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Cut costs, not quality.

Cut costs, not quality

When laboratory operating costs fall, management may wait tensely for the other shoe to drop. The second thud would be quality.

But during our laboratory's drive to reduce costs, quality control and quality of results have gotten better, and turnaround time is faster than ever. Those are all good things to happen, especially under prospective payment. They plainly indicate that we streamlined operations instead of slashing costs indiscriminately. Automation played a part in the improvement, along with an unusual staffing approach and creative purchasing moves.

Some of the measures we have adopted are part of hospitalwide programs. Our 205-bed community hospital began placing a major emphasis on cost containment six years ago, long before its May 1, 1984 date with Diagnosis Related Groups. The hospital now has one of the lowest rates of rising health care costs in Illinois, and Illinois has one of the lowest rates in the nation.

Through attrition, labor expenses came down in the lab. Then, as workload decreased due to the state of the economy and the changing health care environment, a further reduction in personnel was required. Layoffs at this point would have threatened an end to needed services.

Fortunately, the hospital developed an alternative--voluntary time off without pay during periods of low workload. The plan is called "hospital convenience.' It works as a major convenience for the hospital in that it reduces the payroll, but it is also a convenience for employees who wish to participate.

Some employees leave for a couple of hours; others may put in for a four-day weekend. Many in two-income families like being able to take extra time off while retaining their sick leave, vacation time, pension credit, and health care benefits. The only change is in the size of their paycheck.

The laboratory has 30 full-time and part-time employees, and about six to eight full-timers use convenience time during each two-week pay period. Long weekends are the easiest to schedule. Thursday afternoons are slow in the lab because the doctors' offices are closed, and Friday afternoons are slow because there's no surgery the next day. When workload climbs unexpectedly, we can seek part-time help or call back those who are out on convenience time.

In terms of full-time equivalents, the laboratory was once budgeted as high as 26. The authorized figure now is 23.1 fulltime equivalents.

Judicious instrumentation choices have made it possible to run the laboratory more efficiently with fewer staff members. In chemistry, the main workhorse is a walkaway discrete analyzer. It can perform nearly 50 different tests individually or in any combination on blood and other fluids and send the results to clinicians in less than eight minutes. Seven years ago, an earlier model of the instrument helped us get by without hiring an extra medical technologist for the 3-to-11 shift. Microprocessor controls in the current version tell us when there are problems with either the instrument or test results.

Then there's our chemistry profiler, both a discrete and batch instrument. It allowed us to bring profiles in-house and trim several hours off the turnaround time. Discrete testing capability eliminates unnecessary assays and holds down reagent costs. In addition, the instrument analyzes microsamples, which further reduces reagent consumption. It is programmed to accept only those test results that fall within our prescribed quality control limits.

The automated blood gas analyzer remains in constant calibration. That means test results are only a single pushbutton and specimen aspiration away. And with an automated cell counter and platelet counter in hematology, we can handle the workload easily and provide rapid turnaround.

We acquired a new gamma counter to improve productivity and efficiency. The very slow, antiquated model it replaced was tied up most of the day counting the different isotopes. We also had to do the data reductions and calculations by hand. The new model has multiple wells and performs all the data reduction automatically. This enabled us to step up availability of some tests from once a week to two or three times a week. Other tests can be added to the menu without an increase in staff.

The high cost of service contracts on these instruments and in other departments prompted the hospital to try an insurance program instead. The laboratory pays its own separate premiums, and the insurance company reimburses us for the expense of parts and on-demand service calls. Hospitalwide service costs plummeted by $85,000 during the program's first year, which ended October 1984. The biggest savings were registered in the radiology department.

In the laboratory, service contracts on just the discrete analyzer, profiler, and cell counter would have totaled $26,000 in 1984. For a total of $11,840 in insurance premiums, we were also able to include four instruments that were not under service contract at all--the blood gas analyzer, a densitometer, a glucose analyzer, and the old gamma counter. So we're covering more than twice the instruments for less than half the cost. Another point to ponder is that most major breakdowns occur while the instrument is still under warranty.

To make the program work, we must be extremely prudent about requesting service calls. The insurance company is very straight-forward about its goal, and that is to make a 20 per cent profit. If it sustains a loss one year, it will make up for it the next. The more service the lab requires, the higher the subsequent premiums.

Lab premiums rose 4.5 per cent in the second year to $12,383. The rest of the hospital had a premium increase of 16 per cent, from $69,810 to $80,933. In other words, the lab did a better job of not needing the insurance.

Thus, preventive maintenance becomes even more important with this type of system. We must now pay for quarterly preventive maintenance by outside service representatives, but even with this new expense, the laboratory still comes out ahead.

It is particularly important and cost-effective to have staff members who have developed basic repair skills. Two such individuals in our laboratory save us thousands of dollars a year and also prevent reporting delays due to instrument downtime.

When we do need a service call, help arrives promptly. Before dropping out service contracts, I contacted the various companies to see whether we would be penalized when problems arose. They assured us service would not be affected, and it hasn't been. Because of the paperwork involved, we are reluctant to have service representatives make a presumptive diagnosis and send a part without doing an on-site examination.

When you don't have a service contract, replacement parts must be obtained through purchase orders. We learned that it's impossible to get a PO signed in the middle of the night, so we now keep a blank, approved form in the laboratory for emergencies.

We were once billed $3,200 for a cell counter part that cost $1,100. Rather than just let the insurance take care of the bill--and see our premiums rise--we complained to the manufacturer. After we pointed out that we could easily upgrade to a competitor's cell counter, the firm tore up the bill.

As for testing, we periodically evaluate the cost-effectiveness of all procedures. We study expenses, volume, and turnaround time, and then question whether in-house service is truly necessary. Some lower-volume procedures have been dropped from our menu as a result.

Amikacin is one example. The kit for assaying this therapeutic drug had 100 tests, cost about $165, and carried a nine-month expiration date. When the kit became outdated without a single use, we decided to send out the procedure to a reference laboratory.

We have also discontinued CRP serology testing. This is a fairly simple test and not too expensive. Still, the volume was so low that we were discarding more of each kit than we used.

Cost is not the only consideration in deciding which tests to keep on the menu. By sending out low-volume procedures, the lab is able to concentrate on higher-volume, more profitable tests.

By developing new protocols, we have improved the efficiency of many tests. For example, after long performing a combination tube and slide test for pregnancy, we switched two years ago to a more sensitive tube test that uses monoclonal antibodies. There is less interference, results come back sooner, and the single assay is cheaper--$1.75 compared to a total of $2.71 for the other two tests. This change is saving the laboratory $1,000 per year plus the technologist time once spent on the second procedure.

For radioallergosorbent testing, a decision to use RAST screens cut the laboratory's allergen inventory by more than half. We once offered 32 different allergens and often wound up with a stack of outdated disks. Now we do six separate screens, then send out positive results for more specific identification. For example, we will determine that a patient is allergic to trees, but the reference laboratory will pinpoint which tree. This approach cut our costs substantially, and we passed the savings along--the patient fee dropped from $432 to $158.

Growing more and more competitive, reference labs are offering discounts and special bonuses. Many provide daily courier service, and some will install a teleprinter to speed up result reporting. Don't feel you have to be left out if your reference lab announces a special bonus to new customers. A few years ago, ours offered a teleprinter for newcomers with a monthly volume of $2,000. After pointing out that our send-outs had exceeded this level for some time, we got one, too.

Based on annual send-out volume of $37,000, we also negotiated a 20 per cent discount, saving $7,400. Then we talked two other area hospitals into switching to our reference lab. The combined volume of the three hospitals entitled us to a 37 per cent discount--nearly double our original price break!

In the area of quality control, the biggest improvement came when we received a "free' microcomputer as part of a commercial QC program. As with the reference lab's teleprinter offer, we did not initially qualify for this introductory bonus because we were a longstanding customer. We persuaded the firm that we shouldn't be penalized for our good relations with them. We got the hardware.

Now, instead of transcribing data from individual log sheets onto a standard form, technologists enter daily control values directly into the microcomputer. The data are transmitted once a month via modem to the firm's computer. A few days later, we receive a report showing our CVs, SDs, and comparisons with other labs. It used to take weeks to receive a report when we mailed in manually prepared forms.

The microcomputer flags out-of-range results according to limits set by us. It also highlights trends that might indicate quality control problems, such as withinrange results that are clustering either at the low or high end.

There's no quarrel at our institution about spending for staff development. Employees are encouraged to attend seminars and workshops, and the hospital offers a generous tuition reimbursement program. I received an M.A. in health care administration with every single credit paid for by the hospital.

To keep abreast of the constant changes in medical technology, the laboratory subscribes to a wide array of professional journals. The technical employees we hire are graduates of four-year or two-year degree programs and certified by a national registry. We feel a high level of expertise is mandatory if we are to continue providing quality medical care.

So cost containment isn't an overriding principle. It is always considered in tandem with good service, and in fact a service improvement like faster turnaround can spell savings under DRGs.

After several years of earnest cost containment, the savings start to taper off. But the lab continues its cost-cutting measures. Our new electrolyte analyzer reduced cost per test from $2.07 to $.27, and reagent costs dropped $14,000 in the first year. And a recent switch to a single-tube system for blood cultures saves $2,300 annually, which will add up to big dollars by and by.
COPYRIGHT 1987 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Title Annotation:economy measures while improving quality
Author:Bulgrin, Lyle L.
Publication:Medical Laboratory Observer
Date:Aug 1, 1987
Previous Article:Three diagnostic clues to management problems.
Next Article:A microcomputer program for reagent cost management.

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