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The impact of DRGs after year 3: how labs continue to cope.

The impact of DRGs after year 3: How labs continue to cope

Among ways hospital laboratories cope with prospective payment, computerized test ordering and result reporting have expanded substantially during the last year. They can help cut turnaround time, or at least prevent it from getting worse when volume rises or staffing shrinks.

Since Diagnosis Related Groups began, 25 per cent of hospital labs have gone on systems that enable them to receive test orders via computer, our 1986 survey indicates. This compares with 12 per cent in last year's DRG study. Computerized result reporting is also more widespread, instituted by 36 per cent of the labs, versus 22 per cent last year.

"Our laboratory's minicomputer, with interfaces to instruments and the hospital information system, provides instant answers,' said the manager of a mid-size hospital lab in the Southwest. "Nurses don't have to call us as much as they used to. They can look first in their terminals for the results.'

At a 220-bed hospital laboratory in New Jersey, acquisition of automated instruments led to a significant expansion of testing without any increase in staff. The laboratory computer system keeps results flowing smoothly, and reports (including cumulative summaries) maries) have a better format than in the past.

In some cases, however, turnaround time may increase because of computer requirements. The administrative laboratory director at a 230-bed hospital in the Midwest said her lab has no information system of its own but reports test data through the hospital information system. Laboratory personnel have to keyboard the results into the HIS, including those from automated instruments. "Before, we would just write the results on a test slip,' she said.

We'll look further at computerization later in this article. In another step related to the demands of prospective payment, 45 per cent of the surveyed labs have altered request forms to make physicians write out the tests they want instead of letting them check off items from a menu. This compares with 35 per cent last year. And 24 per cent of the labs require medical department approval of requests for certain tests, up from 18 per cent in 1985.

Otherwise, there was little or no change from 1985 to 1986 in lab use of the DRG operational tactics listed in Table I. Preadmission testing increased at 68 per cent of the hospital labs this year, matching the 1985 level; fewer or no mandatory admission tests are the rule at 52 per cent of the labs, up from 50 per cent in 1985; the same proportion of labs have eliminated routine ordering for certain other tests, also a rise of 2 percentage points from last year; and 15 per cent of the labs perform automatic follow-up testing under protocols agreed to by the medical staff, compared with 16 per cent in 1985.

What's happening outside the hospital is as important to laboratories as these internal measures. In the 1985 survey, 63 per cent of the laboratories had tried marketing their services to outpatient providers. This year, the proportion is up to 77 per cent (Table II), and nearly one-third of the rest have definite plans to start marketing in the future.

Physicians' officers continue to get the most marketing attention, targeted by 90 per cent of the laboratories. Nursing homes (68 per cent) rank second, followed by ambulatory care centers (41 per cent) and veterinarians (29 per cent). Hospital laboratories are also marketing their services to other hospitals, health maintenance organizations, companies, universities, government agencies, dentists, and drug and alcohol centers, among other potential sources of business.

Large and small hospital laboratories are equally interested in physicians' offices. Smaller hospitals --those with fewer than 300 beds--are more active in pursuing nursing homes (75 per cent versus 53 per cent of larger laboratories), while large hospital labs lead in seeking test orders from ambulatory care centers (53 per cent versus 31 per cent).

Business-building strategies range from providing courier service to making phlebotomy house calls, opening drawing stations, setting up satellite labs, and installing computer terminals for rapid reporting of results. On the promotional side, labs are writing newsletters, publishing catalogs of available tests, running newspaper ads, and even producing videotapes about their services.

To gain patient referrals, North Carolina Memorial Hospital, a 597-bed institution in Chapel Hill, launched a free telephone consulting service by mailing literature about its staff physicians to doctors in several states.

In Cottonwood, Idaho, 28-bed St. Mary's Hospital conducted a survey and learned that many area residents were traveling to hospitals as far as 60 miles away because they didn't know what their own nearby hospital could do. The hospital began running newspaper ads and created a speakers bureau. Literature profiling the various speakers also describes the laboratory and other ancillary services.

"People are glad to know that they can come to us instead of driving all the way to the reference lab just to have their blood drawn,' Cindy Glover, assistant chief medical technologist, said. "We still send out some tests, but our laboratory performs many common procedures on these walk-ins. The lab is busier than it has been in 20 years.'

Most panelists say their marketing programs are working. Seventeen per cent rate the programs very successful; 68 per cent, moderately successful; and only 15 per cent, unsuccessful. Panelists from smaller laboratories were more critical of their marketing attempts--23 per cent rated them unsuccesful, compared with just 3 per cent at larger labs.

A laboratory supervisor at a small Mississippi hospital credited strong community spirit with boosting test volume by 40 per cent over the last two years. "We put out a plea to support the hometown folks, and the residents really responded,' he said. "The local home health agencies came on board, and 75 per cent of the hospital physicians now use us as their reference lab.'

Brian Balddridge, Stat lab supervisor at the 963-bed Charleston (W. Va.) Area Medical Center, said steadily rising outpatient volume made it possible to retain most of the laboratory's staff after prospective payment reduced test demand for inpatients. Six months after going on DRGs in 1984, the hospital established a for-profit subsidiary to market the lab. "The increase in outpatient testing brought as back up to pre-DRG volume and kept both the staff and our high-volume instruments working.'

Commenting on competition with reference laboratories for outpatient business, a Texas panelist said: "We know we can't match their prices, so we try to beat them by offering better service.' This panelist's hospital recruited DRG cases from local physicians as a loss leader. "Along with the less profitable DRG tests, we have gradually picked up their other business.'

A 220-bed Florida hospital also went after Medicare patients, and its laboratory lowered prices. "We undercut the reference lab, slashing outpatient fees by 60 per cent,' the laboratory manager said. Outpatient test revenue doubled during a nine-month period in 1985 and went up another 50 per cent in 1986. The hospital also processes 40 specimens a week for a drug treatment center.

Fifty-three per cent of the panelists said their laboratories' test charges have gone up during DRGs. Charges remained unchanged in 42 per cent of the labs; only 5 per cent posted reductions.

We also asked about three specific cost-saving moves. As Table III shows, 72 per cent of the surveyed labs sought competitive bids from reference laboratories, compared with 70 per cent in last year's survey, and more than half banded together with other hospital labs to take advantage of bulk purchasing discounts, up from 42 per cent last year. Only 23 per cent of the hospital labs shared in-house testing services with other laboratories, down from 28 per cent last year.

Sixty-one per cent of the labs in DRG hospitals have microcomputers and/or a laboratory information system, up from 55 per cent last year. Computers are more often found in larger hospitals (81 per cent) than smaller hospitals (48 per cent). Two-thirds of the computerized labs interface their systems with automated instruments or the hospital information system.

Thirteen per cent use their laboratory computers to monitor costs, and 15 per cent to monitor physicians' test ordering per DRG or per case--about double last year's rates for these applications. Such monitoring is more widespread than these figures indicate, since hospital computers perform the same functions.

By computer or other means, 55 per cent of the panelists' hospitals currently regulate their physicians' test ordering per case or DRG (Table IV). In descending order of frequency, it is done through hospital committees, a DRG coordinator, administration, computerized audits, pathologists, medical department heads, and peer pressure.

When asked to assess the success of attempts to curb unnecessary test orders, 6 per cent of the panelists said they were very successful; 63 per cent, somewhat successful; and 31 per cent, unsuccessful. These figures are practically identical to last year's.

Some panelists troubled by overordering call their clinicians "prima donnas,' complain that the laboratory doesn't have enough clout to take on the "old guard,' and criticize "wishy-washy' administrators who won't enforce restrictions.

Plain ignorance is blamed as well. When one hospital scheduled an in-service on DRGs for the medical staff, no one showed up.

But panelists also note more understandable reasons for heavy test ordering by physicians. Many doctors practice defensive medicine in an effort to avoid malpractice actions. And many fear that reduced testing will compromise the quality of care.

Laboratories in teaching hospitals are frequently plagued by excess test orders. The director of one lab said faculty members insist their students have freedom of ordering. "Students are responsible for 50 per cent of all orders. Fifteen per cent of these tests are totally unnecessary, and we can't do anything about it.'

What do laboratory directors, managers, and supervisors think are the biggest DRG problems they will face in 1987 and beyond? Continued staff reductions and overwork, according to 30 per cent. Twenty-six per cent fear budget cuts in general; 23 per cent cite quality and productivity concerns; 13 per cent say morale will slide; and 9 per cent forecast a tough fight to upgrade or replace laboratory instruments. Other concerns include a decline in test volume, decreasing revenue or reimbursement, the lack of physician compliance with ordering guidelines, and uncertainty about the future, including the "threat' of mergers or consolidations.

It should be noted that 7 per cent of the panel members think the worst has passed. Some even look forward to the future. "DRGs have helped us,' said one manager whose lab was recently consolidated will another. "We now have more volume, more authority, more control, and better leverage to deal with vendors. We have much more influence than we had before DRGs.'

Don Campbell, chief chemist at 321-bed Allegheny Valley Hospital in Natrona Heights, Pa., also believes DRGs may have been a blessing. "Managers must now operate the lab in a businesslike manner. If we don't, administration will get someone who will.'

Table: I Tactics tried by hospital labs since DRGs

Table: II Has the lab sought to market outpatient testing?

To what markets?

How well has marketing worked?

Table: III Strategies for savings under DRGs

Table: IV Are clinicians monitored for test orders per DRG?

Which of the following help regulate ordering?

How effective are these efforts?
COPYRIGHT 1986 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1986 Gale, Cengage Learning. All rights reserved.

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Title Annotation:diagnosis related groups, part 2
Author:Hallam, Kris
Publication:Medical Laboratory Observer
Date:Dec 1, 1986
Previous Article:The impact of DRGs after year 3: doing more with less.
Next Article:A large-scale screening program for colorectal cancer.

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