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Moving lab revenues and costs outside the hospital.

In the current budget crunch, hospital administrators are anxiously seeking ways to identify and control the major factors that influence costs. In the past, these variables--like case mix and length of stay--did not make much difference to the running of a clinical laboratory. But those days are over.

Today it is essential that the lab wrok in tandem with the hospital in responding to the reimbursement revolution. That means moving many lab costs and revenues where the patients are going--outside the hospital. We will examine some of the most important elements in this trend and present specific strategies that can help the lab preserve high-quality care and financial viability amid turbulent change.

To understand why the lab must shift gears, we must understand the complex scenario faced by hospital administrators. The biggest variables affecting hospital costs are patient case mix, annual admisisons, scope of services, intensity of care and length of stay. We can try to control these variables by cutting length of stay or admissions, in order to reduce the number of beds and achieve a higher occupancy rate in those that remain. Institutions can try to determine case mix more selectively, tinker with formulas for DRG payment, or cut the costs of ancillary services.

Although patient admissions may remain unchanged, the number of actual patient days may decline anyway due to shorter lengths of stay. As more physicians and patients agree to limit hospitalization to acute illness, however, elective admissions tend to decline and the hospital's per-patient income is drastically reduced. Up to a third of all surgical procedures are now being performed in one-day programs, and women are usually discharged 24 hours after uncomplicated childbirth. These arly-discharge patients usually return to doctors' offices and clinics for follow-up care.

The costs of ancillary services won't necessarily drop along with length of stay, even if admission rates remain stable. As the trend toward outpatient care progresses, it is likely that the patients who are admitted will be sicker, requiring more acute care and consuming more hospital resources. As a result, we face a greater need than ever to define the hospital's changing requirements for laboratory and other ancillary services. We must take stock of this exodus to ambulatory settings and start channeling hospital lab resources to a new and different market--one where demand is increasing.

Do ambulatory settings demand the same standards of medical care that apply within the hospital? The success of day surgery programs suggests that we can indeed achieve economy with comparable quality if we're willing to be flexible. Perhaps this in turn implies that some of our hospital standards may be too high.

Several changes have already boosted the number and variety of ancillary services in the community beyond hospitals' present capacity. An increasing population of patients with complex medical problems are leaving the hospital earlier and facing a fixed number, and often a shortage, of beds in skilled nursing facilites. All these patients require management with support from laboratory and pharmacy services; when chronic conditions flare up, they may be periodically readitted to the hospital.

This demand for outreach services and home care programs is just another dimension of the community's growing need for comprehensive services. In response, hospitals are trying to capture these outside revenues by offering the community efficient, high-quality outpatient services at competitive prices.

Significantly, the shift of patient services away from the hospital has broken the continuity of medical service and fragmented the record-keeping process. The creation of a sprawling network of medical services provided by hospitals, physicians, and various for-profit ventures has inevitably had this effect. Hospitals, by responding to the competition, can blunt its impact on their finances while enhancing the continuity of patient care.

We can identify a market for satellite service if we're willing to allocate dedicated staff and resources to meet the challenge. Hospitals will need innovative financial officers who keep a sharp eye on Federal regulations in order to seize opportunities to work with physicians, not-for-profit institutions, corporate providers, independent labs, and other potential customers.

How can the hospital, and the laboratory in particular, respond to this fragmentation of medical services? First, we must acquire adequate systems for the automated management of laboratory and other medical information. We can gain direct access to an enormous data base without redundant computer costs through branch offices, lab and pharmacy information management systems, automated ECG's, and computerized billing systems that interface with the hospital information system.

Computers now let us extend the hospital lab to the physician's office at a lower cost to the patient, while offering physicians a profit motive to reduce their dependency on reference labs for routine testing. Modular software and improved microprocessors help us outsmart the high costs and inflexible bureacracy of a large, cetralized system; we can now create networks of decentralized personal computers, microcomputers, and "intelligent" terminals to flash information from one facility to another. This opens the way to instant transfer of patient records between hospital and physician's office, and gives the hospital lab access to test results performed off-site.

Hospital laboratories, often underutilized in relation to their high overhead costs, can bolster their cost efficiency by offering services for outside medical activities. At present staffing levels, most hospital labs can meet the needs of an acute care center in three shifts--while offering more than Stat service during night and late evening hours when the workload is light. Hospital laboratory services that aren't fully utilized, especially when patient census is down, are a heavy financial burden, and administrators will make it a priority to reduce their unused capacity.

In the past, many small labs sent out tests that were too complex or infrequently ordered to justify in-house performance. These send-outs invariably went to reference or university research labs. The nonprofit hospital lab can now improve its routine testing efficiency, reorganize its resources, provide more complex technical services, and make them readily available in the community. But while the focus of the hospital lab is more community-oriented, it must still compete favorably with the large corporate test providers who can maximize profits through intensive capital investments.

Proprietary labs also face new problems stemming from the reimbursement revolution. They must continue to show growing profits, relying on expansion of their high-volume test capacity. This requires standardization of the test menu, centralized facilities, and an increasing reliance on less-skilled labor. This strategy effectively concentrates the workload, involving many far-flung clients. As a result, the relationship between local users and providers of laboratory services becomes even more important in filling the gap.

The recent development of small, multiphasic analyzers permits small hospitals and physicians' offices to perform formerly expensive or esoteric tests with reasonable cost benefits, and to provide profiles and panels with lower labor and reagent costs. These technological gains, coupled with better management, have made it possible to organize highly labor-intensive work stations.

The organization and loading of specimens received in the lab sets the pace for the entire process of modern automated analysis. Improved analyzers with microprocessor control let us simplify request entry and data reporting with a few simple manual procedures. We can develop dedicated work stations with many options: panels of up to 20 test combinations; a high-priority Stat station that processes specimens in under an hour; toxicology and therapeutic drug monitoring; immunochemistry; ligand assays; clinical enzymology; and special and developmental biochemistry for difficult or semiautomated methods.

With careful planning, all these functions may be carried out with total staffing of not more than 24 technologists on three shifts. Technologists could rotate through work stations, concentrating on high-capacity work stations at peak times. The workload can be flexible, with small groups volunteering for special assignments requiring specialized skills. In other words, improved output in routine testing can allow the laboratory to develop a broader range of services.

Another key development has been the introduction of high-tech hematology and chemistry instrumentation that is easy to operate and requires little maintenance. Much of this technology is designed specifically for the physicians' office market. Does it pose a dire threat to the hospital lab? Not necessarily. The hospital can extend its sphere of influence while actually promoting automated office testing. One route would be to develop contractual arrangements whereby the physician carries out a limited spectrum of testing. In return, the hospital agrees to maintain quality in contracted labs, and provide lab management support to private providers.

These ideas are intended to do more than redirect the flow of reimbursement dollars to the hospital from the outpatient market. They also hold the potential to preserve quality of care from the hazards of rapid-fire reorganization. By looking beyond its traditional turf, the hospital lab can become a force in achieving a seamless flow of patient services between the hospital bed and the ambulatory care setting.
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Copyright 1985 Gale, Cengage Learning. All rights reserved.

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Title Annotation:developing ambulatory care services
Author:Bernstein, Larry H.; Davis, Gustave
Publication:Medical Laboratory Observer
Date:Aug 1, 1985
Words:1462
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