By Diane Nagel

It is fairly expensive to maintain a hospital lab right? Just think about it for a moment, all of that specialized testing equipment in the hospital lab is expensive and costly to maintain and generally hospital labs maintain a smaller pool of potential clients. What about the labor costs and all the supplies and reagents that have to be purchased to perform lab tests?

The downward pressure on hospital labs is daunting to say the least. Consider this…the most modern testing equipment in a clinical reference lab is so sophisticated that it can handle a tremendous amount of excess capacity over and above what most hospital labs actually receive from in-patient tests. In order to take advantage of the ability to benefit from equipment that can perform more tests, the lab must look outside their health system to generate incremental business, hence the drive to increase their lab outreach.

So what are the challenges related to a hospital outreach initiative? First and foremost, hospital labs have to go into battle every day against enormous publicly traded competitors with ticker symbols like, DGX and LH. Competitors who have partnered with health insurers and agreed to charge flat fees for tests based anticipated volume from the health plan participants.

So let’s look at a potential scenario with some basic assumptions:

  • We’ll assume the hospital draws patients from within a 20-mile radius of its location
  • 5,000 of those patients have a health insurance plan with XYZ Insurance Company
  • The largest commercial labs have negotiated flat rate lab fee agreements with  XYZ Insurance Company, so let’s assume the big labs pay $50 per test for those 5,000 patients
  • A hospital lab convinces an outside Physician office to send their patients lab work to the hospital lab , but as a result, the patient with XYZ Insurance Company gets a $300 bill from the hospital lab, because the tests were not performed by the lab with the negotiated agreement in place.
  • The patient then calls their physician and complains, claiming that he never had to pay for lab tests before, so “Why am I getting this bill?”
  • After the physician’s office gets several complaints, the physician’s office tells the hospital lab that this is not going to work, we are too busy to deal with this issue…we are just going to send XYZ Insurance Company patients to the lab that their insurance plan dictates.
  • As a result, outside feeder relationships to the hospital labs are slowly severed and outreach physician relationships lost. The hospital lab suffers because this scenario is repeated multiple times in their small market across a variety of health insurance plans who have negotiated flat fee arrangements with the nation’s largest labs.

Can hospitals fight back and is there long-term hope for their survival?

The answer is yes and no. If hospital labs don’t adapt quickly and gain a better grasp on their clinical and business intelligence, they will continue to atrophy and eventually operate as a pure cost to the health system or they may have to outsource their operation entirely as many hospitals across the USA are currently doing. 

For truly committed hospital labs that want to roll up their sleeves and fight the good fight, there is definitely a way to compete and stave off the competition. With access to better clinical and business intelligence, the same hospital lab referenced above could leverage the lab specific intelligence to learn that the same physician who was getting phone calls from disgruntled patients was a truly valuable account worth working with.

Let’s assume for a moment that the hospital lab was able to identify the fact that the physician’s office sent an average of 75 tests per month to the hospital lab and the profitability on those 75 tests was so strong, that it allowed the hospital lab to eat the cost of the 5 disgruntled patients lab tests month in and month out. In this scenario, the hospital lab is competing and winning the local battle against the 800-lb competitor by accessing greater intelligence that helps the hospital lab make better strategic and competitive decisions.

How hc1.com helps labs turn data into intelligence...

hc1.com offers hospital labs a healthcare CRM solution that helps them compete and grow their hospital outreach programs. By accessing the intelligence contained in their Laboratory Information Management System, hc1.com transforms the lab analytics into quantifiable and useful data in near real-time. In addition to harvesting the labs clinical information, hc1.com makes it possible to pull in the business information spread across disparate systems in the lab. For the first time, clinical reference and anatomic pathology labs can access all of their clinical and business intelligence sprayed across multiple data systems through one system, hc1.com to gain a better perspective on the profitability of specific tests, profitability of providers or practices and TaT’s for individual tests and more.

I firmly believe hospital labs can win the battle because the insanely hard job of accessing reports in the lab environment is no longer difficult when the reports are coming to you in real time. To schedule a live, personalized demo of hc1.com, go here.

Subscribe to the blog
Previous Post Lab Webinar Poll Results: Part 2
Next Post Go Big or Go Home? Whether to Utilize a Large National Lab or Local Lab