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

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

Hosted by Robert Michel
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Damo Consulting Survey Predicts Future Health Network Spending Will Primarily be on Improving EHRs; Could be Positive Development for Medical Laboratories

Survey shows healthcare providers plan to wait for AI and digital health technologies to mature before making major investments in them

Clinical laboratories must develop strategies for connecting to their client doctors’ electronic health record (EHR) systems. Thus, a new survey that predicts most healthcare networks will continue to focus health information technology (HIT) spending on improving their EHRs—rather than investing in artificial intelligence (AI) and digital healthcare—provides valuable insights for medical laboratory managers and stakeholders tasked with implementing and maintaining interfaces to these systems.

According to Damo Consulting’s 2019 Healthcare IT Demand Survey, when it comes to spending money on information technology (IT), healthcare executives believe AI and digital healthcare technologies—though promising—need more development.

Damo’s report notes that 71% of healthcare providers surveyed expect their IT budgets to grow by 20% in 2019. However, much of that growth will be allocated to improving EHR functionality, Healthcare Purchasing News reported in its analysis of Damo survey data.

As healthcare executives plan upgrades to their EHRs, hospital-based medical laboratories will need to take steps to ensure interoperability, while avoiding disruption to lab workflow during transition.

The survey also noted that some providers that are considering investing in AI and digital health technology are struggling to understand the market, the news release states.

“Digital and AI are emerging as critical areas for technology spend among healthcare enterprises in 2019. However, healthcare executives are realistic about their technology needs versus their need to improve care delivery. They find the currently available digital health solutions in the market are not very mature,” explained Paddy Padmanabhan (above), Chief Executive Officer of Damo Consulting, in a news release. (Photo copyright: The Authors Guild.)

Providers More Positive Than Vendors on IT Spend

Damo Consulting is a Chicago-area based healthcare and digital advisory firm. In November 2018, Damo surveyed 64 healthcare executives (40 technology and service leaders, and 24 healthcare enterprise executives).  Interestingly, healthcare providers were more positive than the technology developers on IT spending plans, reported, which detailed the following survey findings:

  • 79% of healthcare executives anticipate high growth in IT spending in 2019, but only 60% of tech company representatives believe that is so.
  • 75% of healthcare executives and 80% of vendor representatives say change in healthcare IT makes buying decisions harder.
  • 71% of healthcare executives and 55% of vendors say federal government policies help IT spending.
  • 50% of healthcare executives associate immaturity with digital solution offerings.
  • 42% of healthcare providers say they lack resources to launch digital.  

“While information technology vendors are aggressively marketing ‘digital’ and ‘AI,’ healthcare executives note that the currently available solutions in these areas are not very mature. These executives are confused by the buzz around ‘AI’ and ‘digital,’ the changing landscape of who is playing what role, and the blurred lines of capabilities and competition,” noted Padmanabhan in the survey report.

The survey also notes that “Health systems are firmly committed to their EHR vendors. Despite the many shortcomings, EHR systems appear to be the primary choice for digital initiatives among health systems at this stage.”

Some Healthcare Providers Starting to Use AI

Even as EHRs receive the lion’s share of healthcare IT spends, some providers are devoting significant resources to AI-related projects and processes.

For example, clinical pathologists may be intrigued by work being conducted at Cleveland Clinic’s Center for Clinical Artificial Intelligence (CCAI), launched in March. The CCAI is using AI and machine learning in pathology, genetics, and cancer research, with the ultimate goal of improving patient outcomes, reported Becker’s Hospital Review.

“We’re not in it because AI is cool, but because we believe it can advance medical research and collaboration between medicine and industry—with a focus on the patient,” Aziz Nazha, MD, Clinical Hematology and Oncology Specialist and Director of the CCAI, stated in an article posted by the American Medical Association (AMA).

AI Predictions Lower Readmissions and Improve Outcomes

Cleveland Clinic’s CCAI reportedly has gathered data from 1.6 million patients, which it uses to predict length-of-stays and reduce inappropriate readmissions. “But a prediction itself is insufficient,” Nazha told the AMA. “If we can intervene, we can change the prognosis and make things better.”

The CCAI’s ultimate goal is to use predictive models to “develop a new generation of physician-data scientists and medical researchers.” Toward that end, Nazha notes how his team used AI to develop genomic biomarkers that identify whether a certain chemotherapy drug—azacitidine (aka, azacytidine and marketed as Vidaza)—will work for specific patients. This is a key goal of precision medicine

CCAI also created an AI prediction model that outperforms existing prognosis scoring systems for patients with Myelodysplastic syndromes (MDS), a form of cancer in bone marrow.

Partners HealthCare (founded by Brigham and Women’s Hospital and Massachusetts General Hospital) recently announced formation of the Center for Clinical Data Science to make AI and machine learning a standard tool for researchers and clinicians, according to a news release.

Meanwhile, at Johns Hopkins Hospital, AI applications track availability of beds and more. The Judy Reitz Capacity Command Center, built in collaboration with GE Healthcare Partners, is a 5,200 square feet center outfitted with AI apps and staff to transfer patients and help smooth coordination of services, according to a news release.

Forbes described the Reitz command center as a “cognitive hospital” and reports that it has essentially enabled Johns Hopkins to expand its capacity by 16 beds without undergoing bricks-and-mortar-style construction.

In short, medical laboratory leaders may want to interact with IT colleagues to ensure uninterrupted workflows as EHR functionality evolves. Furthermore, AI developments suggest opportunities for clinical laboratories to leverage patient data and assist in improving the diagnostic accuracy of providers in ways that improve patient care.

—Donna Marie Pocius

Related Information:

2019 Healthcare IT Demand Survey

Digital and AI are Top Priorities in 2019 as EHR Investments Continue to Dominate

Healthcare IT Spending Priorities Include Big Data Analytics, AI

Healthcare IT Demand Survey: Digital and AI are Top Priorities in 2019 as EHR Systems Continue to Dominate IT Spend

Cleveland Clinic Launches Clinical AI Center: 4 Things to Know

Cleveland Clinic Ready to Push AI Concepts to Clinical Practice

Cleveland Clinic Creating Center for AI in Healthcare

Partners HealthCare Embraces Democratization of AI to Accelerate Innovation in Medicine

Johns Hopkins Hospital Launches Capacity Command Center to Enhance Hospital Operations

The Hospital Will See You Now

Excessive $48,329 Charge for California Patient’s Outpatient Clinical Laboratory Testing Calls Attention to Chargemaster Rates and New CMS Price Transparency Rule

Studies show medical laboratories may be particularly hit by adjustments to hospital chargemasters as hospitals prepare to comply with Medicare’s New Transparency Rule

Recently, Kaiser Health News (KHN) published a story about a $48,329 bill for allergy testing that cast a spotlight on hospital chargemaster rates just as healthcare providers are preparing to publish their prices online to comply with a new Centers for Medicare and Medicaid Services (CMS) rule aimed at increasing pricing transparency in healthcare. The rule goes into effect January 1, 2019.

The patient—a Eureka, Calif., resident with a persistent rash—had received an invoice for more than $3000 from her in-network provider.

Though this type of allergy skin-patch testing is usually performed in an outpatient setting by a trained professional, such as an allergist or dermatologist, the patient elected to have the testing performed at Stanford Health Care (Stanford), a respected academic medical system with multiple hospitals, outpatient services, and physician practices.

The patient’s insurance plan, Anthem Blue Cross (Anthem), paid $11,376 of the $48,329 amount billed by Stanford Health Care, which was the rate negotiated between the insurer and Stanford, Becker’s Healthcare reported. The patient ultimately paid $1,561 out-of-pocket.

So, where did that $48,329 in total charges come from? Experts pointed to the provider’s chargemaster. A chargemaster (AKA, charge description master or CDM) lists a hospital’s prices for services, suppliers and procedures, and is used by providers to create a patient’s bill, according to California’s Office of Statewide Health Planning and Development (OSHPD).

Chargemasters note high prices beyond hospitals’ costs and may be considered jumping off points for hospitals to use in invoicing payers and patients, RevCycleIntelligence explained.

Hospital representatives will negotiate with insurance companies, asking them to pay a discounted rate off the chargemaster list. A patient with health insurance accesses care at that negotiated rate and perhaps has responsibility for a share of that amount as well.

However, an out-of-network patient, uninsured person, or cash customer who receives care will likely be billed the full chargemaster rate.

In a statement to KHN, Stanford explained that the California woman’s care was customized and, therefore, costly: “We conducted a comprehensive evaluation of the patient and her environmental exposures and meticulously selected appropriate allergens, which required obtaining and preparing putative allergens on an individual basis.”

Johns Hopkins researchers Ge Bai, PhD, CPA (left), and Gerard Anderson, PhD (right), authored a study published in Health Affairs that shows “Hospitals on average charged more than 20 times their own costs in 2013 in their CT scan and anesthesiology departments.” Hospitals with clinical laboratory outreach programs will want to consider how their patients may respond as new federal price transparency requirements make it easier for patients to see medical laboratory test prices in advance of service. (Photo copyright: Johns Hopkins University.)

Now is a Good Time for Clinical Laboratories to Make Chargemaster Changes

Some organizations, such as the Healthcare Financial Management Association (HFMA), are calling for chargemaster adjustments as part of a comprehensive plan to improve transparency and lower healthcare costs. This falls in line with the new CMS rule requiring hospitals to post prices online starting Jan.1, 2019.

In fact, hospital medical laboratories, which cannot distinguish their services from competitors, may be impacted by the new CMS rule perhaps more than other services, the HFMA analysis warned.

“The initial impact for healthcare organizations, if they have not already experienced it, will be on commoditized services such as [clinical] lab and imaging. Consumers do not differentiate between high and low quality on a commoditized service the same way a physician might, which means cost plays a larger role in consumers’ decision making.” That’s according to Nicholas Malenka, Senior Consultant, GE Healthcare Partners, and author of the HFMA report. He advises providers to do chargemaster adjustments that relate charges to costs of services, competitors’ charges, and national data.

Medical laboratory leaders also may want to take another look at the opportunities and risks for labs suggested in an earlier Dark Daily e-briefing on the Medicare requirement. (See, “Latest Push by CMS for Increased Price Transparency Highlights Opportunities and Risks for Clinical Laboratories, Pathology Groups,” August 8, 2018.)

Are Chargemaster Charges Truly Excessive? Johns Hopkins Researchers Say ‘Yes!’

Most hospitals with 50 beds or more have a charge-to-cost ratio of 4.32. In other words, $432 is charged when the actual cost of a service is $100, according a study conducted by Johns Hopkins University and published in Health Affairs.

The researchers also noted in a news release about their findings titled, “Hospitals Charge More than 20 Times Cost on Some Procedures to Maximize Revenue,” that:

  • Charge-to-cost ratios range from 1.8 for routine inpatient care to 28.5 for a CT scan; and,
  • Hospitals with $100 in CT costs may charge an uninsured patient or out-of-network patient $2,850 for the service.

“Hospitals apparently markup higher in the departments with more complex services because it is more difficult for patients to compare prices in these departments,” lead author Ge Bai, PhD, CPA, Associate Professor at Johns Hopkins Carey Business School, noted in the news release.

“(The bills for high charges) affect uninsured and out-of-network patients, auto insurers, and casualty and workers’ compensation insurers. The high charges have led to personal bankruptcy, avoidance of needed medical services, and much higher insurance premiums,” co-author Gerard Anderson, PhD, Professor of Health Policy and Management at Johns Hopkins Bloomberg School of Public Health, stated in the news release.

Legal Issues Possible for Hospitals, Medical Laboratories, Other Providers

Still another study published in the American Journal of Managed Care (AJMC) explored the legality of “surprising” uninsured and out-of-network patients with bills at the chargemaster rates. It found that contract law supports market-negotiated rates—not chargemaster rates that do not reflect actual costs or the market.

“Patients and payers should know that they are under no obligation to pay surprise bills containing chargemaster rates, and state attorneys generally can use the law to prevent providers from pursing chargemaster-related collection efforts against patients,” the researchers wrote.

Labs Need to Get Involved

Clinical laboratory leaders in hospitals and health systems are advised to reach out to hospital chargemaster coordinators to ensure the chargemaster, as it relates to the lab, is inclusive, accurate, and in sync with competitive market data. Independent medical laboratories may want to similarly check their chargemasters to see how their lab test prices compare to the prices charged by other labs serving the same community.

—Donna Marie Pocius

Related Information:

That’s a Lot of Scratch: The $48,329 Allergy Test

Allergy Tests

Six Things to Know About a Woman’s $48K Allergy Test

The Role of the Hospital Chargemaster in Revenue Cycle Management

Why Your Access Strategy Demands Pricing Transparency

CMS Proposes Changes to Empower Patients and Reduce Administrative Burden

US Hospitals Are Still Using Chargemaster Markups to Maximize Revenue

Hospitals Charge More than 20 Times Costs on Some Procedures to Maximize Revenue

Battling the Chargemaster: A Simple Remedy to Balance Billing for Unavoidable Out-of-Network Care

Latest Push by CMS for Increased Price Transparency Highlights Opportunities and Risks for Clinical Laboratories and Pathology Groups


Technological Revolution in Hospital Design and Care Delivery Will Bring Changes for Clinical Pathologists and Medical Laboratories

High-tech hospitals of the future will ‘bring the healing to the patients’ with virtual consultations and remote diagnostic/monitoring services delivering added value to patient care

Hospitals of the future may look nothing like the hospitals of today and those changes could have major implications for clinical pathologists and medical laboratory scientists.

That’s according to Samuel Smits of Gupta Strategists, a consulting firm in the Netherlands that focuses on the four pillars of the healthcare value chain: suppliers, payers, providers, and government institutions.

In an article in The Economist, Smits predicted that traditional hospitals soon will be no more. “We have reached the peak of bringing patients to the healing centers—our hospitals,” he said. “We are on the brink of bringing the healing to patients.”

The article further notes that the technological revolution on the horizon “means abandoning long-held assumptions about the delivery of care, the role of the patient, and what makes a good doctor.” Virtual consultations and remote monitoring will mean fewer patients will need in-hospital care, while those who do will find a facility that operates “more like a cross between a modern airport and a swish hotel, with mobile check-in, self-service kiosks for blood and urine tests and the like, and updates on patients’ and relatives’ phones,” the Economist article states.

Changing How Care is Delivered

The Economist predicts that “as some sophisticated diagnostics, including blood tests and virtual imaging, become available remotely, more patients will receive hospital-quality care without leaving home.”

Patrick Murray, PhD, Senior Director of Worldwide Scientific Affairs for Becton Dickinson Diagnostics in Franklin, NJ, stated in a Clinical Lab Products (CLP) article that technological advances in laboratory testing and diagnosis will enable pathologists to find increasing numbers of ways to deliver added-value to patient care.

“In my opinion, all diseases and conditions—particularly in the areas of overall wellness, women’s health, chronic diseases, and infectious disease—will benefit from the development of new tests and technologies,” Murray stated in the CLP article. “Additionally, new technologies can help meet the need to ensure traceability and seamless communication of test results not only within the lab, but also with the pharmacy, retail clinics, and physician offices, ultimately aiding in better patient management and providing more accurate insights in public health.”

Patient-and-Digital-First Hospitals

While experts predict patient-and-digital-first philosophies to be the future of hospital design, some healthcare systems already have embraced the trend. At Humber River Hospital in Toronto the future is now. An article in Modern Healthcare describes the patient-centered, high-tech, 656-bed facility, which opened in October 2015, as North America’s “first fully digital hospital.” The hospital leverages technology “wherever possible to improve quality, safety, efficiency, and customer service,” the hospital’s website states.

Humber River Hospital (above) in Toronto has been described as North America’s “first digital hospital.” It offers virtual check-in and registration as well as integrated bedside patient computer terminals that enable patients to order meals, adjust lights, play games, and access internet, television, radio, and their patient portal. (Photo copyright: Humber River Hospital.)

Humber River Hospital’s high-tech features include:

  • Robotic blood and specimen testing with results available in minutes and sent electronically to the care team with alerts for immediate attention;
  • Computerized patient documentation for immediate bedside charting;
  • Bedside computers that enable patients to control lights, use telephone and internet, order food, and review their medical, virtual check-in, and registration information;
  • A 4,500-square-foot “Command Center” (opens late 2017) will provide real-time data and predictive analytics to improve clinical, operational, and patient outcomes.


  • Three-fourths of the hospital’s supply chain is fully automated; and
  • Real-time locating systems (RTLS) track wandering patients and improve security for newborns.

Quality, Safety, Efficiency, Customer Service

Despite all the predicted upheaval to the status quo, John Deverill, Managing Partner at GE Healthcare Partners, expects the modern hospital will survive in some form. “There will always be hospitals where patients with complex needs go for multidisciplinary diagnosis and treatment by teams of specialists,” he stated in the Economist article. He does note, however, that stand-alone facilities for specific surgical interventions, such as joint replacements, may become the norm.

However, former Humber River Hospital President and CEO Rueben Devlin, MD, recommends hospitals not assume every high-tech healthcare innovation is worth pursuing.

“The four things that I think about are quality, safety, efficiency, and customer experience,” he stated in the Modern Healthcare article. “People talk about the Internet of things. I think about the Internet of junk. They’re nice toys but they need to show value to healthcare to make it purposeful.”

Anatomic pathology laboratories have a track record for adopting new technologies. Pathologists were early users of the remote telemedicine models, where telepathology systems enabled a pathologist to remotely control the stage and microscope of the pathologist who originated the telepathology session.

Similarly, the current generation of whole-slide imaging and digital pathology systems are gaining regulatory clearance in both Europe and the United States. If this next wave of technological innovations produces a shift in how clinical care is delivered, an opportunity will be created for clinical pathologists and medical laboratory scientists to adopt technologies that deliver added value to patients, including making inpatient hospital stays less likely.

—Andrea Downing Peck


Related Information:

How Hospitals Could Be Rebuilt Better Than Before

The Hospital of the Future Is Here…But it Needs more Gadgets and Bandwidth

Clinical Lab Trends 2016

NASA-like Command Centers are Coming to Hospitals

Will Growth in Number of Tele-ICU Programs in the Nation’s Hospitals Create an Opportunity for Clinical Pathologists to Deliver Added Value?