Dented by Falling Patient Volume

Hospital Finances Decline in July

Hospitals’ Operating Margins Fell in July after Four Months of Growth

Clinical Laboratory Trends: Tough Times Ahead for Hospitals and Their Labs81 Hospitals, Health Systems Cutting Jobs

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