Cautious Optimism Seen At Executive War College

Growth in precision medicine balances concern about cuts to lab budgets, test prices

CEO SUMMARY: Among the major themes to emerge from the more than 60 sessions and 100 speakers at this year’s Executive War College on Lab and Pathology Management were the accelerating pace of integrated care, the growth of precision medicine, and use of big data to guide physicians. Other issues centered on labs’ need to prepare for Medicare fee cuts coming in 2018 and how pioneering labs and pathology groups are creating new business models to add more value.

THERE WAS CAUTIOUS OPTIMISM among the 900 clinical lab managers and pathologists gathered in New Orleans earlier this month for the 22nd annual Executive War College on Lab and Pathology Management.

The caution stems from recognition that the nation’s clinical labs and pathology groups face challenges from several sources, the most significant being the substantial revenue erosion coming from reductions to lab budgets and test prices.

The optimism springs from the growing awareness that now—more than ever—hospitals, physicians, and payers need the clinical expertise that only lab professionals can bring to diagnosis, selection of the best therapies, and patient monitoring. Research into the human genome, proteome, microbiome, and other relevant “omes” reinforced that optimism by fostering the development of new diagnostic assays that allow labs to deliver more value. Each generation of new assays is expected to have the capability to accurately detect disease and to improve therapeutic decision-making.

For attendees at the Executive War College, the optimism outweighed the caution for a simple reason. They recognize that healthcare’s swift transformation requires a robust clinical laboratory and pathology service for success.

“By now, it is obvious to the clinical lab industry’s best strategic thinkers that this country’s healthcare system is moving at unprecedented speed toward: new models of care delivery, new forms of provider payment, and rapid growth in the use of precision medicine and the use of big data analysis,” stated Robert L. Michel, Editor-in-Chief of THE DARK REPORT during his speech on day one of the Executive War College. “Precision medicine cannot succeed without the provision of robust, high quality lab testing services.

Precision Medicine

“Physicians’ acceptance of precision medicine is the opportunity that clinical pathologists, clinical chemists, and lab administrators have wished for during the past 25 years,” he continued. “Year after year, at lab meeting after lab meeting, pathologists and others would take the podium and point out that lab testing is only 3¢ on the healthcare dollar, but involved in the majority of decisions to treat and monitor patients.

“Yet, since the mid 1990s, these calls to action produced little change among the nation’s labs,” noted Michel. “That is no longer true. Today, a small, but growing, group of innovative labs is breaking with tradition and doing radically different things. Their common goal is to get outside the four walls of the lab and engage with clinicians to improve patient care.”

One example of such innovation involves the lab divisions of five nationally-prominent health systems. They have organized under the name Project Santa Fe and are working individually and collaboratively to implement clinical programs that help physicians improve their use of lab tests and lab test data in ways that contribute to better patient care.

Value-Based Lab Model

The Project Santa Fe members are publishing the first of these clinical improvement studies in peer-reviewed journals. They have also articulated a value-based model for labs that they call “Clinical Lab 2.0.”

Speakers explained all of these themes during the opening general session of EWC. First to speak was Shubham Singhal, Senior Partner and Global Leader of McKinsey and Company’s Healthcare Systems and Services Practice. He provided a strategic overview of the changes happening to healthcare in the United States.

Singhal discussed two trends that are having an effect on clinical labs. He said that “atomization of networks” was a major trend. He showed data demonstrating how, each year, health insurers report narrow networks reduce costs, allowing insurers to offer lower premiums. As a result, narrow networks are here to stay. Therefore, labs—and other providers— that want to be in these networks must develop clinical services that improve patient care and lower costs.

New Business Models

Singhal also explained how healthcare needs new business models and new regulations to make these models possible and how these models could affect labs. Examples of these new business models are ambulatory surgery centers and retail clinics that are contributing to better patient care at less cost.

In response to Singhal’s call for new business models in healthcare and lab testing, Khosrow Shotorbani, CEO of Tricore Reference Laboratories of Albuquerque, N.M., introduced the concept of “Clinical Lab 2.0” that members of Project Santa Fe are developing.

He was followed by Myra Wilkerson, MD, Chair, Division of Laboratory Medicine at Geisinger Health in Danville, Penna. She discussed the range of new clinical service initiatives at the health system, including the creation of a “food pharmacy” as one way to improve population health in a proactive manner.

Lab administrators and pathologists who want to hear these sessions, and the more than 60 other EWC presentations, can obtain audio recordings online at: www.executivewarcollege.com.

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