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The rising trend in outpatient testing; hospital labs' marketing efforts are paying off, a national MLO survey finds.

The rising trend in outpatient testing

One important strategy for survival under prospective payment is working. A recent MLO survey of hospital laboratories reveals a significant expansion of outpatient test volume to make up for declines in inpatient testing.

More than 75 per cent of the hospital labs polled had pumped up their outpatient workload in 1985, by an average of 18 per cent (Figure I). A similar percentage expect the growth to continue.

Outpatient test volume fell at only 11 per cent of the labs, by an average of 16 per cent. A number of these labs were losing business to the many hospital lab newcomers in the marketplace.

Inpatient volume had a reverse trend, with declines outnumbering gains. Forty-seven per cent of the hospital labs were down in volume last year, 31 per cent were up. In both camps, the change averaged about 10 per cent.

Smaller hospitals--those with fewer than 200 beds--averaged the highest increase in outpatient testing, 21 per cent, and the sharpest decrease in inpatient testing, 15 per cent.

Outpatient testing is good business, most hospitals have found: It generates a profit for 80 per cent of the labs (Figure II). Another 15 per cent break even, leaving a very small minority that actually loses money in the outpatient arena. Panelists from the 5 per cent of labs with red ink attribute their losses by and large to patient demographics--typically, a high proportion of elderly outpatients, for whom reimbursement by Medicare falls short. Some hospitals located in poorer urban areas cite problems in collecting overdue accounts.

The survey drew responses from 266 hospital laboratory representatives on MLO's Professional Advisory Panel, all at the supervisory level or higher. In line with the outpatient testing trend, 70 per cent of them also reported a 1985 increase in preadmission testing.

Prospective payment obviously brought on much of the redirected activity. Thirty-six per cent of the panelists said changes in their outpatient and inpatient volume were closely related to DRGs, and another 48 per cent said the changes were somewhat related to DRGs; 16 per cent saw no connection.

Nearly two-thirds of the hospital laboratories currently market their outpatient services. Their targets include physicians' offices, nursing homes, clinics, and companies with employee health programs (Figure III). Among the rest of the labs, half plan to launch a marketing campaign this year.

The great majority of laboratories with marketing programs are seeing results. Twenty-seven per cent of the panelists said their efforts have been very successful; 62 per cent, somewhat successful.

Some labs seek assistance from outside public relations or marketing consultants, but most undertake their own drives (with help at times from hospital communication specialists). Use of personal contacts to land outpatient business, primarily through pathologists calling on physicians, is the most favored approach--22 per cent of the labs rely on it. Eighteen per cent of the labs employ another form of direct contact: They send out sales representatives or at least designate a technologist to recruit new business.

Walter I. Hofman, M.D., chairman of the department of laboratory medicine at 214-bed Roxborough Memorial Hospital, Philadelphia, firmly believes pathologists must play an active marketing role. "It makes sense to send the big guns to talk to other doctors," he says. "Pathologists are going to have to act as salesmen in the future." Dr. Hofman spends 3 to 5 hours each week marketing his lab's services and has brought in some 50 new accounts in the past 18 months.

In-house communication expertise enables many hospital laboratories to develop brochures, pamphlets, and lab manuals aimed at different clienteles. A supportive hospital public relations staff or marketing department can make a big difference. An East Coast lab manager gives a good reason for such support: "Our public relations department is well aware of the money generated by our outpatient business." His 225-bed hospital operates its own health channel on cable TV, which provides valuable exposure from a marketing standpoint. In addition, new instrumentation and laboratory services receive coverage in local newspapers.

Hospitals have also enjoyed success with a simple grass-roots approach. Laboratorians appear at health fairs, speak to community organizations, and act as testing consultants to physicians' office staff.

A Virginia laboratory director and his staff increased outpatient test volume at their small hospital by 40 per cent, largely by rallying community backing. "We encourage physicians and nursing homes to help their local hospital by sending their test work to us instead of to the large reference labs," he says.

Several panelists simply phoned physicians to ask for their business. And got it. The laboratory at a 300-bed Kentucky hospital boosted its outpatient volume 52 per cent after letting physicians know it was available to handle their office patients' testing needs. "Whenever we heard a doctor was unhappy with his lab service, we went after the account," the hematology section head commented.

Many hospitals appeal to the loyalty of staff physicians for help in hard times. These physicians generally comply with requests to keep their outpatient laboratory work and other ancillary services "in the family."

Physicians are by far the largest source of outpatient revenue and thus receive the greatest amount of marketing attention. Nursing homes are second. Although these and other markets shown in Figure III are a logical starting point, laboratories with established outpatient programs are beginning to move into less traditional areas.

For example, malpractice concerns have extended into dentistry, and dentists are now ordering hepatitis screens and microbiology and coagulation procedures. Chiropractors are another potential market for such tests as BUN, uric acid, and glucose.

Dr. Hofman of Philadelphia's Roxborough Memorial Hospital reports that industrial clients account for 6 to 10 per cent of his lab's outpatient testing. "We handle preemployment physicals for firms with anywhere from 10 to several hundred employees and also perform spot checks for various drugs of abuse."

The laboratory at 450-bed Holmes Regional Medical Center in Melbourne, Fla., recently began inviting parents to bring their children in for screening for drugs of abuse (the chief pathologist authorizes such testing). The program, advertised in local media, is sanctioned by the Governor's Task Force on Drug Abuse and grew out of the hospital's screening efforts for industrial clients.

In addition, the medical examiner refers toxicology and other testing to the lab. "We've become adept at following the chain of evidence procedures," laboratory director Thomas L. Coe says. The facility has also branched into sports medicine, performing basic workups as part of the routine physical for professional athletes in the area. With the addition of such services, the three-year-old outpatient testing program has grown rapidly, Coe notes. Test volume rose more than 100 per cent in 1985 alone.

At present, most of the surveyed hospital labs perform basic tests for outpatients. Complete blood counts, chemistry profiles, and urinalyses head the list (Figure IV). Some labs want their relatively new outpatient programs to grow in an orderly manner. Others would like to expand their test menus but can't without additional staffing or instrumentation.

Courier service is provided to clients by 55 per cent of the hospital labs. In other cases, physicians' offices send patients directly to the hospital lab or arrange to drop off specimens. Thirty per cent of the labs maintain alternate collection stations, often in a clinic or large medical building. Some have set up satellites to better serve clients in outlying areas.

Programs at 14 per cent of the hospital labs have grown to the point where some staff members work exclusively on outpatient accounts. In 24 per cent of these labs, it's one person, and in 43 per cent, it's two or three. In most cases, the staff member performs specimen collection and courier services or takes care of billing and other paperwork. But 11 per cent of the labs have assigned more than 10 staff members to handle the outpatient workload, generally at a satellite or clinic facility.

Some laboratories offer general consulting services, and a few are working on setting up quality control programs for physicians who prefer to run their own tests.

Pathology consultations--for abnormal results, surgical specimens, etc.--are included in the basic outpatient fee at 65 per cent of the laboratories. Consultations are also available on request but not often sought.

Charges for outpatient and inpatient testing are identical at 58 per cent of the labs. Thirty-eight per cent peg their outpatient rates lower, and 4 per cent, higher.

Several panelists say their hospital labs start with a basic charge for each test regardless of patient status. This charge is reduced for outpatient clients who perform such tasks as specimen collection and billing themselves. Volume discounts for outpatient testing were also mentioned by some panelists.

Although it's an effective marketing tool, discounting can be quite costly. The administrative director of lab services for a large southwestern hospital learned this when offering a bargain rate for Pap smears. the idea was to use the Pap smears as a loss leader to bring in more histology work.

It worked a little too well. Pap smears jumped 80 per cent and were heading toward an annual level of 33,000 orders. "The impact hit within two months," the lab director recalls. "Our two cytologists, who already had a very full workload, were not happy. Worse yet, we had priced the procedure 50 per cent below our costs, which included pathologist time for quality control, an extra one-half FTE in cytology, and an additional clerical person."

The laboratory did receive a lot of extra histology business, for an overall profit increase. But clients probably won't see such attractive discounts for other tests in the future.

Panelists listed changes they had made over the last three years to accommodate outpatient testing. Staff scheduling ranked first (Figure V), followed by test charges, result reporting, laboratory hours, and methods or instrumentation. We have already discussed test charges, and we will explore scheduling in a moment--it comes up as a management problem related to outpatient testing. Figure VI sheds light on the third item in the list of changes by breaking down reporting methods. Outpatient results are conveyed most frequently by phone, mail, and courier.

As for outpatient lab hours, expansion into evenings and weekends fits in with a trend in physicians' offices and ambulatory care centers toward longer weekdays and Saturday appointments. Competitive factors as much as patient needs prompt these changes.

Half the panelists' labs have upgraded their methods or instruments for the outpatient market, and many other panelists wish their labs could. Clients, particularly physicians, are demanding increasingly sophisticated services from their reference labs. "Physicians in our area do the basic lab work in their offices and want us to offer the services that entail purchasing more instrumentation," a supervisor at a small North Dakota hospital remarks.

Panelists say the greatest management problem arising from outpatient testing is how to insure sufficient staffing (Figure VII). Hospitals are still thinking lean even though outreach services may now justify more personnel. "Staffing is based solely on the patient census," says a Midwestern panelist whose lab's outpatient test volume increased more than 20 per cent last year. "That makes it difficult to handle the large outpatient workload efficiently and expediently."

Similarly, a chemistry section head coping with a 15 per cent increase in outpatient volume complains: "Because house census is down, we're not allowed to hire any additional staff members or even replace those who leave. As a result, we have no way to adequately handle the extra work."

Other panelists recite variations on the theme that the lab is more forward-looking than the rest of the hospital. "Our fiscal department is not oriented to a for-profit operation and the rapidly changing events in the lab," the director of laboratory operations at a large Philadelphia hospital says.

A hematology supervisor at a large Connecticut hospital is dismayed by administration's seeming inability to grasp the financial rewards of outpatient testing. Numerous panelists claim outpatient testing could account for a much larger chunk of laboratory workload if only the administration would provide a little marketing support or allow the lab to lower its outpatient fees.

Scheduling for outpatient work is also a management concern, according to 11 per cent of the panelists. Barbara A. Glova, assistant laboratory manager at 359-bed Wyandotte (Mich.) General Hospital, says the morning outpatient rush now lasts from 7 to 10. Her laboratory met this added demand mostly by bringing the day staff in a half-hour earlier at 6:30 or 7 and increasing morning phlebotomy coverage with part-timers. Scheduling one clerical staff member at 6:30 gave the lab staggered office coverage throughout the day.

A New York supervisor came to grips with a suddenly heavy afternoon and evening workload at her small hospital by having the technologist who normally leaves at 4 p.m. stay later when necessary. This adjustment generally solved the problem, but she notes that the technologist scheduled to go home at 6 p.m. sometimes gets stuck.

Outpatient work can be unpredictable. "We can't schedule ahead much of the time," the evening laboratory manager at a small Ohio hospital comments. "The workload is completely unexpected, and we cannot regulate the volume. A nursing home may request 60 tests one day and none the next--and all work has to be done the same day."

"Our policy is to do everything at the convenience of the patient," a New Jersey lab manager says. "Sometimes we're swamped, other times we lose the advantages of batching because we have to run tests singly on our large profiling instruments."

Despite the trials and tribulations, 78 per cent of the panelists expect their outpatient volume to continue to increase, and many look toward the future with enthusiasm. One laboratorian says, "The sky's the limit." Another: "We'll keep on meeting or beating the competition."
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.

Article Details
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Author:Hallam, Kris
Publication:Medical Laboratory Observer
Date:May 1, 1986
Previous Article:Pathologists make strides towards nontraditional testing standards.
Next Article:On the road with a consulting technologist.

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