Building Brand Alignment

Let’s look at the Laboratory again; the ability to build brand, affect radical cost reduction and support strategic alignment.

Among ancillary departments, the clinical laboratory is one of the most complicated department for supply chain managers (SCMs) to manage. SCMs are challenged to control costs and inventory levels for the laboratory because lab supplies may require temperature control, belong to the same manufacturing lot number, may present a biohazard, be ordered infrequently, and may expire in a short period. Fortunately, both the quantitative nature of laboratory science, and predictable workflows within the department enable laboratory department managers to affect cost management and cost reduction with relatively little assistance.

Observations in the marketplace suggest that enlightened SCMs should look at the laboratory again, with the objective to connect cost savings initiatives with the strategy of the hospital and health system, as well as building the brand of the organization. If done correctly, radical cost reduction, improved efficiency, and revenues and profitability growth can be achieved.

How to maximize the impact of the clinical laboratory

Creating opportunities for radical cost reduction requires SCMs to think a little differently. By relying on the core skill set used to manage the supply chain, managers can affect enterprise wide improvements in cost and productivity. This is done by thinking about the laboratory service as a part of the supply chain, instead of a destination for purchased supplies. With this logic, laboratory services can be optimized to affect population health, non-testing utilization management, and creating clinical, operational, and financial integration between owned and non-owned organizations.

1. Align with marketing initiatives and population health management with the laboratory

Health fairs and screenings are a regular part of community activation, but in many cases these events are led by insurance companies and large employers who seek to manage healthcare expenses. Hospitals and physician groups have largely retreated from community events and health fairs, because the apparent return for time and money investment is less than simply focusing on operations within the office or hospital. However, as providers are forced to accept more population health risk, community engagement becomes more important. One of the best resources to deploy in these events is laboratory testing, from rapid screening tests to centralized tests for cholesterol as an example.

Best practices in this area suggest that vendors can also participate in these events (within compliance guidelines), and help defray the costs for testing supplies and reagents. Strategic suppliers in laboratory can also provide more elaborate resources like patient education and advanced testing options like hand held molecular testing systems.

2. Engage the laboratory in developing disease state data analytics

Laboratory test results are a tremendous resource for Clinical Decision Support, and some tests have the ability to directly risk-stratify patients and determine a prognosis. To do this, the laboratory must determine what normal ranges are, and whether cutoff values need to change, on a daily basis. Consequently, running a laboratory requires significant analytical acumen. There is additional potential value in laboratory services for health systems because laboratory tests include both inpatient and outpatient and outreach results. Utilizing this larger results set extends the reach of disease state data beyond that of the EMR of the facility or health system. Therefore, the opportunity to leverage the laboratory in cost-effective disease state management is large. Cardiac markers for heart failure for example can be used to more efficiently manage patients in the appropriate setting, as well as indicate areas where patients were treated in the wrong setting; e.g. low levels of cardiac markers suggest that outpatient treatment is a far better option than inpatient treatment. Medical policy makers can directly benefit from laboratory test result analytics to support changes in care pathways. Unfortunately too many laboratory directors are preoccupied with responding to physician demands instead of proactively engaging clinical decision makers with population test result data.

3. Optimize test utilization by integrating testing with owned and non-owned entities

Consolidation in the healthcare market has created a state of increased competition between providers. Competition for prime payer relationships, physician relationships, patient populations and consumer preference is straining resources and revenues for providers. Consequently, inter-organizational integration without ownership is a growing trend. Not-for-profit and for-profit providers are blending operations and utilizing each other’s brands to create a stronger competitive position. In these situations, one of the first functions to integrate is clinical laboratory testing. Enlightened SCMs in collaboration with laboratory department directors can examine utilization, testing patterns, and costs in parallel. Doing this always produces opportunities to shift testing from one setting to another to take advantage of economies of scale, better testing proficiency, and under utilized capacity.

Furthermore, the development of a co-owned reference laboratory has also been observed. In these cases, costs can be reduced by 20-40% and service levels can be maintained. Additional capacity can also be used to create a revenue stream for the participating organizations.

All together, taking a fresh look at the laboratory as a part of the supply chain, instead of a destination for supplies can enable healthcare organizations to affect radical cost reduction and improved competitiveness in today’s marketplace.