As hospitals are forced to innovate, anatomic pathologists and medical laboratories will need to adapt to new healthcare delivery locations and billing systems  

As new challenges threaten the survival of many hospitals worldwide, medical laboratories may be compelled to adapt to the needs of those transforming organizations. Those challenges confronting hospitals are spelled out in a recent report from management consulting firm McKinsey and Company with the provocative title, “The Hospital Is Dead, Long Live the Hospital!

A team of analysts led by McKinsey senior partner Penny Dash, MB BS, MSc, looked at nine trends affecting hospitals in North America, Europe, Asia, and other regions. These trends, the authors contend, will force hospitals to adopt innovations in how they are structured and how they deliver healthcare.

Here are nine challenges hospitals face that have implications for medical laboratories:

1. Aging Patient Populations

“Patient populations are getting older, and their needs are becoming more complex,” McKinsey reports, and this is imposing higher cost burdens. The US Census Bureau projects that by 2030 approximately 20% of the US population will be 65 or older compared with about 15% in 2016.

The federal Centers for Medicare and Medicaid Services (CMS) reports that this age group accounts for a disproportionate share of healthcare costs. In 2014, CMS states, per-capita healthcare spending was $19,098 for people 65 or older compared with $7,153 for younger adults.

The Census Bureau graphic above illustrates how the age of the US population is changing. People are living longer, and as Dark Daily reported in May, this could present opportunities for medical laboratories and anatomic pathologists, as early detection of chronic diseases affecting older patients could ultimately reduce treatment costs. (Photo copyright: US Census Bureau.)

2. Patients Are Behaving More Like Consumers

“Patients—along with their families and caregivers—expect to receive more information about their conditions and care, access to the newest treatments, and better amenities,” McKinsey reports.

Dark Daily has reported extensively on the rise of healthcare consumerism and the opportunities this might offer for clinical laboratories.

3. More Community-based Outpatient Care

Clinical advances are increasing the range of treatments that can be performed in outpatient settings, McKinsey reports. The authors point to multiple studies suggesting that patients can receive better outcomes when more care is delivered outside the hospital. Dark Daily has often reported on the impact of this trend, which has reduced demand for in-hospital laboratory testing while increasing opportunities for outpatient services.

4. Move Toward High-Volume Specialist Providers

Compared with general hospitals, specialized, high-volume “centers of excellence” can deliver better and more cost-effective care in many specialties, McKinsey suggests. As evidence, the report points to research published over the past 12 years in specialist journals.

Some US employers are steering patients to top-ranked providers as part of their efforts to reduce healthcare costs. For example, Walmart (NYSE:WMT) pays travel costs for patients to undergo evaluation and treatment at out-of-state hospitals recognized as centers of excellence, which Dark Daily reported on in July.

UnitedHealthcare’s new preferred lab network also appears to be a nod toward this trend. As The Dark Report revealed in April, the insurer has designated seven laboratories to be part of this network. These labs will offer shorter wait times, lower costs, and higher quality of care compared with UnitedHealthcare’s larger network of legacy labs, the insurer says.

5. Impact of Clinical Advances

Better treatments and greater understanding of disease causes have led to significantly lower mortality rates for many conditions, McKinsey reports. But the authors add that high costs for new therapies are forcing payers to contend with questions about whether to fund them.

As Dark Daily has often reported, new genetic therapies often require companion tests to determine whether patients can benefit from the treatments. And these also face scrutiny from payers. For example, in January 2018, Dark Daily reported that some insurers have refused to cover tests associated with larotrectinib (LOXO-101), a new cancer treatment.

6. Impact of Disruptive Digital Technologies

The McKinsey report identifies five ways in which digital technologies are having an impact on hospitals:

  • Automation of manual tasks;
  • More patient interaction with providers;
  • Real-time management of resources, such as use of hospital beds;
  • Real-time clinical decision support to enable more consistency and timeliness of care; and
  • Use of telemedicine applications to enable care for patients in remote locations.

All have potential consequences for medical laboratories, as Dark Daily has reported. For example, telepathology offers opportunities for pathologists to provide remote interpretation of blood tests from a distance.

7. Workforce Challenges

Many countries are contending with shortages of physicians, nurses, and allied health professionals, McKinsey reports. The authors add that the situation is likely to get worse in the coming decades because much of the current healthcare workforce consists of baby boomers.

An investigation published in JAMA in May indicated that, in the US, the number of active pathologists decreased from 15,568 to 12,839 between 2007 and 2017. In January, Dark Daily reported that clinical laboratories are also dealing with a generational shift involving medical technologists and lab managers, as experienced baby boomers who work in clinical laboratories are retiring.

8. Financial Challenges

In the United States and other countries, growth in healthcare spending will outpace the gross domestic product, the McKinsey report states, placing pressure on hospitals to operate more efficiently.

9. More Reliance on Quality Metrics

McKinsey cites regulations in Canada, Scandinavia, and the UK that require hospitals to publish quality measurements such as mortality, readmittance, and infection rates. These metrics are sometimes linked to pay-for-performance programs, the report states. In the United States, Medicare regularly uses quality-of-care metrics to determine reimbursement, and as Dark Daily reported in July, a new Humana program for oncology care includes measurements for medical laboratories and anatomic pathology groups.

The McKinsey report reveals that several trends in healthcare are forcing healthcare leaders to adopt new strategies for success. The report’s authors state that their “results show that contemporary healthcare providers around the world are facing several urgent imperatives: to strengthen clinical quality; increase the delivery of personalized, patient-centered care; improve the patient experience; and enhance their efficiency and productivity.”

These pressures on hospitals typically also require appropriate responses from clinical laboratories and anatomic pathology groups as well.

—Stephen Beale

Related Information:

The Hospital Is Dead, Long Live the Hospital!

The Nine Forces Changing the World for Hospitals

Older People Projected to Outnumber Children for First Time in US History

CMS: Health Expenditures by Age and Gender

Results of Harvard Study into Medicare Costs Offers Opportunities for Clinical Laboratories

Pathology Groups and Clinical Laboratories Have Unique Opportunity to Take Leadership Role in Healthcare Consumerism

Consumer Trend to Use Walk-In and Urgent Care Clinics Instead of Traditional Primary Care Offices Could Impact Clinical Laboratory Test Ordering/Revenue

Walmart Flies Employees to Top Hospitals for Surgeries in a Bid to Cut Healthcare Costs

New UnitedHealthcare Preferred Lab Network Launches July 1

Precision Medicine Requires Targeted Cancer Therapies, but Payers Reluctant to Pay for Some Genetic Testing Needed to Match a Patient with Right Drug

Telemedicine Gaining Momentum in US as Large Employers Look for Ways to Decrease Costs; Trend Has Implications for Pathology Groups and Medical Laboratories

Trends in the US and Canadian Pathologist Workforces From 2007 to 2017

With Experienced Baby Boomers Retiring in Ever-Larger Numbers, Clinical Laboratories and Pathology Groups Use New Methods to Improve Productivity, Reduce Costs

Humana’s New Oncology Value-based Care Program Includes Quality and Cost Measurements of Provider Performance, Clinical Laboratories, and Pathology Groups