Feature Story

Giving Paper The Heave-Ho

April 2001
Andrew Pasternack

The phones never stop ringing at Diagnostic Laboratory Services.

The Honolulu-based laboratory employs a dozen people to handle its call volume of 3,000 per day. The calls come in from impatient physicians, frustrated staff, and anxious patients, many of whom are calling from other Hawaiian islands, or Guam, Saipan, Micronesian Islands, and Samoa.

Edward Hope, the lab’s vice president for marketing, has watched anxiously as the call volume has ticked up ever so slightly since the laboratory implemented a new Internet-based results reporting system. But as that system takes hold, "our measure of success will be that the number of calls will go down," he says.

Fewer calls would mean that DLS’ physician customers are having an easier time getting their patients’ results or duplicates of existing reports, requests that together account for much of the current call volume. It will make them happier customers and give DLS a competitive edge. Looking down the road, the laboratory hopes to provide an ordering system to complement the results reporting system, at which point doctors can begin to place their orders for tests, supplies, add-ons, and other lab services, all via Internet. And at some far distant point, the lab will be able to decommission the hundreds of laser printers it now supports in all its clients’ offices, thus saving hundreds of thousands of dollars in annual service and supply costs.

"We don’t know if physicians are ready for all this yet," Hope says, "and very few labs have this type of service up and running, but clearly almost every major lab in the country is working on it. Those that don’t will be dinosaurs."

For some years, observers have awaited the emergence of the Internet in laboratory operations. That time seems to have arrived.

"What I see across the laboratory marketplace is that lab-accessed test results are more easily implemented than ordering," says Robert Michel, editor-in-chief of The Dark Report. "It’s simply easier to get into the lab’s existing database than to implement an ordering service."

As basic as it is, results reporting will improve the value of the laboratory to its clients, says Richard E. Horowitz, MD, clinical professor of pathology at the University of California Los Angeles and University of Southern California, and an advisor to an Internet lab service called LabDat. "If the lab’s job is to communicate to the physician, then results reporting improves our value," he says.

Among the first Internet reporting systems to be commercially implemented is one by Labtest.com Inc. The Midland Park, NJ, company had three clients, such as DLS in Honolulu, go live in December 2000 and January 2001. Typical of high-tech startups, the company has a small staff, which, including outside consultants, numbers about 15. Cofounder and president William Seay and about half his colleagues formerly worked for Clinical Diagnostic Services, based in nearby Englewood. The balance come from information systems vendor Seacoast Laboratory Data Systems, Portsmouth, NH. "Our management team has been in the lab business on the technology side for 10 years," Seay says.

The first product out of the gate for Labtest.com is called Concierge, which, when implemented, appears like a private-labeled service for those labs that offer the service. Currently, the three Labtest.com clients are making use of results reporting, and two of them plan to implement test ordering within the next few months.

Ultimately, the laboratory benefits because it has to make fewer calls or mailings to doctors to retrieve missing or erroneous ordering information, and by being able to "get out of the commodity role that managed care has placed them in, and start to build value," says Seay. Labtest.com will match the look and feel of a laboratory’s Web site and existing reporting formats.

Another company is LabDat Inc., of Glendale, Calif., headed by chief executive officer Gary Burkhartsmeier. This company, too, has deep roots in the clinical lab world. Burkhartsmeier is former director of laboratory operations for Health Line Clinical Laboratories; the lab and the Internet company were headquartered until April 1 in the same 13,000-square-foot building in Burbank.

LabDat has a staff of 10, all of whom are in business and product development, programming, integration interfacing, and user support; there are also two advisory board members. "We are not sending sales people directly to laboratories as yet," says Burkhartsmeier. All sales efforts thus far are directed toward forming relationships with distributors for customized XML versions that can operate in conjunction with their Web-based products.

LabDat has two subscriber laboratories: Health Line, a statewide commercial lab, and Millennium Clinical Laboratory, a smaller but fast-growing Southern California lab. Through those two labs, LabDat has 310 users in California. Its first order-entry system, available since April 2000, was too cumbersome for users. "Our new version 3.0 was released recently to address the users’ concerns," says Burkhartsmeier. It features autofill from outside databases and online custom profiling. New "consultant" features—to help practitioners use lab testing effectively—"are being polished for national rollout within the next few months" in version 4.0.

What the two companies have in common are products built on the thin-client generation of information technology. The Dark Report’s Michel says the other prevailing information technology mode, fat-client technology, makes the user responsible for buying, installing, upgrading, and generally managing the laboratory information technology. Thin-client technology assigns those (sometimes onerous) responsibilities to the vendor’s side of the ledger.

Most of the widely installed laboratory information systems are built on fat-client design. These arrangements lock the client (a lab) and vendor (the software company) into a relationship that involves maintenance contracts, payment for software upgrades, possibly customer programming services, and the periodic hardware upgrade. What’s happening now, says Michel, is that vendors, anticipating a large-scale switch to Internet-based products, are trying to migrate fat-client applications into the thin-client mold. Companies like LabDat and Labtest.com have built their products in the thin-client mold from the start.

Internet applications tend to be thin client. All the user has to do is enter a password and other security information, click and go; in exchange for monthly fees, the user happily delegates the management of the technology back to the vendor or service provider. Companies that offer these sorts of applications are called application service providers, or ASPs. One of the potential advantages of the new Internet laboratory services is that they can be accessed from anywhere there is Internet access, which includes handheld devices and Web phones. Labtest.com and LabDat make note of the fact that physicians can obtain results from any Internet-connected device, whether it be in their office, hospital, home, or briefcase.

Some labs can still choose to run their own show using this technology. Client-hosted (that is, laboratory-controlled) operations offer the benefit of local control and administration of the database and Web server hardware. Disadvantages are higher initial costs, less frequent software updates, and the need for trained network technicians. The laboratory will typically have to buy hardware such as a Web server, database server, firewall, and routers, and it must pay software licenses to third parties for items such as database software, Web server software, operating system software, and security software.

The laboratory will also need a permanent Internet connect to serve Web pages, requiring a T1 line or greater. These costs can range from $50,000 to millions of dollars, depending on the bandwidth, server redundancy, expected traffic, and other factors. "The lab can build a rowboat or a battleship; it’s up to them," sums up Seay.

DLS has chosen to go this route, to give its users better response times than it would have with a host across the Pacific. DLS’ Hope estimated the cost of this approach at "a few hundred thousand dollars."

Once a laboratory decides to take the plunge into Internet services, it seems to be relatively easy to get physicians to sign on to the system. The real challenge is getting them to use it, say the labs.

Path Lab Inc., of Portsmouth, NH, has signed up about 80 of its hundreds of clients for its branded service, based on Labtest.com’s Concierge engine. Of those first 80 customers, about 25 are actively using it, says Dawn Dickinson, client services manager and Labtest.com administrator for Path Lab.

Path Lab manages five hospital-based laboratories and several physician office laboratories, and it services clients (office labs and long-term care facilities) throughout Maine, Vermont, Massachusetts, and New Hampshire. All told, the organization handles up to 5,000 accessions per day, and with those accessions come 26,000 calls per month. Dickinson believes that overall call volume has already dropped a little, and she expects it to continue easing up in the months ahead as more physicians become fluent with the system.

"Once doctors hear we have results on the Internet, they’re anxious to sign up," she says. "The challenge is getting them to use the service."

The technical snag is the connectivity. "The system is lightning fast with a network-type connection but, as with any Internet site, you are at the mercy of your connection," Dickinson notes. "It can be a bit slow if accessed through a traditional phone line." For clients who rely on mail or fax for results reporting, "it has proven to be a great option," she says. "It has also been a great product for larger physician groups whose medical staff practice out of more than one location. It allows access to results from anywhere on any patient." Physicians who occasionally work from home or a location other than their office have found this to meet their needs. "They can access results at their leisure as their schedule allows from wherever they are at," Dickinson says.

Ten people work in Path Lab’s information systems department, and Dickinson says they found the Labtest.com implementation fairly smooth. "There are always a few bumps in the road on these things, but in terms of conversion, interfaces, firewalls, that kind of thing, it went very well. Our Path Lab site never had to go down," she says.

DLS and Path Lab say their user-physicians like the system’s ability to produce cumulative reports, which can be presented numerically or graphically. "It gives them the same information as they’d get on a piece of paper numerically, but doctors like the visual representation," Dickinson says. For example, a physician reviewing a graph of cumulative results for prothrombin times for patients on anticoagulant therapy can place the mouse pointer on a peak value, click, and be shown the detailed report.

In addition, physicians are pleased with their ability to customize the system’s options to their own needs. One example of this is limiting the selection of tests for results reporting or ordering, the latter of which is being pilot-tested at Path Lab. "Instead of an endocrinologist scrolling through a whole Path Lab requisition, she can set it up so that the top 10 or 20 tests and their ICD-9 codes come up," Dickinson says. On the Concierge-based service, physicians can also order supplies such as specimen containers. Meanwhile, they can get additional information on tests or results from Path Lab’s technical bulletin, which is posted on the site.

DLS’ Hope is eager to move ahead with the ordering module. "The real key, in marketing, is you want to make it easy to buy the lab’s services. We’re trying to design a requisition that can be ordered online, is faster than manual requisition, and is much less likely to be rejected by the insurance carrier for missing information," he says. "But it’s a monumental job."

To set up ordering, laboratories like DLS will have to convert their test catalogs. "Ordering online is more complicated than on paper. The names of the tests really have to be standardized." For example, different physicians might variously ask for SMA 12, or a comprehensive medical profile, or a metabolic panel—all virtually the same test. The online test catalog will have to make it clear to the physician which one of these to seek out and select.

William Temple, MD, the medical director at Health Line, where LabDat was incubated and released, agrees on the importance of the online test catalog for Internet-based ordering. Each lab in partnership with its vendor needs to customize the ordering system. Labs develop their own sets of test codes, depending on the technology, reagents, products, and methods they employ. Putting those menus or catalogs online will help eliminate the risk of incomplete information that is not uncommon on paper requisitions. "Inadvertently dropping ’non’ from ’non-malignant’ would change the course of a patient’s treatment," Dr. Temple notes. It has become second nature for pathologists to talk in code, and it’s probably a more accurate way to request tests, he says. The key will be putting those codes at the ordering physician’s fingertips.

Internet-based ordering can affect the physician’s office productivity in another way: by tying ordering into the physician’s billing and records systems. "The lab Internet solutions should be able to talk to the doctor’s practice management software," says Michel. "The ordering system should be able to go into the patient database and extract patient billing and demographics data necessary to complete the test requisition," he says. "At some point down the road, they’ll need to be able to do that; otherwise the nurse or system operator will have to rekey it."

New users of the services are excited about the potential for productivity improvement. DLS’ Hope says these kinds of systems have been needed for a long time. "In an industry that has had nothing but bad news for years—new regulations and payer cutbacks—we feel that the Internet is the first really good news that laboratories have had. It offers solutions to the deluge of paperwork that physicians and labs have had to bear with."

DLS’ five-year plan calls for its doctors to perform virtually all of their practice management tasks—paying bills, making inquiries, requesting a reprint of previous orders, adding orders onto existing orders, and the like—by Internet. A recent survey revealed that 40 percent of Hawaii’s physicians have Internet connections in their offices. But some of the older physicians, in Hope’s rendition, say, "’I’ve never touched a computer in my life and I ain’t about to start now,’" Hope says. "That’s why we think it’s a long-range plan."

The Web will ultimately help the laboratory’s performance as well, says Michel. Few would argue with the statement that the independent lab sector has a high error rate in areas like billing, collections, and pickup, he asserts. "The industry has tolerated a high error rate, because no one was there to set a benchmark." The Web will advance the rate of standardization toward best practices, Michel believes.

Internet laboratory solutions may also become less an option and more a necessity. The Health Insurance Portability and Accountability Act, which will go into effect within two years, will require that all identifiable medical data be kept confidential. That could be trickier for test results communicated by fax than for those transmitted electronically.

"Seventy percent of the medical record is lab results," says Dr. Horowitz. "If we can offer the physician these results via Internet, this is an excellent way to comply with regulations and cement the relationship with the patient."

Growing patient consumerism will also drive the Internet’s use, LabDat’s principals predict. LabDat lets doctors use their own discretion in giving patients access to their test results. A physician whose patient was especially anxious, for example, about the result of a Pap test could give the patient access, rather than make her wait a week or longer to get the result on paper. Similarly, Labtest.com also permits secure viewing by patients of their lab test results, once physicians have released them.

"Patients are extremely motivated to find out the explanation for their results," Dr. Temple says. "It’s to the doctors’ and labs’ benefit that the patient has some reasonable ability to make sense out of lab results, such as for blood work, without having to pursue a lawsuit."

For physicians themselves, LabDat will have a knowledge base to bolster the usefulness of test results. Within the results reporting functions, for each set of tests and test results, a consultant button appears. "A doctor may find his patient has elevated serum calcium," poses Dr. Horowitz. "The consultant button will bring up explanations for what the test results mean. What drugs might have caused that result? That’s the kind of thing it’ll tell you."

Physicians can’t possibly keep up with all the interpretive information that steadily streams into medical journals, says Dr. Temple, and in this regard the LabDat knowledge base will be helpful. "Certain influenza strains can give false positives on HIV antibodies," Dr. Temple offers by way of example. "Doctors may not have kept up with this. Or they may not know some of the markers for hepatitis, or some of the antibodies for lupus, arthritis, or other autoimmune diseases."

The consultant buttons will eventually offer content on both the ordering and result reporting sides, say LabDat sources.

LabDat is licensing the knowledge base from the University Pathology Consortium, a group of six academic pathology departments that have pooled their knowledge about the appropriate use of laboratory tests and the interpretation of results. The consortium comprises the University of California at San Francisco, University of California at Davis, Stanford University, Creighton University, University of Iowa, and University of Southern California.

Labtest.com, too, is developing a knowledge base for physicians and patients, still in the pilot stage. However, the software already allows physicians to save and reuse commonly used test explanations and recommendations, Seay says.

The biggest future direction, says Dr. Temple, is anatomic pathology. Future versions of LabDat will have a dictionary that helps a physician use biopsy and cytology diagnoses "to their maximum benefit."

"No one can keep up with everything," he says.

Andrew Pasternack is a freelance writer in Richmond, Calif.