Physician alignment: What happens to the lab?

These days, as hospital systems’ stomachs appear to be growling for physician practices (and vice versa), lab professionals, and the patients themselves are caught in the middle. Should the hospital system take on some or all of the lab testing done in those offices, thus fully using its experienced staff and state-of-the-art equipment? Or should the physicians’ offices hold on to their analyzers in the name of better patient care?

The question will come up with increasing frequency: “Hospitals are grabbing physicians as fast as physicians are running to them,” says Patrick Creager, medical technologist ASCP, HS, and president of Guidance Healthcare Consulting, Grand Rapids, Mich.

That these decisions will have to be made is inevitable. They already are, and the results aren’t predictable.

“As a broad observation, ‘If you’ve seen one, you’ve seen one,’ or put another way, the model varies widely from deal to deal,” says Sumner Spradling, CEO, Infolab Inc., when asked about which way hospitals and doctors are going on the centralized-vs.-decentralized lab debate. “Whether or not the hospital assumes the lab testing depends on how the deal is negotiated.

“Generally speaking, lab testing is addressed during the negotiating process between the hospital and the physician. So if a physician sees value in the laboratory and wants to retain it as part of the practice, then the hospital is likely to accommodate the doctor during negotiations. But if it gets overlooked or if there is no strong voice, then the hospital is highly likely to assume some or all of the lab testing.

“We see widely divergent outcomes in this regard, but most acquisitions result in some if not all lab testing migrating to the hospital. Unfortunately, many times the physician lab is simply an unintended casualty of the transaction.”

The tests that tend to migrate to the hospital include what Spradling calls the “Big Four” — hematology, chemistry, immunoassay, and coagulation. Rapid diagnostic tests are typically left on site at the physician office, he adds. “But it is important to restate that there is no standard pattern as to how lab testing is handled in an acquisition.”

Good ol’ fashioned customer service

“In my opinion, it’s easy to integrate the back office, billing, coding, procurement,” says Mark Zacur, vice president of marketing and business development, Thermo Fisher Scientific. “But as it relates to the lab, I have a hard time envisioning a huge amount of integration. Most of the testing in the physician office is done that way for speed, efficiency and customer loyalty – the ability to get back [with results] to the customer quickly. I don’t know that I see that really changing, at least not for flu, strep, that sort of thing. If more sophisticated testing is required, or there’s some huge financial benefit to leveraging the central lab, I can see that.”

“Hospitals are taking moderately complex, but not waived, tests,” says Tim Dumas, TLD Consulting LLC and author of Repertoire’s “Lab Guy” column. “The reason waived tests came into existence in the first place was rapid turnaround time. It’s all around patient care.” Waived tests yield rapid results, allowing the doctor to make a diagnosis and prescribe treatment, he says. “They don’t have to call the patient back. That’s one of the big advantages to having your own in-house testing – you get patients treated, and they’re out the door.” Neither physicians nor hospitals are likely to change that.

Adds Creager, “Most hospitals that are big enough to buy practices, at least in metro areas, have done some outreach to doctors’ offices.” Their message to the docs: “We’re roughly the same or just a little bit more expensive than [a commercial lab], but we will put a printer in your office and we can get your lab reports directly to you; and we’ll pick up three times a day.” It’s a proposition that may be hard for the physician to turn down.

What’s most important is that the physician makes the decision, says Rodney Forsman, assistant professor emeritus of laboratory medicine and pathology, College of Medicine, Mayo Clinic. “One might assume, on paper, that it would be great to have a core lab in the middle [of an IDN], to create efficiencies,” says Forsman, who is president-elect of the Clinical Laboratory Management Association. But with years of experience under its belt integrating multispecialty practices, Mayo has discovered that what works best is letting the physician decide what’s best for patients. “That may mean, in many instances, that some tests are done near the patient, in the doctor’s office. A classic example is hemoglobin A1c. You’re getting numbers while the patient is in front of you. The hope is, you can drive better compliance and good old-fashioned customer service.”

Regardless of where the tests are performed, newly created accountable care organizations will have to carefully decide which tests are performed at all, continues Forsman. “It’s analogous to the DRG model on the inpatient side. You’re not going to overutilize [the lab], because you don’t get paid any more to do so.” Calling himself a strident advocate for the lab proving its value, Forsman says that “providing the right test at the right time on the right patient can avoid a lot of other aggregate costs of care. If you can avoid starting the wrong treatment for depression or ordering other procedures or pharmaceuticals [that are unnecessary or worse, incorrect], that’s where the expense is, and lab is a way to get at some of it.”

To read more, click here for The Value of Lab story