In this 1965 Blake Edwards spoof about turn-of-the-century auto racing starring Tony Curtis, Jack Lemmon and Natalie Wood, the challenge facing the drivers brave enough to enter is a long and grueling race across three continents, from New York to Paris, heading west through Russia. In the world of clinical laboratory medicine, a similar type of endurance race has been rolling along for the last ten years – the proverbial “race to the bottom”, or to the lowest possible pricing – and unfortunately, it seems to be picking up some speed.
It all began when the large national labs in the U.S. began discounting lab testing in order to get “exclusive” contracts with payers like United Healthcare and Aetna. This commoditization of the valuable information that guides physicians in the diagnosis and treatment of a wide range of conditions and disorders caused many smaller clinical labs, unable to compete in this lower margin business any longer, to be acquired by the larger labs.
Now it seems that CMS will fuel this race with their latest proposal. Beginning in January of 2017 they will being paying labs at the same rates as the private insurers, a move that will be about a 20-30% hit on labs that provide testing for CMS patients. According to the proposed rule, the savings for CMS would amount to over $5 Billion dollars in the first 10 years following implementation.
At this point you may be thinking that this is just old-fashioned competition - "survival of the fittest", as they say. Well, I’m not about to debate that point given the current pressure on all of healthcare to deliver higher quality at lower costs. However, I will point out that the clinical lab industry delivers significant value, and as such needs to find ways to capitalize on that value as the status quo of healthcare is challenged and disrupted.
The logical solution for labs is to use the treasure trove of data they possess as currency to buy into their rightful place as a true partner in the fight for wellness, population health and better overall care. It has long been agreed that laboratory diagnostic data makes up about 70% of the information found in a patient’s medical record, aiding physicians throughout the decision making process. With new technology available to get that data into the hands of providers where and when they need it, increased value and decreased costs should be achievable.
Let’s consider just the segment of the population that is currently “at-risk” for progressing to a significant chronic illness like diabetes. Laboratory data can be used to identify and alert these patients and their physicians so that steps can be taken to prevent further complications of this disease. In addition, with cloud-based systems and mobile technology, alerts can be automated to enhance compliance with testing and treatment protocols.
It reminds me of the old DuPont advertising slogan from long ago: “Better living through chemistry”. If we adapt this saying to apply to clinical labs in today’s environment, the slogan becomes “Better living through data”. The new race for this century will be to see how fast we can get patients, doctors, and hospitals engaged with one another for the sake of better health. In this race, everyone is a winner.