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Cutting costs in clinical chemistry.

With the advent of DRGs, the problem of maintaining services while putting a tight cap on costs may become critical for many hospitals.

Our institution, for various historical and administrative reasons, probably has dealt with the cost containment issue longer and more vigorously than most hospitals. We have been compelled to introduce a variety of measures that preserve essential elements of quality care at a low level of expenditure.

There's no special secret to our cost containment success. What we do have is a serious commitment, together with a desire to find rational and productive solutions, even if they seem drastic and controversial to others. While these measures have been applied in the clinical chemistry laboratory, the underlying approaches should prove effective in other laboratory areas as well.

Every laboratory must adapt cost-cutting strategies to itw own unique set of needs nad problems, and ours is no exception. Our staff is a very small one for a fairly large, tertiary care teaching hospital. There are approximately 500 beds in the main division and 200 psychiatric beds, which generate a

surprising amount of chemistry tests. We also perform most biochemical tests, other than electrolytes, for a 126-bed division about three miles away.

The daytime technical staff consists of only nine full-time technologists, apart from employees in our toxicological subdivision, housed in another building. (We also have two chemistry technologists' on the evening shift and one on the night shift.) Fairly extensive surveys have shown that this is approximately half the usual technical staff for an institution this size. Supervisory personnel consist of an asistant biochemist, clinical chemistry supervisor, and chief of biochemistry--also a very lean staff to provide round-the-clock supervision.

Despite our small staff size, the great bulk of testing is done inhouse. We estimate that send-out testing costs will total only about $40,000 for the next 12 months, and we may be able to cut that level substantially the following year. Because we have long operated in very crowded quarters, we have not been able to introduce all the technology we would have liked, or to perform many tests now sent out to reference laboratories. This situation should change as the chemistry division moves into additional space afforded by the recent opening of our new children's hospital.

It has been said that the single most expensive piece of hospital equipment is the doctor's pen. As long as ordering any test is as easy as marking a laboratory slip, cost containment in the clinical laboratory will remain extremely difficult. As new tests appear, the number of tests per patient--even with no increase in the hospital's bed complement--will keep rising. If the ordeirng process goes unchecked, the endless cycle of escalating costs will remain unbroken.

We must remember that most physicians have only marginal motivation for holding down laboratory costs, unless they happen to be part-owners in proprietary institution. House staff officers may not feel a lifelong commitment to the institution, at least not during their internship and residency. Voluntary staff members with no direct economic ties to the hospital can very often be expected to pay lip service to the importance of cost containment, but to act in this direction much less frequently.

For these reasons, and because the laboratory workload is the end product of thousands of individual decisions each day, it will probably be impossible to eliminate unnecessary testing completely. The problems of oversight and review are simply too formidable. Nevertheless, we can win some important victories for cost containment right at the start--at the ordering phase.

The commitment to cost containment mentioned earlier cannot be limited to laboratorians alone, or our efforts are doomed. In issuing directives to "cut costs," administrators too must demonstrate a willingness to be guided toward the real problems by the lab's professional staff and interested, knowledgeable clinicians.

In our experience, the biggest danger confronting each new cost containment effort is the initial administrative tendency to focus cost-cutting attempts on the wrong problems and areas. This often leads to counterproductive measures that take even more time and effrot to correct, as we will discuss shortly.

The clinical chemistry lab is such a complex entity that each of its major cost-creating components must be treated as a separate but related problem requiring a detailed, specifically targeted approach. When we undertook our campaign, we were struck by the diversity of methods needed to attack each of the problem areas. Trying to solve all of them at once with one overall approach is likely to produce little more than good intentions. Let's take a look at each of these problem areas, and some solutions that worked.

* Administrative support. Generally, administrators do not understand the myriad details of laboratory operations--nor should they be expected to. Adminsitrative efforts to contain lab costs require the laboratory's guidance, or they may acutally backfire and increase costs.

For example, a recent across-the-board job freeze at our institution was misinterpreted to include a ban on acquiring replacement part-time and zero-time employees (substitute medical tehcnologists called into the laboratory as needed). This misunderstanding forced us to fill those vacancies--mostly on the evening and night shifts--with premium-time personnel from the day staff. The error was expesive. Hiring part-and zero-timers for these emergency vacancies would have cost only two-thrids as much. Most laboratory directors or supervisors can cite comparable examples from their own experience.

Setting up a cost containment or laboratory utilization committee with active access to top hospital management is a good way to obtain properly directed administrative support. Ideally, adminstrators, laboratorians, and clincians should meet regularly to discuss very specific problem areas.

Although our experience with this type of committee is relatively short, the results so far have been favorable. Our cost containment committee is a particularly high-level group including the vice president for education and research, the chairmen of three clinical departments (laboratories, medicine, and community medicine), and several mid-level hospital administrators. In addition to our department chairman, the lab is also represented by the laboratory administrator and the chiefs of biochemistry and hematology. A number of the topics that follow are appropriate for such a committee to consider.

* Send-out testing. Tests sent to reference laboratories represent a circumscribed challenge in cost containment--an isolated problem area where most hospital-based chemistry sections can most successfully cut costs. Savings in this area are tangible and immediate: Reference laboratory bills represent hard cash (not vague third-party dollars) paid out directly from the hospital's operating budget.

There are probably only two good reasons why tests should ever be sent from a hospital to an independent lab: inadequate space within the hospital laboratory to perform these tests, or too few requests for a particular test to justify either the cost of setting it up or the delays caused by trying to batch the analyses.

The latter category includes tests employing expensive reagents--immunological procedures, for example. The cost of running standard curves and controls for a very small number of tests is high. This category might also encompass tests so labor-intensive that the work hours utilized become a serious cost consideration. Of course, there are institutions equipped to perform some of these tests. For example, a hospital with a fully equipped radioimmunoassay laboratory might perform estrogen and progesterone receptor assays, and function as a reference laboratory itself.

In the face of extreme cost-cutting pressures, referrals made out of tradition, lack of expertise, and an unwillingness to accept new technologies are unjustified if in-house performance can produce significant economies. Special expertise can be obtained by hiring trained personnel and taking advantage of educational programs sponsored by professional societies or instrument manufacturers. New instrumentation should be carefully selected, with a view toward decreasing the laboratory's total expenditures. We will delve more deeply into instrument questions shortly.

For chemistry tests ordered more than, say, 15 times a month, it would be most unusual if major savings did not result from switching to in-house testing, assuming sufficient space is available. Even with our small staff, we can often add a key additional test simply by rearranging work schedules. Moreover, we have produced real additional personnel hours by judiciously selecting new instruments to performan particular test more efficiently, with less labor. For these reasons, chemistry laboratories that send out large numbers of tests, totaling some $100,000 or more a year, are probably underutilizing their potential for cost efficiency.

It still holds true that not every lab can do every test. And when ordering patterns produce a few requests each for a large variety of tests, chances for any payback from in-house testing are severely restricted. There will always be a residual number of tests that must be sent out, both for turnaround time and cost efficiency.

Even among these tests, experience has shown that we can cut costs drastically. About eight years ago, we observed a slow, stubborn upward trend in the number and cost of reference tests. The trend continued from year to year. However, looking at the monthly variations, we noticed that outside testing traffic was heaviest whenever the new house staff came on board. Toward the end of the academic year, the number of send-outs dropped appreciably.

It seemed obvious that our patients weren't any sicker in July and August than in May and June. The obvious conclusion, one that many clinical chemists have no doubt reached on their own, was that many tests ordered by overenthusiastic new house officers were not necessary.

We enlisted the cooperation of administrators and clinical department chairmen in drafting an outside test request approval form (Figure I). The new protocol stated that no request for outside tests would be considerd valid unless signed by the chairman of the appropriate medical department or a designated full-time staff clinician. The reverse side of the form listed frequently ordered send-out tests, so that clinicians would be clear about which procedures required prior approval.

The results were startling: The number of outside reference test requests sent from the laboratory dropped immediately by two-thirds. In other words, only one-third of the previous requests could be considered truly necessary for patient care. Informatl interviews with house officers and physicians with hospital privileges strongly indicated that the earlier orders were largely in the interest of "defensive medicine," not only for medicolegal reasons, but also to avoid the professional embarrassment of having forgotten to order some esoteric test.

Although education is a useful way to deal with such an un-healthy condition, it doesn't work as fast as the approach we used. If we rely solely on education to contain testing costs, hospitals may go bankrupt before the effort bears fruit.

Once our clinciians were subject to scrutiny on test requests, they began to think harder before writing an order. Thus, our procedure actually stimulated the educational process.

Unfortunately, most such problems resist a permanent solution. As time wore on, department chairmen requested that more and more of their staff members be granted the authority to approve test requests, and the authority gradually spread through the medical staff. Laboratorians also grew lax as administrative pressures were redirected elsewhere. After a while, even the house staff assumed approval authority, with litte challenge from the laboratory or administration.

Not surprisingly, the money spent on outside testing neared previous levels (before implementing the form) within five years. We never regressed completely, though. Experience had taught us well. AS the latest threat to our financial stability loomed--in this case, New York State's version of capped reimbursement--the screws again began to tighten, this time with a vengeance.

WE now set up very careful strictures. Only the chairmen--or in their absence, another full-time senior member of the department--were permitted to sign the approval forms. The reference bill promptly took another sharp drop; since then, send-out volumes appear to have stabilized at about 40 per cent of their previous levels.

These days, the medical staff understands the gravity of the problem, and they know that the request protcol must be adhered to rigorously. One of the cost containment committee's major functions is to continually monitor this face of laboratory expenditures.

Another approach, taken almost simultaneously, has been equally helpful in curbing the cost of outside testing. Two years ago the Joint Purchasing Committee of New York--Particularly its vice president, Barry Novick--developed an initiative to utilize the aggregate purchasing power of a majority of voluntary hospitals in the New York metropolitan area and obtain a single low bid for outside laboratory fees. This was accomplished by soliciting bids from major reference vendors. The lowest bidders were then investigated through site visits, questionnaires, and interviews.

The plan was quite successful and resulted in an almost across-the-board cut of 60 per cent off listed fees. Vendors were more than willing to bid and offer savings of this magnitude, as they stood to gain a huge cliente from tens of thousands of voluntary hospital beds. This strategy has proved fully as effective as our test-ordering crackdown--and easier to implement.

* Instrument costs. Besides the capital cost, a one-time purchase or lease expense, we must consider an instrument's operating cost. Here, the key number is the actual running cost per test. There is a rough natural division between instruments used for routine procedures and for what might be called "high tech" test.

Routine chemistry procedures are primarily analyses for macro-constituents, performed in large numbers by easily available colorimetric or ion-specific electrode methodologies. In the high tech category, constituent analyses are usually micro to sub-macro, often using hihgly labor-intensive methods, or at least techniques involving above-ordinary skills. The division matters primarily because the instruments used in the first group are usually not readily adaptable to the second.

Instruments processing large numbers of routine tests are often more elaborate and costly because they are geared for maximum throughput and are usually highly computerized. Frequently reluctant to state the exact cost per ordered test, manufacturers intead highlight how little technologist time or skill such instruments demands.

In fact, a little reflection will show that the correlation between technologist time and csot savings is indirect and convoluted. Time does not necessarily equal money, unless one plans to lay off personnel directly following the purchase of automated equipment. On the other hand, if the focus is kept closely on the cost per test--with or without a capital purchase component--we have a direct means of comparison among different instruments.

The data processing component of automated instrumentation is another item that many manufacturers have strangely overlooked. There should always be a direct patient-chartable form available on which patient data are automatically printed, as well as a different, highly compact form for the laboratory's copy of the data.

A number of automated instruments, even those of quite recent vintage, require an auxiliary computer to accomplish this, often at much additional expense. Others require manual transcription of data onto a chartable form and a laboratory copy. In this anomalous situation, a highly advanced analyzer produces data in such a primitive format that it negates much of the potential labor-saving advantages of automation.

* Complex test analyzers. Complex tests--as opposed to routine procedures--entail rather elaborate methodologies for reagents, instrumentation, or both. These tests may include immunological and/or radio-labeled materials, and are frequently used to analyze drugs, hormones, specific proteins, or microconstituents in body fluids. A wide variety of methodologies and instrumentation is available for performing many, but not all, of these analyses.

With respect to potential costs, most current methodologies or instrumentation appear subtly or obviously designed to lock customers into a particular type or brand of reagents. Whether by means of a specific patented reagent type, a specific and unusual size of antibody-coated tube, a unique type of reagent carrier or analytical pack, or a unique methodology, the effect is the same. Intentionally or otherwise, customers seem to be locked into purchasing supplies from one manufacturer, who almost exlcusively controls the cost per test--customers cast their only vote at the time of the initial system purchase or rental.

In fact, laboratories are not nearly so helpless in controlling operating costs. Clinical chemistry consumers have some valuable defenses to help regain control of these outlays.

To begin with, the original equipment can be selected in two ways. We can submit purchase orders based on which system has the lowest initial cost per test. Or we can go one step further and ask, Which system can most readily be modified to yield significant and permannet reductions in the cost per test?

With a homogeneous immunoassay that our laboratory uses, it is easy to modify the spectrophotometer flowcell to accept volumes of about one-third or less than those prescribed in the original method, and to correspondingly modify the volumes delivered by the syringe pumps.

Sensitivity and accuracy are not compromised with this approach. The spectrophotometer "sees" the same concentration of reaction solution as in the original procedure, but saves two-thirds of the total reagent amount. In many institutions, this can easily translate into annual savings of tens of thousands of dollars. We estimate our yearly savings at more than $ 50,000. Similarly, it may even be possible to modify a fluorescence polarization immunoassay to accept half or less of the usual reagent volume.

Many systems, of course, are far more difficult to modify for cost savings. Manufacturers of these systems should be encouraged to respond more readily to the severe budget limitations in many hospital laboratories. For example, manufacturers could provide optional blank delivery systems for those who prefer to prepare their own reagents.

It seems some reagents are still purchased for traditional reasons, even though economical home-made substitues work just as well. One example is the control material used in blood gas analysis. Typically, sealed ampules of controls containing known amounts of oxygen and carbon dioxide are used for this purpose. However, at least one commercial instrument now facilitates the preparation and use of tonometered simple buffer solutions or anticoagulated whole blood as blood gas controls--at a minute fraction of the cost of commercial alternatives.

Chromatography is the best defense against high reagent costs in the area of complex analyses. Although gas chromatographs--and to a greater extent, liquid chromatographs--have found their way into many hospital laboratories, this technology is underrepresented in a far greater number of institutions.

Liquid chromatographs in particular have made recent gains in popularity for toxicological analyses. Unfortunately, many of the major chromatographic instrument manufacturers have failed to place much emphasis on the clinical market. Armong the hundreds of instruments displayed at last year's American Association for Clinical Chemistry meeting in New York City, almost no chromatographic instrumentation could be found.

Therapeutic drug monitoring has a long way to go before exhausting the potential of liquid or gas chromatography. The modern chromatograph is the exact opposite of a dedicated, analyzer. Its potential flexibility at least equals that of any other analytical instrument. Chromatographic quantitation is so simple and readily available in modern computer-controlled instruments, and the variety of detection modules so wide, that we can certainly look forward to using these techniques more often and for a much broader range of analyses. Low-molecular-weight hormones (steroids and catecholamines), amino acids, nucleotides, and many other endogenous constituents are only some of the analyte candidates for chromatographic methodologies.

Do you think that chromatographic procedures are inherently slow and complicated? Think again! Modern liquid and gas chromatographs, equipped with microprocessor-controlled, programmable, automatic samplers, can provide an amazingly large throughput in a brief period. Newer liquid chromatographic columns yield analyses within a few minutes or less for each sample. Computerized integrators and printers deliver calculated final answers as rapidly as any other multisample analyzer--and at a fraction of the cost per test.

The price of chromatographic systems is comparable to that of many competing automated immunochemical analytical systems. Reliability and ease of maintenance have greatly improved within the last two or three years, and their operation now lies well within the competence of many clinical chemistry staff members.

Best of all, the cost per test is vastly lower than for procedures using immunochemical reagents. This cost gap results from the fact that only a few ml of inexpensive gases or solvents are needed, rather than expensive labeled antigens and antibodies. AS chromatographic procedures become faster, they will use even less material, and costs will decrease accordingly. In addition, the flexibility of these instruments allows clinical chemists to improve methodology with an eye toward cost containment, as well as analytical precision and accuracy.

The approaches described here are intended to achieve real savings, not theoretical or "paper" economies. Even today, it is possible to improve economic and operational efficiency in a hospital-based clinical chemistry laboratory without compromising quality. The measure that work best will be those that reflect an understanding of the laboratory's day-to-day workload, in all its complexity.
COPYRIGHT 1984 Nelson Publishing
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Copyright 1984 Gale, Cengage Learning. All rights reserved.

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Author:Rosenthal, Arthur F.
Publication:Medical Laboratory Observer
Date:Jul 1, 1984
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