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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More Big Companies Engage Health Networks Directly to Cover Their Employees’ Healthcare: Should Medical Laboratories Be Talking to Self-Insuring Employers?

By negotiating directly with healthcare systems employers garner cost savings, while creating opportunities for clinical laboratories willing to be flexible about claims and reimbursement

It’s a healthcare trend called “direct contracting” and it is the latest method that self-insuring employers are using to better manage the cost of their health benefits plan, while maintaining access and quality for their employees. The interesting thing about direct contracting is that it might be a strategy that could work for innovative regional clinical laboratories to negotiate a place for themselves in that employer’s provider network.

Healthcare costs continue to skyrocket in the United States, and in response, many large companies are providing healthcare services to their employees by working directly with health networks and other organizations, instead of using third-party administrators (TPAs) of insurance plans to create healthcare benefits packages for their employees.

This can provide clinical laboratories and anatomic pathology groups with opportunities to create revenue and further outreach into their communities. Astute lab leaders may want to consider meeting with the decision-makers at large companies in their areas and develop strategies for working together directly. Human resources managers may be interested in the benefits of working directly with medical laboratories.

Employers Already Engaged with Health Networks for Provider Services

Self-insuring is not a new concept. In a direct contracting relationship, the employer skips the TPA in hopes of achieving cost savings. Sometimes the direct contract is for specific services that employees need most often, or they can be designed to cover the entire spectrum of services available to employees.

Many companies have already engaged in direct contracting for healthcare services. Among them are: Cisco Systems, Boeing, Intel, Walmart, and Whole Foods. Amazon, JP Morgan Chase, and Berkshire Hathaway also have announced a joint agreement to self-insure their employees, which Dark Daily reported in June. (See, “Six New Jersey Hospitals and Several Major Corporations to Self-Insure Their Million+ Employees; Trend Could Impact How Local Clinical Laboratories Get Paid,” June 11, 2018.)

Cisco has negotiated a direct healthcare agreement with Stanford Health System. Stanford operates a clinic at the Cisco campus, so that the primary care doctor is a member of the community within the company.

“I’m in their space. I’m actually where they work. I’m a bit of a village doc,” Larry Kwan, MD (above), a doctor of internal medicine with Stanford Health Care, told Reuters about his role in the Stanford clinic at the Cisco campus. About 1,000 Cisco employees are enrolled in the Stanford plan. Katelyn Johnson, Integrated Health Manager at Cisco Systems, says it’s a program that requires a more active approach from companies than traditional health benefits plans. (Photo copyrights: Stanford Health Care.)

Boeing, too, has explored direct contracting in a program where the company negotiated directly with hospitals in four different states. The direct contracts have resulted in cost savings and cover some 15,000 employees plus their families. Some of those cost savings have come from things like getting doctors to prescribe generic drugs.

Intel also has a similar program, covering around 38,000 employees and their families. They have found success in managing chronic conditions like diabetes. Technology, such as video-conferencing, also has helped lower costs and improve retention.

Even health networks are getting into the game. One recent example is the Healthcare Transformation Consortium (HTC), a six-hospital healthcare systems in New Jersey that formed to self-insure and provide direct healthcare coverage for their employees.

Companies may gain some cost savings from directly negotiating, but there are gains for the health systems as well. In a deal with Whole Foods in 2016, Adventist Health System gained a new set of skills that they plan to use in negotiating similar deals with other employers.

“We have a little bit more flexibility as a health system to design around what Whole Foods defines as quality, or what Whole Foods defines as patient satisfaction, which is sometimes different than the traditional definitions,” Arby Nahapetian, MD, regional chief medical officer and SVP at Adventist-Southern California told Modern Healthcare.

Signs Point to Trend Continuing

The Healthcare Transformation Consortium in New Jersey, along with the joint agreement between Amazon, JP Morgan Chase, and Berkshire Hathaway, are examples of what the future is likely to hold. The more these kinds of collaborations and direct contracts result in both cost savings and patient satisfaction, the more companies will likely consider direct healthcare contracts.

Hospital-based and independent laboratories may want to consider meeting with the larger employers in their service regions and explain to the HR benefits managers how better utilization of selected lab tests could improve patient outcomes and contribute to better managing costs.

After all, employers tell health insurance companies what they want to cover with their health benefits plans. So, educating the employers’ HR teams about the true value of clinical laboratory tests could be a winning strategy for labs willing to take the time to do this.

Dava Stewart

Related Information:

Fed Up with Rising Costs, Big US Firms Dig into Healthcare

Left Out of the Game: Health Systems Offer Direct-To-Employer Contracting to Eliminate Insurers

Six New Jersey Hospitals and Several Major Corporations to Self-Insure Their Million-plus Employees; Trend Could Impact How Local Clinical Laboratories Get Paid


Google Files Patent for Needle-free Blood Draw System That Could Eventually Remove Clinical Laboratories and Pathology Groups from the Process

Patent filing describes a device that is intended to allow patients to collect their own blood specimens without the need for needles

Google, (now known as Alphabet, Inc.; NASDAQ:GOOG) recently filed an application for another patent that deals with medical laboratory test technology. This patent application is for a needle-free blood draw system that enables patients to perform diagnostic testing on themselves.

The new system is designed to replace painful finger pricks and deliver diagnostic test results digitally to providers’ electronic health record (EHR) systems. Should the technology make it through clinical trials, widespread adoption of such a device could have sweeping implications for pathologists and clinical laboratories across America. (more…)

Corporations Take Electronic Health Records into their Own Hands

Clinical laboratories have traditionally been the primary storehouse for laboratory test data. Not only has this been a strong source of added value to clinicians, but it positions clinical laboratories to be major players in the approaching age of genetic medicine. Now there’s a new threat on the horizon. Several of the nation’s largest corporations are preparing to handle the electronic health records (EHRs) of their employees.

The first news of this nascent trend was a story in The Wall Street Journal on November 29, 2006. The article stated that in the first week of December, Intel Corp, Wal-Mart Stores, Inc., British Petroleum America Inc., Applied Materials, and Pitney Bowes would disclose a plan to provide digital health records to their 2.5 million workers and their dependents.

The plan was announced and the group of employers was identified as the Dossia Founders Group. Collectively, this group is funding the Dossia Network, an independent secure, non-profit infrastructure for gathering and securely storing information for lifelong health records in a multimillion-dollar-data warehouse that will link hospitals, doctors, and pharmacies.

Why, you’re probably asking yourself, would big business want to get involved in the business of electronic health records? As with all things corporate, there is a monetary savings at the root of the corporate goodwill. The companies hope that cutting out the paperwork in health care would reduce administrative costs, duplicative care, and medical errors. In turn, the potential savings would make it easier for employers to continue sponsoring health care insurance for their workers.

Officials say that the Omnimedix Institute of Portland, Ore., will maintain the health records. Omnimedix will gather the information from insurers, pharmacies, doctors and other health care providers. Patients will be able to update the record with items such as their family’s history of illness.

The Dossia Network brings up two long-standing and unanswered questions. First, who owns a patient’s data? These big employers seem to suggest that it’s the patient that owns their own data. When given the opportunity to control their own EHR, many patients will likely opt out of the benefit because of concerns about privacy. Patients fear an EHR with their complete medical history might alert insurers to potential health problems and lead them to deny coverage or increase premiums.

The second question raised by the creation of the Dossia Network is this: Should the US allow corporations to set the standard for the EHR? The fragmented US health system has had little success developing a standard for EHRs, especially a standard that will cross between hospitals and state lines. Now several corporations, with a total of over 2.5 million employees, are preparing to launch their own version of an EHR – with little input from the US health system. Omnimedix is in a rare position of power, where it may be able to define the standard for the EHR that gains wider use in future years.

Lab directors and pathologists should take note of one specific goal of this corporate EHR project-Eliminating duplicate tests as one way to lower the overall cost of healthcare. One interesting consequence of employer-funded EHRs is that their use may provide credible measurements of the actual level of laboratory test over-utilization.

Laboratories wanting to stay abreast of this important trend in EHRs should become familiar with the EHR standard as it is created by Omnimedix and the Dossia Network. They can then prepare the necessary informatics interfaces to allow them to submit electronic results into the individual patient records of these EHR systems.

Related Articles:

Big Employers Plan Electronic Health Records

Five big firms to promote electronic health files

Blog on why physicians should be concerned about the Employers’ EHR program

Cardinal Health Joins Major U.S. Employers in Effort to Make Lifelong Personal Health Records Available to Individuals Nationwide