CAP TODAY Pathology/Laboratory Medicine/Laboratory Management
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.
Seltmann
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.
Dr. Lorey
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.
Utts
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.