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A hospital administrator's view: interfacing with the lab director.

Management at all levels must cooperate in dealing with the impact of economics, new technology, and quality assurance. The author, a member of MLO's Editorial Advisory Board, is vice president for medical affairs at The Presbyterian Hospital in the City of New York, Columbia-Presbyterian Medical Center, and associate professor of clinica pathology at the College of Physicians and Surgeons, Columbia University, New York. This article is adapted from his presentation at the M LO '88 Conference on Laboratory Management

As a hospital administrator, I divide my time among various hospital departments for which I am responsible, based on need. Overall, I maintain a low-profile approach toward the laboratory, using continuous monitors and periodic checks to determine how well the operation is running.

I hold the laboratory directors or laboratory administrators, whom I consider my associates, accountable for all day-to-day aspects of laboratory operations. The better a laboratory administrator is able to manage his or her area, the less time I must be directly involved. When hiring directors and administrators, I try to select people who will use my time, and other resources that I extend to them, in the most effective and efficent manner.

Three major forces are driving health care today: economics, new technology, and quality assurance. These affect both hospital and laboratoryadministrators, the form er more directly than the latter. A laboratory administration that understands these forces will understand the pressures exerted directly on hospital administration.

Today our Federal Government, when looking at the big picture, thinks about health care costs as a percentage of the annual gross national product (the economic value of all the goods and services created in the United States during the year). Last year, health care accounted for 11.2 per cent of the GNP, and some economists project that it could reach 15 or 16 per cent in the next few years if nothing is done to arrest the increase.

The rising health care share of the GNP is troubling for several reasons. As the nation spends more for health care, fewer dollars are available for housing and other social programs. Paradoxically, the poor and homeless may in some instances be better off sick than well. We have created an incentive for people to be hospitalized in order to be assured of food, clothing, and shelter.

Some economists contend that with health care accounting for more of the GNP, the U.S. is also less effective as a competitor in international trade, the reason being that American businesses have to pay more money for health care, making the cost of producing their products higher than that of businesses in other countries.

The Federal and state governments are responding to the fact that health care accounts for such a high percentage of the GNP by trimming hospital reimbursement for patients whose hospitalization is paid for by government programs. The private insurance companies think that they should not have to pay any more than government rates for the same care for their policyholders. As a result of lower Medicare and Medicaid reimbursement, and rising prices for goods and services, hospital administrators must constantly look for ways to reduce costs and increase revenues.

The second driving force is new technology. This includes the information systems that link all of the components of the health care system. Medical information systems, of which a laboratory information system is a component, require financial investment but greatly aid in monitoring and decreasing hospital operating costs.

We are always examining how new technology can not only decrease nonpersonnel costs but also help our present laboratory staffs with their workload during this time of a nationwide shortage of qualified laboratory personnel. In our hospital laboratories, the vacancy rate for technologists is exceptionally high, and in laboratories where there is a shortage of technologists, the appropriate instrumentation and laboratory information systems may lessen some of the difficulties that the available staff is facing.

I make every effort to be well informed about new technology, and fortunately, my medical specialty is laboratory medicine. If I lacked that background, I would rely completely on laboratory directors and administrators to keep me informed about the most recent laboratory technology. It is part of their responsibility to explain the pros and cons of state-of-the-art instruments to hospital administration and make purchasing recommendations.

Several aspects of new technology affect health care costs, and hospital administrators need to be certain of basic facts about all new technology that is requested for purchase (see Figure 1). For example, administrators need to know if new equipment is substitutive or additive. Substitutive technology replaces established technology by improving test accuracy, cost per test, or productivity, and it usually leads to cost reductions over the long term. Additive technology, on the other hand, permits the laboratory to achieve previously infeasible tasks, but it usually generates new, additional costs.

A third major factor shaping health care is the incentive to assure quality. In the lab, we have practiced quality control for years, but we have not had formal written quality assurance programs,

The Joint Commission on Accreditation of Healthcare Organizations has mandated a quality assurance program in every department of the hospital. These programs assure that quality assurance indicators are monitored on a minimum of a monthly basis. For each problem discovered, there should be a written plan of corrective action that is monitored to assure that the problem has been addressed.

Quality assurance indicators may monitor turnaround times for emergency orders, the timeliness of lab results, the number and quality of venipunctures, and patient-physician satisfaction with lab performance.

Economics, new technology, and quasity assurance are interrelated topics, and all have an impact on the laboratory. I expect a laboratory administrator to constantly evaluate lab operations in light of these three factors and to anticipate problems. I need to know what problems may be on the horizon and begin to address them before they are upon us. I want to avoid crisis management.

Laboratory managers should provide hospital administration with a plan for addressing problems that they see on the horizon. For example, what is the laboratory's plan for handling specimens that may contain lethal infectious agents? How will the ever-growing number of elderly patients affect laboratory operations? How will proposed new hospital programs affect laboratory operations?

Managers must anticipate what resources will be needed for future conditions and how the resources will be used. I also expect laboratory directors or administrators to educate members of the staff about laboratory goals and how they are to be accomplished.

Hospital administration is one component of the decision-making group that determines the fate of resource requests for the laboratory and other hospital departments. The other components are the medical board and the board of trustees. This group allocates all resources needed to provide the best patient care, which should be the basis of every decision.

The hospital's resources are space, personnel, equipment, and supplies. Space is the most precious of these because it is finite and generally money cannot purchase more of it (unless a hospital expansion program is approved).

The laboratory, like all other hospital deparments, must negotiate with hospital administration to get the resources needed for its operations. Within the laboratory system, there may be multiple locations for testing-i.e. , the main laboratory, the satellite laboratories, specimens sent to reference laboratories, and perhaps some hospital laboratories may be involved with physicians' office testing and home testing. Each of these laboratory components requires a share of the resources designated for the laboratory.

Hospitals divide the allocated money to be spent annually into two major categories: the operating budget and the capital budget, We carefully monitor the interplay between these two budgets for each department.

If we determine that we really cannot afford to acquire an instrument that has been proposed in a capital budget, it should not appear-without a great amount of thought and discussion-as part of a long-term acquisition plan inserted into the operating budget. Occasionally this can be justified because it can be shown that the acquisition will significantly save on reagent and technologist costs.

A substantial portion of the laboratory operating budget is spent for personnel, the most vital resource of the laboratory. To review personnel needs for any hospital department, many hospital adminstrations have created a management audit division. If a department requests additional staff, its entire operation is audited to determine whether personnel are being used efficiently.

If it is determined that additional positions are justified, the recommendation of the management audit is very influential. Sometimes an audit may indicate that a department is overstaffed, and the managers must carefully justify their current level of staffing.

Developing the final capital budget for a large hospital may take several months. We have created forms for capital requests, and these are very detailed.

Even if a hospital does not have a detailed formal capital budget request process, when the laboratory seeks approval for purchase of a new instrument, its administrator should include answers to some key questions for the hospital administrator: What are the consequences of not approving this request? Does the requested item directly relate to laboratory plans about which hospital administration is aware? If the request is for a replacement, what has been the cost of annual repairs for the current item? What will be the impact of the new item on space utilization and on the cost of supplies and personnel?

If the answers don't provide sufficient support for the request, chances are that the laboratory cannot justify obtaining the item. Figure Illists some points that administrators consider when a request for a new instrument is submitted.

Beyond his or her role as resource allocator, the hospital administrator holds the laboratory directors and administrators responsible for reviewing the laboratory system to see how well it operates. Together with the laboratory directors and administrators, I periodically review laboratory operations by looking at the pre-analytic, analytic, and postanalytic phases of testing.

The pre-analytic phase of testing extends from the time a test is ordered until the specimen reaches the laboratory. The analytic phase extends from specimen arrival until the test result is available from the instrument. The post-analytic phase extends from the time the result is available in the lab until it is given to the physician who ordered it,

In the past, labs focused primarily on the analytic phase of testing. Today we have to look at the whole process and provide resources to make each phase efficient and effective . In particular, specimen collection and transport are critical. If the specimen has been improperly collected or mishandled in transport and is not appropriate for analysis, time, money, and energy will be wasted if it is analyzed. Obviously the most important consideration is the possibility that results will be erroneous and lead to inappropriate patient care.

I consider phlebotomy part of the laboratory function. If the laboratory cannot exercise control over phlebotomy activities, then a major area has been misassigned, and the laboratory can't be held responsible for the quality of test results.

Besides testing that is performed in the hospital, the hospital administrator together with the laboratory director should monitor outside testing services. Costbenefit analyses are conducted, and the volume of referred tests is reviewed. If it is more beneficial to perform the tests in the hospital laboratory, then hospital administration must allocate the required resources to the laboratory.

The hospital laboratory directors are held responsible for the necessity, cost, and quality of testing for specimens sent out of the hospital. The laboratory director should know a great deal about the outside laboratory being used, especially about its quality assurance program. He-or she should have objective evidence of how well the laboratory functions. The laboratory administrator and director should visit the outside laboratory.

When new tests are requested by clinicians, the requests must be reviewed by the laboratory director and the diagnostic laboratory committee of the medical board. If, based on the rationale for the request, the diagnostic laboratory committee and the laboratory director recommend that the tests be offered by the hospital, then the laboratory director and hospital administration must determine whether the tests will be performed in the hospital or sent out.

The hospital administrator anticipates that the laboratory director and laboratory administrator will monitor the overuse of tests. To eliminate requests for unnecessary tests, they need help from the medical board, the directors of clinical services, and the physicians who order the tests.

For the effort to be effective, the laboratory must supply the directors of clinical services with the number and types of tests ordered by their services. It is most useful if this infon-nation is reported by hospital location and by doctor. The information must also be made available at regular and frequent intervals. This requires a good laboratory information system.

The major forces affecting health care delivery systems today-economics, new technology, and quality assurance-4emand that hospital administrators and laboratory directors and laboratory administrators work more closely than ever to assure that the laboratory appropriately meets its responsibility to provide efficient, high-quality testing services, and that hospital administration allocate the resources necessary for the laboratory to meet its responsibility.

Figure 1

Points to be considered before acquiring new lab technology

Is it substitutive or additive?

Substitutive-This kind of technology replaces established technologies by improving clinical accuracy, economic efficiency, or productivity of performing the same task, It yields long-term reduced costs.

Additive - This kind of technology permits the achievement of previously impossible or infeasible tasks. It generates new and additional costs.

Is it labor saving or labor costing?

In most instances, technological innovations result in labor-saving devices. In the health care field, however, advances often are in the form of complex equipment requiring skilled personnel to operate.

Labor-increasing devices usually generate additional operating expense, much of it due to the creation of specially trained classes of technical personnel.

What is its impact on total cost?

Big ticket-High unit cost (eg., MRI, CT scans, organ transplants). Little ticket-Low unit cost. Although less costly on a per unit basis, the little-ticket technologies have a potentially greater effect on health care costs because of higher volume of use (e.g., routine laboratory tests, routine imaging tests, endoscopy).

Figure 11

Factors influencing approval of a request for a new lab instrument

1. What are the costs vs, benefits of the instrument? (Consider the annual cost of labor, supplies, and space with and without the new instrument, and fixed costs for a specific volume of tests annually.)

2. Do the instrument's performance specifications meet the laboratory's goals for accuracy, precision, specimen volume, and speed of analysis?

3. Will the test be offered 24 hours each day, and will trained personnel be available at all times?

4. Does the laboratory have adequate space, power supply, and ventilation for the instrument?

5. How will the data be processed? Can the instrument be interfaced with the laboratory computer system?

6. Is the service contract adequate? Are service calls limited to working hours? Is there a limit on the number of calls allowed?
COPYRIGHT 1988 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1988 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Blumenfeld, Thomas A.
Publication:Medical Laboratory Observer
Date:Oct 1, 1988
Previous Article:A new way to determine test cost per instrument.
Next Article:A lab director's view: interfacing with the hospital administrator.

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