June 2023—As CAP TODAY assembled its annual guides to chemistry and immunoassay analyzers (for this issue and the July issue), publisher Bob McGonnagle brought together IVD manufacturers and lab leaders to talk about consolidation and ever-larger health systems, technology, efficiencies, and centralized and decentralized testing.
Of the larger systems and labs, and the decentralization that is also common, Bryan Hanson of QuidelOrtho says, “I look at this as community health 2.0, which is: What will be the interplay between core and central labs and where patients want to be tested?”
Here’s what they had to say when they met online on April 28.
Kaiser Foundation Hospitals announced on April 26 that it acquired Geisinger Health and is creating a nonprofit organization called Risant Health to expand access to value-based care. It will seek to add additional nonprofit health systems. John Waugh, do you have a reaction to this news?
John Waugh, system VP, pathology and laboratory medicine, Henry Ford Health System: It may be the face of things to come, and maybe that’s good. I would rather see this kind of merger or acquisition than publicly traded laboratories taking on laboratories. Those are more frightening because of the disruption it causes people who have built their livelihoods around laboratory careers. I hope for Geisinger that it’s a sign of business as usual because it is a powerhouse and a well-known, well-led organization that many of us look to emulate.
Tom Lorey, can you comment on the acquisition? What has filtered down to Kaiser Permanente leadership?
Thomas S. Lorey, MD, strategic director and senior consultant, pathology and laboratory medicine, Kaiser Permanente Northern California: I share the concerns but it’s potentially a great partnership with one of the best health care organizations in the country that’s closely aligned with Kaiser Permanente’s values, and the idea of forming a nonprofit to ensure the continued independence of that entity is important.
This news points to the ever increasing need to consolidate testing where it makes sense and on a grand scale for optimal efficiency—having advanced analyzers with large menus and connectivity not only of tracks for samples but also IT. Julia Seltmann, what’s your reaction to the news?
Julia Seltmann, senior global marketing manager, Atellica Solution, Siemens Healthineers: This news reflects common trends in laboratories. One is they need to be prepared to be agile. Anything can happen and you don’t know what, but it probably will be a takeover or buyout. You have to be ready to adapt what you have to grow or shrink. You need to think about what you can have in your lab to be ready to change, whether it’s for becoming a spoke with a hub or dealing with financial pressures that will change what you’re doing. Maybe your clinical focus changes to dialysis, which you’ve never done before, or you have to prepare for another pandemic. That’s part of what labs have to build into their thought process when they’re looking at analyzers or how they’re preparing to be agile and adaptable.
The other issue is, when you become part of Risant, what will be expected for standardization within that lab setting or network? Will they expect clinical concordance of results to include what the reports will look like? What kind of mean standardization? How will that change with the purchasing groups? What will you be looking for in terms of ordering and backups and moving staff back and forth? It seems like a sign of the times, of several trends coming together.
Jim Utts, what do you make of the current environment and of this news as it affects that? More consolidation on the provider side makes it harder, to some degree, for an instrument manufacturer because the stakes are higher to win a major contract for a core lab.
Jim Utts, MBA, global marketing director, Abbott: We’re built for this. We offer an end-to-end solution that has flexibility and scalability. When we partner with clients it allows them to be nimble across their organization, in a spoke or a hub, in California or Pennsylvania. The interconnectivity we provide to labs, whether between informatics, automation, and systems, complemented by high-performing assays, allows them to grow and scale as need be.
Bryan Hanson, what are your thoughts about the environment and how the synergies are working for Quidel and Ortho?
Bryan Hanson, MBA, vice president, head of laboratories business unit, QuidelOrtho: The formation of Risant Health is exciting news as you look at what consolidation can bring to health care. While consolidation is creating larger systems and larger central or core labs, we’re also seeing decentralization of testing. I look at this as community health 2.0, which is: What will be the interplay between core and central labs and where patients want to be tested? How do we connect them, and how does the core lab play an ever increasing and more important role in that process? As industry and as providers, our responsibility to create that connection is exciting. You can see that with the Risant Health consolidation and the consolidation of QuidelOrtho. We’re trying to help connect the two worlds—decentralized and centralized solutions coming together to ensure a common pathway.
Gaurav Sharma, many labs, including at Henry Ford, have severe staffing shortages. As we develop core laboratories, do we not also need to have a single technology that can be deployed in different testing sites? Having one method is a great simplification, including for labor if someone needs to be sent to an outlying clinic or small hospital. Does this resonate with you as you think about the future?
Gaurav Sharma, MD, division head, regional laboratory; associate medical director, clinical pathology core laboratory; and medical director, system point-of-care testing, Department of Pathology and Laboratory Medicine, Henry Ford Medical Group: The solution to future problems is in the past, and while we can speculate about health care, it’s a trend every industry has followed. I’m in Michigan, so I’ll use the automobile industry as an example. One hundred years ago, more than 40 or 50 automobile manufacturers were here, and for the past 50 years there have been no more than four major manufacturers. When any industry is innovating, there will be a wave of a large number of players and then ultimately there will be about five big players along with regional ones. This brings in reliance on a standardized workflow, simpler supply chain, and overall simplicity. This is important because in health care we are seeing a move from a sickness-driven and cost-nonconscious economy to a consumer-driven, cost-conscious economy. Much of value-based care is about decreasing costs. So how do you do that? By decreasing the number of visits to your doctor and by reducing wait time. I foresee there being a workforce of non-medical laboratory scientists, like an associate designation, that will go out and do point-of-care testing. Could that be a medical assistant? Yes. There will be more point-of-care testing, rather than less, with value-based care.
Another key development to think about is that in the future we’ll have an aging population that will have a higher incidence of cancer. Molecular testing will become more differentiated and standardized in terms of complexity, much like chemistry and hematology. That molecular workforce does not need to come from a chemistry or hematology background; rather, it will be de novo. There are elements that are common, but you don’t have to train in hematology to do molecular. Thus we will see more differentiation in what we call the typical medical laboratory scientist training pathway. People will go a little earlier into molecular skill sets and may or may not retain training in hematology, chemistry, and point of care.
Tom Lorey, Kaiser has many clinics, doctors’ offices, and small hospitals. Are you attempting to have one basic technology or one vendor with different sizes of their offering installed throughout the northern California system?
Dr. Lorey (Kaiser Permanente): In northern and southern California, we regionalized in the mid-70s. By 1990 in northern California, 70 percent of all lab testing and 80 percent of chemistries were going to our regional laboratory, and we’ve stayed there. Further to Bryan’s and Julia’s comments, we continue to strategically decentralize, including with more home, point-of-care, and outpatient testing, while maintaining harmonization of test results across the region.
In the past we’ve been compelled to standardization on a single vendor to achieve harmonization. For chemistry, where you can have wet and dry systems, and immunochemistry, where vendors use different antibody clones to identify different epitopes on the target antigen, test results can differ by orders of magnitude at medical decision points. In northern California we have standardized along vendor lines to assure test result comparability across our hospital and regional laboratories. For tests performed only at our regional laboratory, we support multiple vendors to assure maximum flexibility and facilitate a wide test menu. Accuracy-based proficiency testing, vendor cooperation, and IT interoperability look promising to achieve more harmonization in the future without standardization.
John Waugh, what are your thoughts about all of this?
John Waugh (Henry Ford): An imperative we have here is trying to shoehorn into this value-based care equation that says, how can we reduce expenses? Laboratories have been doing an extraordinary job of reducing expenses to the point that they now represent about three percent of the total health care spend. Smart people in health care will tell you 33 to 35 percent of the spend in health care is waste and all we need to do is look for ways to drive out waste. If you could drive out 33 percent of waste in a $4 trillion health system, you’d be driving out $1.3 trillion, so the bigger number for success in the U.S. health care market is to work in that 33 percent, not the three percent. We’ve been nibbling around that reduction by looking for families of analyzers that can offer small, medium, and large because integrated delivery networks have care settings that are small, medium, and large, and opportunities to aggregate capital equipment acquisition, consumables, and services. A lot of those are driven through group purchasing organizations now, but there’s no reason other companies have to feel locked out of GPO contracts if they can make a competitive offering and take a piece of the market that’s ripe for an opportunity.
With some of these new developments, will the GPO be the group left out in the cold? If we get enough consolidation on one provider, we don’t need a GPO taking a percentage.
John Waugh (Henry Ford): The endpoint of consolidation is monopoly. Monopoly isn’t necessarily where you want to be, but it also creates niche players that can say, If you don’t want to go with a monopoly solution, here’s something that might fit your needs better.
Jim Utts, we all know the laboratory provides excellent value for the money within the health care system. But that doesn’t help when you go into a system with a contract and say, You guys are wonderful; why don’t you spend a little more money with us and we can improve your testing accuracy or quality in the health care system. There’s still financial distress in the system, and I don’t think we should underestimate that.
Jim Utts (Abbott): I don’t think it’s a single-source solution. We’re focusing on how we can improve efficiencies within the four walls of a lab, whether it’s automating the mundane or freeing up people to focus on more value-added activities. When you’re seeing double-digit vacancy rates, anything we can do to support personnel is critical to the success of the individual, the lab, and the health institution.
Outside the lab we sometimes underestimate the value of the lab’s role in integrated clinical care. In addition to thinking about the lab as a cost center, the pivot should be, where is the lab creating value to support and improve cost of care through more efficient patient pathways? Maybe that’s early diagnosis or other programs. We’re trying to highlight that best practice. The Univants of Healthcare Excellence program, which Abbott sponsors, is bringing forward that best practice in laboratory medicine to spotlight how it can apply to the broader health care ecosystem.
Bryan Hanson, with the strains we have in the system, particularly in labor, the proper interpretation of a laboratory test can go begging if the person who receives the result is not sufficiently qualified to understand its import and the immediate actions to take for patient care. In the core laboratory you don’t know who’s receiving the results.
Bryan Hanson (QuidelOrtho): Financial pressures and reduced margins have caused pressure in the core lab. We need to continue to look at how to ensure we get the right results the first time and then how to automate the processes around it. The level of autoverification that is done by advanced processes is still not where it needs to be. One statistic that scares me is 50 percent of labs in the U.S. still are not autoverifying results despite the quality and technology we have in this system. There’s common-sense technology that can be applied immediately to make an impact.
The IVD industry has taken on many tasks it wasn’t fundamentally designed to do. You’re doing more with IT for your lab customers than many of their own IT systems do—with the middleware you offer and the algorithms with your instruments that Bryan alluded to. To some degree you’re no longer doing just tests; you’re shaping the information. Is that correct, Julia?
Julia Seltmann (Siemens Healthineers): Yes. When I was studying medical laboratory science, I thought I would be working with body fluids and doing analysis, but it ended up being an IT job and working with robots. That focus is 100 percent going to data management, what we can do with data, and clinical decision support. You pretty much have to be a software programmer if you want your LIS to do what you need it to do. In 2023 you should expect the analyzers you’re buying to have built-in IT functions. Autoverification, among other things, should be integrated in analyzer software.
I had a discussion with a medical director who is working on what he called a physician report card for laboratory stewardship. Labs are looking at the work they have to do and how to be more efficient. This program is looking at test ordering pattern and utility and how physicians were using those tests.
An area that doesn’t get enough acknowledgment is the effort a laboratory puts into meeting accreditation requirements. We talk about patient testing, the workload everyone sees, but working on the bench you see all the work you have to do every time you get a new lot. Every time there’s a new hire you have to train. There’s work outside of patient testing that labs can look to manufacturers for help with—streamlining and integrating assay verifications into the day-to-day work, for example. I think there will be a different approach to automating beyond patient testing. We’re giving data to the clinician and patient, but what else are we doing with it to address sustainability requirements? What is our waste, and are we being efficient with our reagent?
Bryan Hanson (QuidelOrtho): I’d like to go back to your question, Bob, of the merger of the two systems. If you think about consolidating different HISs, LISs, different infrastructures of technology, the laboratory is still playing catch-up because we’re integrating and consolidating technologies that haven’t gotten to the future yet. Hopefully this will be an accelerant to start leveraging and using newer, cloud-based technologies and getting away from historical systems that have been dragging us down. If we don’t leapfrog technologies with the consolidation that will occur, it will be challenging for the industry to pivot to the future.
Insofar as all of this involves IT, we should also note there is a shortage of health care IT workers. Do you agree with that, Gaurav?
Dr. Sharma (Henry Ford): Yes. The shortage of IT workers in health care, especially in lab informatics, is a critical issue that demands immediate attention. The problem is not limited to a particular state or region—it’s a nationwide concern. With the growing adoption of digital health care technology, patients expect a more virtual form of interaction with their health care providers, which has led to a sharp rise in demand for all health care informatics professionals, so it’s not a surprise that many laboratory informatics workers are transitioning to other health care disciplines. To keep pace with these changes, it is high time we take proactive measures to attract and retain more workers in laboratory informatics.
John, do you have a comment?
John Waugh (Henry Ford): A few days ago there was a national webinar sponsored by a large in vitro diagnostics company, and there was a conversation about what we should anticipate on May 11 with the end of the public health emergency and about how we can be better prepared for the next pandemic or other worldwide or national event—in light of the supply chain problems we experienced, the residual effects of which we’re still living with. I was struck by the fact that there were no comments from presenters or audience members about the shortage of labor. What about the shortage of qualified medical laboratory scientists who have worked hard over the past three years to pull health systems through the mess we’ve been in? There were conversations about how can we fund or improve supply chain systems or national stockpiling of key supplies, but there should’ve also been comments about how we can reinforce and invigorate a pipeline for people who want to go into this field to become medical laboratory scientists.
Stan Schofield gave the keynote address at the Executive War College and made the point that every lab needs to understand it has to grow its own labor force. It cannot depend on the junior college or high school or the medical technology schools. Tom Lorey, is Kaiser looking at growing its own lab staff?
Dr. Lorey (Kaiser Permanente): Yes. We see the same challenges when it comes to hiring and retaining good employees. All KP labs support clinical lab scientist internships and the regional lab has a histotechnology training program. Moreover, we leverage automation and IT systems extensively to support our lab professionals.
I’d like to get back to cost and financial management. As laboratory medical directors, we focus on generating consistently accurate results in a timely fashion. The cost per test, although not irrelevant, is generally immaterial to the total cost of care. As part of an integrated care system, our lab directors can often ignore the cost per test—if a more expensive test improves outcomes or turnaround time or decreases total cost of care, everyone wins. Furthermore, the cost of the test almost always pales in comparison to the downstream cost of an inappropriate utilization and misinterpretation. One example is reference values. While reference ranges are great when screening for disease in a healthy population, they’re not so great when used to inform the differential diagnosis of a symptomatic patient. If a slightly elevated liver function test isn’t an indication of disease, why are we flagging it as such? If we want to add value, let’s incorporate magnitude of deviation and probability and report likelihood ratios instead of statistical reference ranges. The value of the lab to clinical care would increase dramatically if we were to better contribute to probabilistic diagnostic reasoning.
Our providers are overwhelmed by flagged test results in their inbox, which often reach the patient before the provider. Improving patients’ and providers’ ability to interpret the significance, if any, of an abnormal flag would greatly improve our service. Although difficult to measure, the cost of unnecessary patient anxiety, phone calls, reassurance, and unnecessary follow-up is daunting.
The downstream cost of a false-positive as you work it up to see what it means vastly swamps in expense the cost of a test?
Dr. Lorey (Kaiser Permanente): Yes. For example, several years ago when we first reported benign squamous cells as a component of the urinalysis, some of our patients Googled the result and came away with squamous cell carcinoma, which understandably led to concern and many phone calls. Back then we simply removed it from the report, but today, with the Cures Act, it’s not that simple. The cost of misinterpretation of normal and slightly abnormal results has become very expensive.
Jim Utts, when you’re dealing with important purchasing decisions, do you feel like you’re engaged with a knowledgeable customer who understands some of these contexts of care and their importance?
Jim Utts (Abbott): We are seeing that our clients are well educated and informed on the decisions they are making for the lab and health system. We’re also seeing the number of stakeholders involved has grown, which elevates the importance of demonstrating the value of the lab to the overall health system.
As systems become larger there are more people in the C-suite who are dedicated to laboratory and pathology. Julia, what are you seeing at the high levels of laboratory administrators within the systems you work with?
Julia Seltmann (Siemens Healthineers): They’re often looking at contracts to include as many things as they can at one time, from imaging and laboratory to pharmacy and surgical. We’re seeing different levels of sophistication in what customers want to do for customizations and different levels of understanding in how complex to get with the results and with what the lab is offering. They’re looking for solutions to come packaged and ready to use and not give their technical staff or laboratory the work of figuring it out themselves. Others want to do their own investigations and studies and have the capability to customize it for what they’ve determined for their laboratory.
Bryan, are the people you’re dealing with in systems and laboratories increasingly aware of questions such as, Isn’t the total cost of care a more important measure than cost per test? Are they aware of how the value basis for most of health care is increasingly dominating?
Bryan Hanson (QuidelOrtho): It’s a complicated answer. Ten or 15 years ago, decisions were lab based. If I’m a laboratory manager, I can probably make a decision in my lab. Now the decisions are more complicated, more elevated, there are value-based committees, standardization committees, and potentially up to 50 people involved if it’s a complex system. It’s extremely difficult now to always show and demonstrate total cost and value of ownership outside of my reagents cost this amount, service costs this, waste is this. We struggle with this as IVD manufacturers and as an industry because while we can demonstrate total value of ownership, there’s typically someone in the C-suite, a CFO, who is still looking at dollars and cents. We are trying to change that. If you can decrease length of stay and get more people through the health care system, that will lower cost. It’s an evolving conversation but it’s where we need to go. We have to change the business model of the relationship and of how we interact with patients. We’ll get there, but we’re still transactional at times.