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New ventures multiply for hospitals and their labs.

New ventures multiply for hospitals and their labs

An off-site reference laboratory jointly owned by a hospital's for-profit affiliate and a large number of its physicians is expected to open this summer in Morristown, N.J.

Another hospital is building two new health care facilities in New York. It will also convert a mammoth warehouse into a resource center housing activities not directly related to patient care, such as food preparation.

And a third hospital in the area has joined with a neighboring institution to run a magnetic resonance imaging center. In addition, it is teaming up with 10 other hospitals to acquire a lithotripter for treatment of patients with kidney stones.

These are some of the expansion plans discussed by a group of hospital administrators during recent MLO interviews. They reflect what's happening all over the country as hospitals seek to overcome DRG limitations on inpatient revenue. New services and partnerships, outreach programs, and diversification are in full bloom this spring of 1987.

Our small, informal survey turned up one consolidation. In New Jersey, 621-bed Morristown Memorial Hospital and 635-bed Overlook Hospital of Summit are combining many responsibilities under a new holding company called Atlantic Health Systems, including financial planning, marketing, legal affairs, education, quality of care, and human resources. Plans call for the company to take in other New Jersey health care providers eventually and become a regional system.

Atlantic Health Systems is working with pathologists, administrators, and others at Morristown Memorial and Overlook to develop criteria for selection, through competitive bidding, of a single reference laboratory to serve both hospitals. Lynn Nemeth, vice president-administration of the holding company, says the hospitals are also investigating the possibility of referring some laboratory work to each other.

In another development, a laboratory jointly owned by an affiliate of Morristown Memorial and 150 physicians will soon open across the street from the hospital. (Partnerships between hospitals and physicians are cropping up everywhere.) The joint venture will also include a radiologic imaging center and a home health care business.

Starting with six employees for day and evening testing, the lab staff could expand to eight or nine in three years if business grows as expected. All office practices in the area will be sought as customers, whether or not their physicians are partners in the joint venture. Courier service will pick up specimens from physicians' offices and deliver results. Some offices with sufficient test volume will receive results through computer terminal links to the lab.

Joseph M. Myers, senior vice president of Memorial Investment Corporation, the for-profit subsidiary of Morristown Memorial Health Foundation, says a number of other projects are under consideration. One, for example, would spin the bioengineering department out of the hospital and make that service available to physicians' offices, nursing homes, and possibly even other hospitals.

"It's my feeling that this is the tip of the iceberg,' Myers says. "We're just beginning something that offers tremendous opportunity. It spreads through the whole hospital structure and organization to find candidates for diversification and restructuring. We're really in the very formative stages of this evolution.'

Memorial Investment Corporation plans to concentrate on businesses that have a direct relation to hospital activities. That's a sound policy, according to another hospital executive, Richard Giorgino, associate administrator of 206-bed Columbus Hospital in Newark. "We're good at health care but may not be so good at running a restaurant, taco stand, or car wash,' he says. "A lot of hospitals fail when they attempt to get out of traditional health services and into something completely unrelated.'

A subsidiary of Columbus Hospital's parent corporation is leasing office space at a Bloomfield, N.J., shopping mall, and subletting it to doctors. Within a year or so, there should be be eight physicians' offices in the building, served by a small hospital-operated satellite lab on the premises. The lab would be a joint venture with the physicians. Similar projects may be undertaken elsewhere, depending on physicians' demand for office space.

In Newark, a group of physicians who set up CT scanning near Columbus Hospital a few years ago are now talking about magnetic resonance imaging, and the hospital may join them as a partner.

Thomas A. Blumenfeld, M.D., vice president for medical affairs at 1,300-bed Presbyterian Hospital in New York, describes considerable expansion: "We are building two new hospitals, 40 blocks apart. One is a state-of-the-art high tech institution, primarily for patients requiring complicated procedures or who have complex illnesses, where we will be giving some unique care. The other is a community-type hospital, primarily for less complex and more routine kinds of care, in support of a large local community.

"These hospitals will not have their own kitchens. In a location close to the two sites, we acquired an exceptionally large warehouse, now called our resource center, where we plan to have a very large kitchen facility. In fact, it is so big that an FDA inspector will be on-site during food preparation. This food service will supply both of our hospitals. Gourmet-type foods will be prepared in giant lots and flash-frozen.

"The resource center has a railroad siding, and we will have the potential to buy such things as pharmaceutical supplies in very large quantities.'

Commenting on the trend toward home testing and physicians' office testing, Dr. Blumenfeld suggests one way to preserve quality: Have the results flow back electronically from the physician's office to the hospital laboratory, where central records can be maintained on each patient. He also thinks hospitals should install compact instruments in office labs and share the test revenues with physicians.

The February MLO Editor's Memo recounted the big news at 916-bed Beth Israel Medical Center in New York. Damon Clinical Laboratories recently took over management of the hospital laboratory's day-to-day technical operations and assumed all operating costs. It charges Beth Israel on a fee-for-service basis. Damon and the hospital intend to build a larger off-site lab in perhaps two years and jointly sell clinical testing services throughout the New York metropolitan area.

"Hospitals must capture business they have been throwing out,' Louis Liebhaber, assistant director of operations at Beth Israel Medical Center, says. "That includes laboratory testing that goes out to other labs, home care, chemical dependency programs, and a host of other activities in which hospitals serve as the referring-out end of the business.'

Beth Israel already provides home IV therapy, durable medical equipment for home respiratory therapy, and an inpatient and outpatient private chemical dependency program. It is also an equity partner in a health maintenance organization. The hospital has a kosher food service, and kosher catering is one of the added enterprises it is exploring.

Robert Wood Johnson University Hospital, New Brunswick, N.J., operates satellite laboratories in five New Jersey communities for Rutgers Community Health Plan, a health maintenance organization. The 416-bed hospital is considering moving its own main laboratory off-site to better compete with reference labs for outpatient testing business.

Among other activities, the hospital is involved in a home care program as a partner with Elizabth (N.J.) General Medical Center, Muhlenberg Hospital of Elizabeth, and Servicemaster, Chicago; a joint blood program and a magnetic resonance imaging center in a joint venture with St. Peter's Medical Center of New Brunswick; and an 11-hospital consortium that plans to purchase a lithotripter. That last service will be based at Robert Wood Johnson.

Patricia Lynch, executive vice president of 201-bed Union (N.J.) Hospital, mentions the key role played by laboratory management in her institution's establishment of an alcohol detoxification program. "Laboratory testing has become one of the primary cost factors in such programs. What the lab told us it could do in terms of productivity, meeting tight turnaround time requirements, and cost was essential in shaping decisions on the program.'

From a lab manager's point of view, participation in strategic planning can engender a good deal of job satisfaction. For example, Candis Kinkus, administrative director of laboratory services at Morristown Memorial Hospital, liked working on the business plan for the institution's off-site lab partnership with physicians.

"Providing that kind of input is one of the reasons I enjoy working here,' she says. "I value it in my management responsibilities.'
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Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Part 2; new services, partnerships, outreach programs, diversification activity
Author:Benezra, Nat
Publication:Medical Laboratory Observer
Date:May 1, 1987
Previous Article:How hospital administrators view the lab.
Next Article:Management applications of workload recording; analyzing the sources of workload can improve laboratory activity forecasts and staffing plans.

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