From ‘new-school’ rules of running a clinical laboratory to pharmacy partnerships to leveraging lab data for diagnostics, key industry executives discussed the new era of clinical laboratory and pathology operations
Opening keynotes at the 28th Annual Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management taking place in New Orleans this week covered three main forces that healthcare and medical laboratory administrators should be preparing to address: new consumer preferences, new care models, and new payment models.
“COVID-19 didn’t change a whole lot of things in one sense, but it accelerated a lot of trends that were already happening in healthcare,” said Robert L. Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and Founder of the Executive War College, during his opening keynote address to a packed ballroom of conference attendees. “Healthcare is transforming, and the transformation is far more pervasive than most consumers appreciate.
“Disintermediation, for example, is taking traditional service providers and disrupting them in substantial ways, and if you think about the end of fee-for-service, be looking forward because your labs can be paid for the value you originate that makes a difference in patient care,” Michel added.
Another opportunity for clinical laboratories, according to Michel, is serving Medicare Advantage plans which have soared in enrollment. “Lab leaders should be studying Medicare Advantage for how to integrate Medicare Advantage incentives into their lab strategies,” he said, highlighting the new influence of risk adjustment models which use diagnostic data to predict health condition expenditures.
Opening sessions at this week’s annual Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, presented by Robert L. Michel (above), Editor-in-Chief of Dark Daily and its sister publication The Dark Report, discussed demand for delivering healthcare services—including medical laboratory testing—as consumer preferences evolve, new care models are designed, and as payers seek value over volume. While these three forces may be challenging at the outset, they also create opportunities for clinical laboratories and pathology groups—a focal point of the Executive War College each year. (Photo copyright: The Dark Intelligence Group.)
Medical Laboratories Must Adapt to ‘New-School’ Rules
During his keynote address, Stan Schofield, Vice President and Managing Principal at The Compass Group, noted that while the basic “old-school” rules of successfully running a clinical laboratory have not changed—e.g., adding clients, keeping clients, creating revenue opportunities, getting paid, and reducing expenses—the interpretation of each rule has changed. The Compass Group is a trade federation based in South Carolina that serves not-for-profit healthcare integrated delivery networks (IDNs), including 32 health systems and 600 hospitals.
Schofield advised that when it comes to adding new clients under the “new-school” rules of lab management, clinical laboratory directors must be aware of and adapt to hospital integrations of core labs, clinical integrations across health systems, seamless services, direct contracting with employers in insurance relationships, and direct-to-consumer testing. Keeping clients, Schofield said, involves five elements:
Strong customer service.
A tailored metrics program for quality services based on what is important to a lab’s clients.
Balanced scorecards that look at the business opportunity and value proposition with each client.
Monitoring patients’ experiences and continuous improvement.
Participation in all payer agreements.
As to the problem of commoditization of laboratory goods and services, Schofield said, “Right now, we’re facing the monetization of the laboratory. We’re going to swiftly move from commoditization to monetization to commercialization.”
Pharmacies Enter the Clinical Laboratory Market
In another forward looking keynote address, David Pope, PharmD, CDE, Chief Pharmacy Officer at OmniSYS, XiFin Pharmacy Solutions, discussed the “test to treat” trend which could bring clinical laboratories and pharmacies together in new partnerships.
Diagnostics and pharmacy now intersect, according to Pope. “Pharmacists are on the move, and they are true contender as a new provider for you,” he said. “An area of pharmacy that is dependent upon labs is specialty medications.”
Specialty medicines now account for 55% of prescription spending, up from 28% in 2011, driven by growth in auto-immune and oncology, Pope noted. Other examples include companion diagnostics required for targeted treatments pertaining to all major cancers, and new areas like thalassemia (inherited blood disorders), obesity, next-generation sequencing, and pharmacogenomics, in addition to routine testing such as liver function and complete blood count (CBC).
Federal legislation may soon recognize pharmacists as healthcare providers who will be trained to perform specific clinical services, Pope said. Some states already recognize pharmacists as providers, he noted, explaining that pharmacies need lab data for three primary reasons:
Service—Pharmacies can act as a referral source to clinical laboratories. When referring, pharmacies may need to communicate lab test results to patients or providers to coordinate care.
Value-based care—Pharmacies would draw on data to counsel, prescribe, and coordinate care for chronic disease management, among other services.
Diagnostics and pharmacogenetics—Specialty medication workflows require documented test results within a specific timeframe prior to dispensing.
Another point Pope made: Large pharmacies are seeking lab partners. Labs that can provide rapid turnaround time and good pricing on complex tests provide pharmacies with partnership opportunities.
Using AI to Create Patients’ ‘Digital Twins’ That Help Identify Disease and Improve Care
High-tech healthcare technology underlies many opportunities in the clinical laboratory and pathology market, as evidenced throughout the Executive War College’s 2023 curriculum. An ongoing challenge for labs, however, is how to produce the valuable datasets that all labs have the potential to generate.
“It feels like we’ve come so far,” explained Brad Bostic, CEO of hc1 during his keynote address. “We’ve got the internet. We’ve got the cloud. All of this is amazing, but in reality, we have this massive proliferation of data everywhere and it’s very difficult to know how to actually put that into use. And nobody’s generating more data than clinical laboratories.
“Every single interaction with a patient that generates data gives you this opportunity to create the idea of a ‘digital twin.’ That means that labs are creating a mathematical description of what a person’s state is and using that information to look at how providers can optimally diagnose and treat that person. Ultimately, it is bigger than just one person. It’s hundreds of millions of people that are generating all this data, and many of these people fall into similar cohorts.”
This digital twin opportunity is heavily fueled by medical laboratory testing, Bostic said, adding that labs need to be able to leverage artificial intelligence (AI) to:
“I recommend lab leaders sit down with their teams and any outside partners they trust and identify what are their lab’s goals,” Bostic stated. “Think about how this technology can advance a lab’s mission. Look at strategy holistically—everything from internal operations to how patient care is affected.”
Healthcare industry watchdog Group Leapfrog says that if CMS suppresses the data “all of us will be in the dark on which hospitals put us most at risk”
For some time, hospitals and clinical laboratories have struggled with transparency regulation when it comes to patient outcomes, test prices, and costs. So, it is perplexing that while that Centers for Medicare and Medicaid Services (CMS) pushes for more transparency in the cost of hospital care and quality, the federal agency also sought to limit public knowledge of 10 types of medical and surgical harm that occurred in hospitals during the COVID-19 pandemic.
And even though the CMS announced in its August 1 final rule (CMS-1771-F) that it was “pausing” its plans to suppress data relating to 10 measures that make up the Patient Safety and Adverse Events Composite (PSI 90), a part of the Hospital-Acquired Condition (HAC) Reduction Program, it is valuable for hospital and medical laboratory leaders to understand what the federal agency was seeking to accomplish.
According to USA Today, medical complications at hospitals such as pressure ulcers and falls leading to fractures would be suppressed in reports starting next year. Additionally, CMS “also would halt a program to dock the pay of the worst performers on a list of safety measures, pausing a years-long effort that links hospitals’ skill in preventing such complications to reimbursement,” Kaiser Health News reported.
The proposed rule’s executive summary reads in part, “Due to the impact of the COVID-19 PHE on measure data used in our value-based purchasing (VBP) programs, we are proposing to suppress several measures in the Hospital VBP Program and HAC Reduction Program … If finalized as proposed, for the FY 2023 program year, hospitals participating in the HAC Reduction Program will not be given a measure score, a Total HAC score, nor will hospitals receive a payment penalty.”
In a fact sheet, CMS noted that its intent in proposing the rule was neither to reward nor penalize providers at a time when they were dealing with the SARS-CoV-2 outbreak, new safety protocols for staff and patients, and an unprecedented rise in inpatient cases.
Groups Opposed to the CMS Proposal
Like healthcare costs, quality data need to be accessible to the public, according to a health insurance industry representative. “Cost data, in the absence of quality data, are at best meaningless, and at worst, harmful. We see this limitation on collection and publication of data about these very serious safety issues as a step backward,” Robert Andrews, JD, CEO, Health Transformation Alliance, told Fortune.
The Leapfrog Group, a Washington, DC-based non-profit watchdog organization focused on healthcare quality and safety, urged CMS to reverse the proposal. The organization said on its website that it had collected 270 signatures on letters to CMS.
“Dangerous complications, such as sepsis, kidney harm, deep bedsores, and lung collapse, are largely preventable yet kill 25,000 people a year and harm 94,000,” wrote the Leapfrog Group in a statement. “Data on these complications is not available to the public from any other source. If CMS suppresses this data, all of us will be in the dark on which hospitals put us most at risk.”
Leah Binder, Leapfrog President/CEO, told MedPage Today she is concerned the suppression of public reporting of safety data may continue “indefinitely” because CMS does not want “to make hospitals unhappy with them.”
AHA Voices Support
Meanwhile, the American Hospital Association noted that the CMS “has made this proposal to forgo calculating certain hospital bonuses and penalties due to the impact of the pandemic,” Healthcare Dive reported.
“We agree with CMS that it would be unfair to base hospital incentives and penalties on data that have been skewed by the unprecedented impacts of the pandemic,” said Akin Demehin, AHA Senior Director, Quality and Safety Policy, in a statement to Healthcare Dive.
Though CMS’ plans to limit public knowledge of medical and surgical complications have been put on hold, medical laboratory leaders will want to stay abreast of CMS’ next steps with this final rule. Suppression of hospital harm during a period of increased demand for hospital transparency could trigger a backlash with healthcare consumers.
Though pathology salaries rank 16th among 29 medical specialties, it is in the top 10 among specialties that attract women and respondents say that comes with a lot of paperwork
Despite “hardships” brought on by the COVID-19 pandemic, 18,000 physicians in more than 29 medical specialties who participated in Medscape’s 2021 Physician Compensation Report said that, overall, their 2020 income was similar to prior years. Pathologists reported earnings in 2020 of $316,000, $28,000 below the average specialist’s salary of $344,000.
The average pathologist’s salary ranked 16th among medical specialty salaries.
Compared to 2019, medical specialists on average made $2,000 less in 2020. The average salary for primary care doctors was $242,000 in 2020, down $1,000 from 2019, according to a Medscapenews release.
“Physicians experienced a challenging year on numerous fronts, including weathering the volatile financial impact of lockdowns,” said Leslie Kane, Senior Director, Medscape Business of Medicine, in the news release. “Our report shows that many were able to pivot to use telemedicine and focus on tactics that would protect their practices.”
Medscape, a health information provider that is part of the WebMD network, said that in addition to telehealth, doctors turned to MACRA (Medicare Access and CHIP Reauthorization Act of 2015) value-based payment reward programs and other strategies to minimize the effects of office closures last year.
Pathology Salary Unchanged
To complete its study, Medscape asked physicians to take a 10-minute online survey. The reported findings included responses from 17,903 physicians (61% male, 36% female) practicing in more than 29 specialties between October 2020 and February 2021.
Pathologists who participated in the survey reported no change in their annual salary since 2019. Other specialties that reported no salary change include:
Family medicine,
Infectious diseases,
Ophthalmology, and
Orthopedics/orthopedic surgery.
Top 10 Medical Specialty Salaries
Medscape’s report listed these top-10 medical specialties as earning the highest salaries (see the graphic below for the full list of medical specialties surveyed):
Contrary to what many specialists reported, plastic surgeons did not experience slowdowns in appointments during the COVID-19 pandemic. In fact, not only did plastic surgeons earn the most, at 10% they are the medical specialists who got the biggest increase in pay of previous years as well.
According to the American Academy of Facial Plastic and Reconstructive Surgery (AAFPRS), which conducted its own salary survey of its member surgeons, “70% of AAFPRS surgeons report an increase in bookings and treatments over the course of the COVID-19 pandemic, with nine in 10 facial plastic surgeons indicating an increase of more than 10%. Surgical procedures are the most common procedures as part of this upsurge, perhaps cancelling out any decreases that might have resulted from the economic crisis and lockdowns.”
Other specialist salaries which Medscape found increased in 2020 include:
Oncology: up 7%
Rheumatology and cardiology: up 5%
Diabetes/endocrinology: up 4%
Neurology, critical care, psychiatry: up 3%
General surgery, urology, public health/preventive medicine: up 2%
Medical specialties that reported reductions in salary included:
Otolaryngology and allergy/immunology: down 9%
Pediatrics and anesthesiology: down 5%
Dermatology: down 4%
Pulmonary medicine, physical medicine, gastroenterology, and radiology: down 3%
Emergency medicine and internal medicine: down 1%
About 92% of physicians surveyed indicated that the COVID-19 pandemic caused their income to decline. Also, 22% of doctors noted they experienced loss of work hours.
Pathologists Received Low Average Bonuses
Reporting on receipt of incentive bonuses, Medscape ranked pathology in the bottom half of its list with $42,000 as an average bonus. The top incentive bonuses went to those practicing:
Orthopedics/orthopedics surgery: $116,000
Ophthalmology: $87,000
Otolaryngology: $72,000
About 59% of primary care physicians and 55% of specialists surveyed reported receiving an incentive bonus.
Pathologists Rank High in Job Satisfaction
In responding to a question about compensation, pathologists ranked near the top (seventh position) with 64% saying they are content with their pay. Others expressing salary satisfaction included:
Oncology: 79%
Psychiatry: 69%
Plastic surgery: 68%
Dermatology: 67%
Public health/preventive medicine: 66%
Radiology: 65%
Pathology: 64%
Pathology Popular Among Women MDs
Medscape found that women MDs chose certain medical specialties more often than others, including pathology, which ranked eighth. The top eight specialties employing female physicians are:
Pediatrics: 61%
Obstetrics/gynecology: 59%
Diabetes/endocrinology: 50%
Family medicine: 47%
Dermatology: 46%
Infectious diseases: 46%
Internal medicine: 44%
Pathology: 43%
Specialties with the fewest female physicians are:
Plastic and general surgery: 20%
Cardiology: 14%
Urology: 11%
Orthopedics/orthopedics surgery: 9%
Pathology a Leader in Paperwork
Medscape also surveyed physicians as to the estimated hours they spend per week on paperwork and administration. Here, pathology ranked the fifth highest with 19%, while radiologists and hospital-based physicians were third from the bottom with 11.6%.
Specialists that reported the highest hours spent on paperwork include:
Amid a trying year, the Medscape survey respondents made an encouraging point: 78% of them said they would choose medicine as a career again. And 85% of pathologists said they would choose the same specialty.
Medscape’s report may be helpful to hospital-based clinical laboratory leaders preparing salary budgets and to pathologists in salary negotiations and determining professional responsibilities.
“Pathologists and medical laboratories may have to demonstrate efficiency and effectiveness to stay in the insurer’s networks and get paid for their services
In recent years, Medicare officials have regularly introduced new care models that include quality metrics for providers involved in a patient’s treatment. Now comes news that a national health insurer is launching an innovative cancer-care model that includes quality metrics for medical laboratories and anatomic pathology groups that deliver diagnostic services to patients covered by this program.
Anatomic pathologists and clinical laboratories know that cancer patients engage with many aspects of healthcare. And that, once diagnoses are made, the continuum of cancer care for these patients can be lengthy, uncomfortable, and quite costly. Thus, it will be no surprise that health insurers are looking for ways to lower their costs while also improving the experience and outcomes of care for their customers.
To help coordinate care for cancer patients while simultaneously addressing costs, Humana, Inc., (NYSE:HUM) has started a national Oncology Model-of-Care (OMOC) program for its Medicare Advantage and commercial members who are being treated for cancer, Humana announced in a press release.
What’s important for anatomic pathologists and clinical
laboratories to know is that the program involves collecting performance
metrics from providers and ancillary services, such as clinical laboratory,
pathology, and radiology. These metrics will determine not only if doctors and
ancillary service providers can participate in Humana’s networks, but also if
and how much they get paid.
Anatomic pathologists and medical laboratory leaders will want to study Humana’s OMOC program carefully. It furthers Humana’s adoption of value-based care over a fee-for-service payment system.
How Humana’s OMOC Program Works
According to Modern Healthcare, “Humana will be looking at several measures to determine quality of cancer care at the practices including inpatient admissions, emergency room visits, medications ordered, and education provided to patients on their illness and treatment.”
As Humana initiates the program with the first batch of
oncologists and medical practices across the US, it also will test performance criteria
that anatomic pathologist groups will need to meet to participate in the
insurer’s network and be paid for services.
The insurer’s metrics address access to care, clinical status assessments, and patient education. Physicians can earn rewards for enhancing their patients’ navigation through healthcare, while addressing quality and cost of care, reported Health Payer Intelligence.
Humana claims its OMOC quality and cost measurements are
effective in the areas of:
inpatient admissions,
emergency room visits,
medical and pharmacy drugs,
laboratory and pathology services, and
radiology.
To help cover reporting and other costs associated with
participation in the OMOC program, Humana is offering physician practices
analytics data and care coordinating payments, notes Modern Healthcare.
“The practices that improve their own performance over a one-year period will see the care coordination fee from Humana increase,” Julie Royalty, Humana’s Director of Oncology and Laboratory Strategies, told Modern Healthcare.
Value-Based Care Programs are Expensive
Due to the cost of collecting data and increasing staff capabilities to meet program parameters, participating in value-based care models can be costly for medical practices, according to Scottsdale, Ariz.-based Darwin Research Group (DRG), which studies emerging payer models.
Some of the inaugural medical practices in the Humana OMOC
include:
Southern Cancer Center, Alabama;
US Oncology Network, Arizona;
Cancer Specialists of North Florida;
Michigan Healthcare Professionals;
University of Cincinnati Physicians Company; and
Center for Cancer and Blood Disorders, Texas.
Other Payers’ Value-Based Cancer Care Programs
“Depending upon which part of the country you’re in,
alternative payment models in oncology are becoming the norm not the exception,”
noted the DRG study. “Humana is a little late to the party.”
Darwin Research added that Humana may realize benefits from
having observed other insurance company programs, such as:
Humana has developed other value-based bundled payment
programs as well. It has episode-based
models that feature open participation for doctors serving Humana Medicare
Advantage members needing:
total hip or knee joint replacement (available
nationwide since 2018); and
spinal fusion surgery (launched in 2019).
Humana also started a maternity episode-of-care bundled
payment program last year for its commercial plan members.
In fact, more than 1,000 providers and Humana value-based
relationships are in effect. They involve more than two-million Medicare
Advantage members and 115,000 commercial members.
Clearly, Humana has embraced value-based care. And, to
participate, anatomic pathology groups and medical laboratories will need to be
efficient and effective in meeting the payer’s performance requirements, while
serving their patients and referring doctors with quality diagnostic services.
Clinical laboratories could offer services that complement SDH programs and help physicians find chronic disease patients who are undiagnosed
Insurance companies and healthcare providers increasingly consider social determinants of health (SDH) when devising strategies to improve the health of their customers and affect positive outcomes to medical encounters. Housing, transportation, access to food, and social support are quickly becoming part of the SDH approach to value-based care and population health.
For clinical laboratory managers and pathologists this rapidly-developing trend is worth watching. They can expect to see more providers and insurers in their communities begin to offer these types of services to individuals and patients who might stay healthier and out of the hospital as a result of SDH programs. Clinical laboratories should consider strategies that help them provide medical lab testing services that complement SDH programs.
Medical laboratories, for example, could participate by offering
free transportation to patient
service centers for homebound chronic disease patients who need regular
blood tests. Such community outreach also could help physicians identify people
with chronic diseases who might otherwise go undiagnosed.
Anthem Offers Social
Determinants of Health Package
In fact, health benefits giant Anthem, Inc. (NYSE:ANTM) partly attributes its 2019 first quarter 14% increase of Medicare Advantage members to a new “social determinants of health benefits package” comprised of healthy meals, transportation, adult day care, and homecare, according to Forbes.
“Our focus on caring for the whole person is designed to deliver
better care and outcomes, reduce costs, and ultimately accelerate growth,” Gail Boudreaux,
Anthem President and CEO, stated in a call to analysts, Forbes reports.
An Anthem news release states that SDH priorities for payers, providers, and other stakeholders should focus on enhancing individuals’ access to food, transportation, and social support.
CMS Expands Medicare
Advantage Plans to Include Social Determinants of Health
The Centers for Medicare and Medicaid Services announced that, effective in 2019, Medicare Advantage plans can offer members benefits that address social determinants of health. Medicare Advantage members may be covered for services such as adult day care, meal delivery, transportation, and home environmental services that relate to chronic illnesses.
Humana’s ‘Bold Goal’
Humana, Inc. (NYSE:HUM) calls its SDH focus the BoldGoal. The program aims to improve health in communities it serves by 20% by 2020.
“The social barriers and health challenges that our Medicare Advantage members and others face are deeply personal. This requires us to become their trusted advocate that can partner with them to understand, navigate, and address these barriers and challenges,” said William Shrank, MD, Humana’s Chief Medical Officer, in a news release.
UnitedHealthcare
Investing More than $400 Million in Housing
Meanwhile, since 2011, UnitedHealthcare (NYSE:UNH) also has invested in affordable housing and social determinants of health, Health Payer Intelligence reported.
In a news release, UnitedHealthcare, the nation’s largest health insurer, described how it is investing more than $400 million in 80 affordable US housing communities, including:
$12 million, PATH Metro Villas, Los Angeles;
$11.7 million, Capital Studios, Austin;
$14.5 million allocated to Minneapolis military
veterans housing;
$7.9 million, New Parkridge (in Ypsilanti, Mich.)
affordable housing complex;
$21 million earmarked to Phoenix low- and moderate-income
families needing housing and supportive services;
$7.8 million, Gouverneur Place Apartments, Bronx,
New York; and
$7.7 million, The Vinings, Clarksville, Tenn.
“Access to safe and affordable housing is one of the
greatest obstacles to better health, making it a social determinant that
affects people’s well-being and quality of life. UnitedHealthcare partners with
other socially minded organizations in helping make a positive impact in our
communities,” said Steve Nelson,
UnitedHealthcare’s CEO, in the news
release.
According to the American Hospital Association (AHA) and the Health Research and Educational Trust (HRET), housing, or lack of it, impacts health. In “Housing and the Role of Hospitals,” the second guide in the organizations’ “Social Determinants of Health Series,” AHA and HRET state that 1.48 million people are homeless each year, and that unstable living conditions are associated with less preventative care, as well as the propensity to acquire diabetes, cardiovascular disease, chronic obstructive pulmonary disorder, and other healthcare conditions.
Social determinants of health programs are gaining in
popularity. And as they become more robust, proactive clinical laboratory
leaders may find opportunities to work with insurers and healthcare providers
toward SDH goals to help healthcare consumers stay healthy, as well as reducing
unnecessary hospital admissions and healthcare costs.