November 2009
Feature Story

Anne Paxton

Pathology Associates Medical Laboratories has a 20-year track record of forging profitable clinical laboratory outreach programs through joint ventures with hospitals. It’s probably impossible to boil down the success of the Spokane, Wash.-based company to a formula. But Thomas O. Tiffany, PhD, PAML president and CEO, is sure of one thing: PAML and its five joint venture programs would not have prospered without well-planned informatics.

“Informatics is a key infrastructure element in successful integrated clinical laboratories in integrated delivery networks,” Dr. Tiffany said in a presentation at the September meeting of APIII (Advancing Practice, Instruction, and Innovation through Informatics) at the University of Pittsburgh.

He said PAML’s outreach ventures have thrived largely because informatics were put in place to handle logistics, respond to clients’ needs, and provide connectivity between laboratory information systems and physician offices.

Twenty-five years ago, PAML was a reference lab purchased by a hospital. Now a wholly owned subsidiary of Providence Health Care, PAML views itself as a broker or agent to the five hospital systems with which it has a partnership. A company of 1,300 people, it provides esoteric reference testing, venture partnerships with other hospitals, and outreach services.

A nearby hospital, Sacred Heart Medical Center, performs highly esoteric reference testing for PAML, while PAML itself focuses on high-volume, rapid TAT esoteric testing. Together, the two labs perform 1,100 different tests—about 9 million billable tests a year, 12 million total. Among PAML’s employees are 85 IT staff, including eight integration engineers and nine employees who handle physician connectivity.

Typically, hospital labs have trouble competing with large well-financed lab companies, because hospitals have fixed costs and lack key IT and operational components, Dr. Tiffany said. But in the joint ventures PAML developed, sophisticated informatics are employed to simplify getting samples to the lab, make sure results come back in a timely manner, and improve physicians’ and patients’ experience in dealing with the lab.

“Hospitals and labs are learning that Rapid Process Improvement, Lean, and Six Sigma provide them with a competitive advantage, once the organization embraces a culture of quality.” But the indispensable component of that culture is accurate measurement, Dr. Tiffany emphasized. “You can’t manage what you can’t measure.”

That’s the rationale underlying PAML’s Joint Venture Advantage, a suite of tools allowing the lab to automate processes and detect service failures in pre- and postanalytical phases.

A key component of Joint Venture Advantage is JVA CRM, PAML’s customer relationship management: an end-to-end workflow and business analytics tool that documents client activities and patterns. “This program assists us with the appropriate monitoring and analysis of operational trends and client issues,” he said.

By implementing CRM, he explains, they can react more quickly to service failures and respond promptly to client and other emerging issues.

“In my environment, we have more than 450,000 calls per year by central client services, so you can’t do that manually. It won’t work. We found that out several years ago.” PAML brought in a consulting group to help it modify Microsoft’s Dynamics CRM package to make it function within a clinical lab setting. “We’re now one of the largest users of MS CRM,” Dr. Tiffany said. “We’ve put it into client services. We’ve also pushed it down into accessioning, into our analysis center, and up into our sales force. So it’s really the central heart of our activities.”

All clients have an ID number linked to their phone numbers, so that when they call, a screen pops up, showing their orders. The most common reason for a call is that someone is looking for a result, Dr. Tiffany said. The second highest number of calls are requests to add on a test. “Then you want to make sure each request is tied back to an order.”

“We have to decide why those calls are happening, so they go into a Pareto chart that we can use for quality assurance and process improvement.” A Pareto chart, named after its Italian creator Vilfredo Pareto, is a basic tool of quality control developed to systematize solutions to quality issues. “The chart allows you to organize the reasons behind client calls by frequency and to deal with the most frequent issues first,” Dr. Tiffany said.

At PAML, the value of JVA CRM has been especially notable in phone response time, which has improved and held steady at “threshold” levels. The quality threshold, Dr. Tiffany explained, is a benchmark of the Six Sigma quality management system: an error frequency of fewer than three occurrences in 100,000.

Over the past three years, “We have been able to handle a 15 percent increase in the volume of calls without adding staff,” Dr. Tiffany said. Perhaps more impressive: Lost account revenue due to service-related issues has dropped from 20 percent to zero for PAML’s largest region. In addition, the response time to specimen-related problems detected in triage has been reduced to same-day.

JVA Mobility is a second component of Joint Venture Advantage. It’s an industry-leading product to automate logistics and tracking systems for specimen integrity. “It’s a system for integrated route planning, scheduling, dispatch, and specimen tracking,” Dr. Tiffany said. PAML couriers drive the company’s 120 cars about 3.7 million miles a year on 140 logistics routes. “When a courier is on a manual route, sometimes you may get a new person who can miss pickups and literally leave a bunch of samples sitting at a doctor’s office. That’s a bad thing to do, so we have developed an automated logistics package that automatically charts the routes, minimizing left turns and so on.”

“The drivers have handheld devices like FedEx’s, so when the driver comes into the client office, they log in all the specimens they pick up and that gets transmitted back to us. So we know ahead of time what’s coming into the lab.” This system takes the paperwork and the individual decision elements out of the pickups and deliveries.

“By implementing JVA Mobility, we have established a world-class logistics management system customized for laboratory needs,” he said. Specifically, PAML has seen a significant decline in missed pickups and lost specimens, as it has improved the appropriate manifestation and tracking of specimens.

The system has had an enormous impact on PAML’s handling of stat tests. “We had 50,364 stat delivery and pickup calls last year. We used to call taxis to pick them up, which meant we were having somebody outside the system bringing valuable specimens to the lab. But now, with automated dispatch, when someone has a stat test, the handhelds have GPS locators, the dispatchers can see on a map where the closest driver is, and they’ll direct the driver to that sample.”

JVA Lab Connect is the third part of the automated logistics software and is the physician connectivity piece, he said, including EMR connectivity and the Enterprise Master Patient Index, or EMPI, the part of the system that handles patient identifiers. “EMPI also allows us to track each patient by multiple medical record numbers, because that’s what you have to do in the lab business as patients move from lab to lab and clinic to clinic.”

The largest of the five joint ventures PAML has set up is PACLAB, which includes 14 hospitals in the Puget Sound area of western Washington, from Everett in the north to Centralia in the south. “There you’re dealing with hospitals that compete clinically but have all decided to come together and form a reference lab to keep those samples in the hospitals and keep revenues and integrate their informatics.” Traffic in the Puget Sound area can be congested, so the automated logistics component has been particularly helpful in handling driving conditions there.

“Of course,” Dr. Tiffany said, “each hospital has its own LIS. You couldn’t tell them, ‘Before we do this, we have to standardize.’ So the IT staff has to deal with the various LISs, integrate to send orders to them, and integrate results into a single report that goes back to the physician the next morning.” PAML also has established ways to connect to 500 different physician EMRs and is adding hundreds more each year. “That’s really grown, and it’s all part of what we call our central nervous system.”

Outcomes data are another benefit of information networks like PAML’s, Dr. Tiffany said, so the lab can go back to third-party payers and make reports on the clinical results in the database. “With hemoglobin A1c scores, for example, we could show that each of the payers is not really looking back and making sure these diabetics are really in control.”

Ultimately, PAML hopes to offer a fully integrated report. “We brought in a consultant who was a former medical director for a large national lab, and we said we wanted to see how we stack up not only as a clinical reference lab but as an anatomic pathology reference lab. And one of the big issues is when you have a specimen and do morphology or flow cytometry, and imaging on the morphology, and perform, say, IHC, FISH, and Southern blot. How do you get all that information together in a single report back to the oncologist or pathologist? We want to be able to keep adding material into an integrated final report, rather than accumulate a whole bunch of different reports from different computers.”

Following strategic trends in the lab industry, PAML plans to expand its esoteric testing during the next few years, Dr. Tiffany said, noting that the seven largest esoteric testing labs, among them ARUP, Myriad, Genzyme, and Bio–Reference Laboratories, generated $1 billion in 2007—an overall growth of 21.8 percent from 2000. The fastest growing, Bio-Reference, grew 47.3 percent to reach $250 million in 2007.

“We will continue to integrate anatomic pathology testing capability and one-stop shopping to facilitate global billing and integrated reporting critical for information integration.” In addition, they plan to complete their integrated esoteric testing center and expand their testing capability.

In the meantime, PAML continues to find willing partners for joint ventures. At the end of October, the company announced an agreement with Catholic Health Initiatives, a national nonprofit health organization that operates in 20 states and encompasses 78 hospitals. Under the agreement, CHI will assume a 25 percent equity position in PAML, as together they develop a national network of regional laboratories at several CHI hospitals. “So that,” Dr. Tiffany said, “is what one of the largest hospital networks thinks about this technology.”