Survival tips for the informatics and retail revolutions
July 2003 Anne
Paxton
The train may be leaving the station, but it’s not too late for
laboratories to get on board for the health care information technology
revolution. That’s the appraisal of Bruce Friedman, MD, director
of ancillary information systems and professor of pathology at the
University of Michigan Medical School and Health System, Ann Arbor.
Outlining laboratory
business strategies at the May 2003 Executive War College on lab
and pathology management sponsored by The Dark Report,
Dr. Friedman said the key to survival in the $24 billion market
will be solidifying the role of the laboratory as an integrator
of information: “We need to shift the raison d’être
of the central lab from primarily data creation to data creation
plus data integration and management.”
Given current
patterns in near-patient testing and self-testing, by 2005 about
40 to 50 percent of tests will have moved out of the physical space
of the central laboratory, he estimates. But laboratory professionals
should accommodate and even embrace this shift, not fight it. Dr.
Friedman sees 10 trends to which laboratories must adapt.
- Central lab model receding
Until
recently, the centralized laboratory model—laboratory factories
with high test volume and low unit cost—has dominated. And
the expensive infrastructure it requires and low cost per test
because of economies of scale have made it hard for new health
care delivery and lab testing models to emerge, he said.
Now,
however, a variety of factors, including patient and clinician
demand, are weakening that model. “I know our patients don’t
want to fight for a parking spot in Ann Arbor at the mother ship.
They want to go to remote stand-alone clinics,” said Dr.
Friedman.
For
their part, clinicians and nurses are demanding faster test turnaround
and more control over laboratory testing devices, and many IVD
manufacturers are marketing their point-of-care devices directly
to clinicians in critical care units.
“Those
of us who have been in the laboratory have as a trump card the
cost per test, because we can perform tests more cheaply in centralized
labs,” he said. “I’ll tell you some news. The
clinicians really don’t care that much about cost per test.
What they’re trying to do is optimize their operations and
information flow in the CCU.”
Opportunities
for the decentralization of testing have made the central laboratory
less relevant: “When a consumer buys a glucometer in his
neighborhood retail pharmacy and performs glucose tests on himself,
he converts his bedroom into a laboratory.”
“We
now have the problem of capturing and integrating results being
generated in remote testing locations. From a laboratory information
management perspective, the key question has to be how to integrate
all that information—not just the information generated
in the central lab.” New standards have been developed for
integrating POC test results into the longitudinal LIS database.
“Lab
professionals have generally considered decentralized testing
to be synonymous with bread-and-butter testing, or routine testing,”
Dr. Friedman said. “But with chips and downsizing of instruments,
there are now companies offering sophisticated genetic testing
using devices not much bigger than your hand.”
“So
we can no longer talk about decentralized testing as being unsophisticated.
We may end up with sophisticated genetic testing being performed
by an instrument with a very small footprint, which would easily
migrate out of the central lab.”
“In
my view,” he added, “the LISs we’re working
with today will have difficulty serving this new decentralized
market, because the business model for which they were designed
was based largely on information flows from the central laboratory
and interfaces to high-throughput analytic instruments housed
in the central laboratory. And this will require a new Web-based
LIS architecture.”
New
competition will also be a factor as decentralization proceeds,
he believes. “For example, internists, many of whom are
involved with the development of genomics and proteomic testing,
will vie with pathologists for this new laboratory testing. In
fact, a new field is evolving called clinical proteomics, and
to the extent that labs shun this new area or don’t develop
expertise in it quickly, it could migrate to other hospital-based
professionals who will begin to compete with the current laboratory
professionals.”
- Acute-care
testing merging with home health
But
other tests are also moving to remote venues, Dr. Friedman added,
pointing to the merger of acute-care laboratory testing with home
health care. “There is a concerted effort being undertaken
to reduce health care costs as less sick patients migrate from
the ICU to general care, and inpatients migrate to outpatient
units and home,” he said. “So shortly we’re
going to need to perform much more testing in the home care environment.
As part of this maturation, I hope laboratory professionals will
be asked—or will volunteer—to help maintain quality
oversight and training of home workers, some of whom will perform
this home testing.”
Personnel
associated with entrepreneurial integrated delivery networks will
pursue home health as a logical extension of other health services
that they offer to shave costs and retain patients, he predicted:
“I’ve discovered that many consumers do not want their
genetic testing performed in hospital laboratories because they’re
afraid of the relatively widespread access to hospital databases,
so they may seek out some of the small biotechnology companies
performing genetic testing on the Web as a way of keeping their
results confidential.”
Such
genetic testing may not limit itself to one-shot reporting. “The
reporting lab may need to create a lifetime relationship with
the patient because the meaning of certain genetic tests may be
different tomorrow than it is today. And this may create a new
business model for some of these labs.”
- Lab
data repositories dis-integrating
As
the central laboratory model becomes less influential, Dr. Friedman
asserted, more “islands” of lab data may be created.
“Many of us in the laboratory who are enamored of the centralized
lab model have a distaste for point-of-care testing because it’s
not quite as neat a package as we’re used to from the perspective
of lab operations and management,” he said. “It’s
important for laboratory personnel to take the appropriate steps
to reintegrate the data being generated outside of the central
laboratory. As data migrate out of the hospital lab, it falls
to us to get our arms around such data and reintegrate it into
the LIS database.”
He sees
pathology informatics as the discipline that will assist in reintegrating
the data and interpreting the now complete longitudinal lab database:
“Whether lab professionals will be compensated for this
larger data integration and management role is up for grabs. But
my belief and hope is that the hospital lab will remain as a data
hub through which diverse data streams will converge, and that
pathology informaticians will be increasingly called upon to help
plan this data reintegration from diverse data sources.”
- Demand
for data portability and security
The
fourth trend Dr. Friedman perceives is patient and government
demand for greater portability and confidentiality. “We’re
certainly spending a lot of resources complying with HIPAA,”
he said, referring to the newly effective Health Insurance Portability
and Accountability Act of 1996. “One thing is certain—all
laboratory professionals will need to work very closely with their
LIS vendors, on whom a substantial portion of the burden for HIPAA
compliance has settled. Increased regulatory requirements will
obviously increase the cost of data management and data reporting.”
- Two
data domains evolving
Dr.
Friedman sees two major lab data domains evolving. One is hospitals
with their clinical data repositories. The other is private physician
offices with their practice management systems, or PMS, which
are evolving into office-based electronic medical records. “What’s
unique about our role as pathology professionals is that we have
the opportunity to bridge these two data domains,” he said.
“Physicians
many times want interfaces between the hospital’s lab portal
product or LIS and the PMS they have running in their offices,
so lab professionals, particularly those with an outreach component
to their business, are now torn between the dual challenge of
enhancing and integrating data on the hospital side and on the
physician office side.”
Complicating
this, he said, is that many PMS vendors view their products as
office electronic medical record platforms that can accommodate
laboratory—and even retail pharmacy—ordering. They
may thus be unwilling to help develop interfaces between their
products and lab portal software, wanting instead to have the
lab order-entry capabilities as part of their own software. Dr.
Friedman believes “hospital-based labs are in the unique
position of being
able to span this gap between hospital and physician office clinical
data management.”
- Lab
portals becoming widespread
Lab
portal software, which enables order-entry and results-reporting
lab transactions over the Internet, will make it easier for labs
to harmonize hospital-based and MD office-based information management,
Dr. Friedman said. “I believe all information management
will eventually take place on the Web. It provides an inexpensive
means of developing and delivering new lab products and services
to physicians, patients, and health care consumers, it supports
enhanced physician decisionmaking, and it promotes consumer health
because consumers are increasingly sophisticated about buying
products on the Web and can thus take advantage of Web-enabled
lab transactions.”
Two
groups of vendors can supply a lab portal product to clinical
laboratories: classic LIS vendors that provide such products as
an extension of their standard product line, and a group of small
startup companies specializing in this type of software. “So
you have a choice. But you may have to get used to working with
two or more vendors to provide all the IT functionality you’ll
need in your laboratory,” he cautioned.
One
important feature of lab portal applications is that they can
be run remotely from the hospital. “The server running the
lab portal software and the laboratory database does not necessarily
have to be physically located within your hospital computer room.
It can exist hundreds of miles away without any degradation of
service. This is referred to as the application service provider
model.”
“So
the lab portal software uses the Internet infrastructure to provide
physician office connectivity for the hospital-based lab, and
this enables your outreach program to provide Web-based order
entry and results reporting to your physician clients in their
offices, and to compete effectively with the commercial labs that
may have provided this service for a long time.”
Installing
a lab portal product can give hospital labs an edge over commercial
laboratories, Dr. Friedman said. “You can replicate the
data in your hospital LIS through your lab portal database—that
is, provide your customers with a longitudinal record of past
test results. So in addition to providing an order-entry results-reporting
platform to physicians in their offices, you can provide an archival
view of two or three years’ worth of lab data, depending
on the size of the LIS database—which is a feature the commercial
reference labs can’t provide for their customers.”
Such
Web-based services mediated through lab portals will promote efficiencies
in the physician office and speed development of the office-based
electronic medical record, Dr. Friedman believes: “Lab portal
vendors are also developing their products to provide not only
for lab ordering, but radiology ordering and even cardiac diagnostic
ordering and transmission of prescriptions to local pharmacies.”
“This
development trajectory for lab portals will culminate in their
full flowering as what might be called clinical support portals,”
he added.
Initially,
the market for lab portal software has been commercial reference
labs. “A next step in the evolution of lab portal software
will be greater integration between PMSs and lab portals as interfaces
between the two systems are developed. The next logical step will
be the development of additional ordering capabilities in the
lab portals, such as radiology and diagnostic cardiology. Meanwhile,”
he continued, “the lab portal vendors will be selling their
products to large health systems and their embedded laboratories,
which may choose to use them as an order-entry and results-reporting
front-end or as a wrapper around their installed legacy systems.
The final step may be integrating home health testing, such as
telehealth and personal health records, into these evolving lab
portal systems.”
- Classic
LIS coexisting with decentralized LIS
“In
my judgment, today’s lab portals will serve as the kernel
for the evolution of a new form of LIS architecture that I’ll
call the decentralized version, and I think the classic or centralized
LIS will coexist with this type of decentralized LIS,” Dr.
Friedman said.
“The
centralized LIS has developed incredible sophistication in understanding
internal work processes within hospitals. However, it’s
never been quite as efficient in supporting lab outreach to physician
practices or hospital-based point-of-care testing, so I believe
the lab portals will be used to support this type of lab activity.
Because of their more modern Web architecture, they can also accommodate
to integration of point-of-care health testing, home health, and
other decentralized lab activities.”
“If
you have a lab network, you can install a lab portal-type product,
which can then provide the logic to triage the specimens when
they’re ordered anywhere in the system and shunt them to
the appropriate performing laboratory within that network.”
A lab portal can also accommodate direct-access testing in support
of biotech companies that want to go retail and sell genetic testing
directly to consumers, Dr. Friedman added. All one needs to do
is “bolt on” lab portal software to the performing
laboratory so that customers can order the genetic test on the
Web and receive the test result the same way.
“Interconnectedness
is inherent in the Internet standards on which lab portal software
or decentralized LISs are based,” Dr. Friedman said. “This
provides tremendous flexibility if one wants the laboratory to
pursue e-commerce goals.”
- Direct-access
testing on the rise
While
some aspects of direct-access testing have potential for mischief,
Dr. Friedman believes the retail sale of lab tests to consumers
marks a turning point for the clinical lab industry. Quest’s
direct-access testing Web site, www.questest.com, he noted, offers
a wide array of sophisticated lab tests directly to consumers.
“That the largest reference lab in the U.S. is now offering
such services in some 12 states can be viewed as a professional
challenge to all of us because such a large commercial laboratory
has decided to invest substantial financial resources into DAT.
The company is making a very large bet on direct-access testing,
and I think it will take off.”
“I
may be overly optimistic, but I think that in the more than 20
states where DAT is legally permissible, hospitals and their owned
health insurance plans will begin to consider offering direct-access
testing to their subscribers as a member benefit, particularly
for tests like PSA and cardiac profiles where a substantial health
benefit can be demonstrated,” he added. The cost to the
plan for such a program is minimal, and the program can be easily
marketed as an insurance subscriber benefit and as a public health
benefit. “And if such a phenomenon takes off,” he
said, “direct-access testing in the U.S. could easily jump
to as much as 10 percent of testing performed in the U.S.”
- Lab
testing results becoming more complex
“Clinicians
are faced with increasingly complex laboratory testing results,
and I believe LMCs—laboratory medicine consultations—will
become a new way of generating revenue in the laboratory,”
Dr. Friedman said. “As tests become increasingly commoditized,
this is a new opportunity for a downstream lab product based on
the integration of test results and clinical information from
various databases as well as the clinical data repository.”
Such
lab consultations will be particularly important in this era of
genomics and proteomics, when primary care providers and other
physicians will soon become overwhelmed with the complexity of
the lab data presented to them, he says. “This is an opportunity
for the laboratory world to start adding value and provide a safer
environment for patients by helping clinicians arrive at correct
diagnoses and even determine appropriate therapy for patients.”
“Billing
for lab medicine consulting requires a case-by-case physician
order. In the past we shied away from formal billed-for lab-initiated
consults because of this requirement. But I believe obtaining
an order for consultation or reflexive testing is now going to
become much easier because of lab portal software,” Dr.
Friedman said.
“I’m
suggesting if we start now, we’ll be prepared for the genomic
and proteomic revolution in lab medicine.”
- Wireless
technology changing business relationships
“Mobile
phones that are enabled to browse the Web and wireless tablet
computers will present the opportunity for new working relationships
between laboratory professionals and our physician customers,”
Dr. Friedman predicted. Physicians on rounds will be able to view
their patients’ test results using lab portal applications.
How can hospital
laboratories and lab professionals best adapt to these IT trends?
Dr. Friedman believes they need to accept that the role of hospital-based
lab professionals is both information creation and information management.
Among the steps he advises are:
- Developing
familiarity with home health and telehealth programs and supporting
technology.
- Recruiting
pathologists and lab professionals who are not closely wedded
to the central lab model.
- Seeking out
vendors who can accommodate new (that is, Web-enabled) ways of
doing business.
- Reinforcing
the notion of hospital lab personnel as the final integrators
and formatters of lab data from multiple sites and as having final
QC oversight.
- Capitalizing
on strategic advantages of hospital-based labs over commercial
labs.
- Creating
opportunities for laboratory medicine consultations.
- Exploring
the purchase and deployment of lab portal software.
- Considering
direct-access testing in states where it is permitted.
In the process,
laboratory professionals must maintain some degree of control over
the quality of laboratory data and processes throughout health systems.
“Sometimes we throw up our hands and say this is too much
aggravation. But the worst reaction is to abdicate responsibility,
because if you continue to maintain some oversight—even though
you may not be reimbursed for the responsibility—you’ll
still have a place at the table for all lab testing discussions.”
Adapting to
the revolution in information technology will mean more than mere
survival. “As laboratories move from purely wholesale to partly
retail businesses, it will have a salutary effect on all lab operations,”
Dr. Friedman said. “It will make us much more service-oriented
than we’ve been in the past—and make the value of lab
professionals much more obvious and appreciated by patients and
consumers alike.
Anne Paxton is a writer in Seattle.
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