CEO SUMMARY: Two recent Internet surveys revealed that consumers rank access to their personal lab test results as the number one most wanted feature in healthcare services. This is an early warning for laboratories and pathology group practices. Today’s consumers have changing expectations about the types of services they want their clinical laboratory to provide. Caresoft, Inc. is one of several companies that want to capitalize on this consumer trend.
HEALTHCARE E-COMMERCE will have far-reaching impact on the organization of clinical laboratories and the way they deliver testing services to physicians, patients, hospitals, and payers.
There is a simple reason why this is true. The majority of information in the individual patient record which retains long-term clinical value to doctors is a patient’s laboratory test data. Any company which intends to use the Internet to offer healthcare services quickly finds out that, to be successful, it must somehow include laboratory test data in its product mix.
This was certainly the case at Caresoft, Inc., one of the first Internet health companies to establish a credible national presence. Earlier this year, Quest Diagnostics Incorporated began to allow its patients to use Caresoft’s web site, mydailyapple.com, to access and view their laboratory test results.
THE DARK REPORT believes that Caresoft offers laboratory executives and pathologists early insights into two important trends. One trend is the arrival of companies that want to improve healthcare services through Internet-based products and services. The second trend is consumer involvement in all aspects of their healthcare, particularly laboratory testing.
Because of its relationship with Quest Diagnostics, Caresoft is now offering “online retrieval of personal lab test results” to a potential pool of as many as 80 million people across the United States. This gives Caresoft (and Quest Diagnostics) daily experience with changing consumer needs and expectations.
“Caresoft was founded four years ago,” stated Jagjot (JJ) Singh, President and CEO at the San Jose-based company. “From the start, our mission has been simple. We want to strengthen the bond between patients and their physician providers. In our view, it is information which ‘glues’ together the various pieces of the healthcare community.
“We recognized what most people in clinical laboratories already know—there are big gaps in how information is collected and flows between providers, patients, and payers,” observed Singh. “Because our focus is specifically on the patient-physician relationship, we chose to emphasize services dealing with clinical information, such as lab test results.”
Caresoft’s interest in clinical information, and lab test results in particular, came as a direct result of its first physician/patient Web sites. These were launched in April 1997 at several locations around the country, including Massachusetts General Hospital and the Joselyn Diabetes Center.
“This was a real eye-opener for us,” noted Singh. “It was immediately obvious that several things were not working to the doctors’ advantage. We found that physicians were open to on-line sharing of clinical information amongst themselves, one-on-one. But the two major barriers for expanding this activity are legal restrictions governing the practice of medicine across state lines and the lack of reimbursement for on-line medical services.
“Those are two big reasons why most doctors are unwilling to spend time each day emailing their patients,” he continued. “But these early experiences helped us to identify some particularly useful benefits we could contribute to the doctor-patient relationship.
“We realized that there was a way for an intermediary to become a trusted agent for both parties. The objective is to share information at the right level with the right people. And it was very obvious that the number one place to start was with clinical laboratory data. Patients not only want to know immediately when their lab test results are available to discuss with their physician, but growing numbers of patients want to see their test report and understand what the lab test numbers mean in relation to their particular health situation,” observed Singh.
Building from its experience with these early patient/physician Web sites, Caresoft decided to concentrate on improving the way clinical information was distributed and accessed by physicians, patients, and other relevant parties. Clinical lab tests were the obvious starting point because of the huge volumes of tests ordered daily.
“Quest Diagnostics was observing the same shift in consumers’ needs and expectations,” recalled Singh. “Working with them, we developed a way for patients to access and view their laboratory test results through the mydailyapple.comWeb site, beginning in April 2000.
“We plan to expand the types of clinical information we handle for physicians and patients during 2001. This will include pharmacy in addition to lab test results,” he added.
When implementing its lab test reporting service, Caresoft was forced to deal with two obstacles. The first involved state laws governing the ordering and reporting of medical lab tests. The second involved ethical and related issues from certain types of diagnostic tests.
State Laws Restrict Access
“It won’t surprise anyone in the clinical lab world that some states have laws restricting the access patients have to their own laboratory test results,” Singh commented. “These laws have a significant effect on us. Probably 14 to 16 states do not allow patients to access their test results through any mechanism other than a personal visit to their physician.
“Another serious issue involves lab tests for highly sensitive medical issues, such as cancer tests, pregnancy tests, and sexually-transmitted diseases,” he noted. “Certainly these are situations where the test results are best shared in an appropriate physician/patient setting.
E-Commerce Companies Recruit Lab Executives
WHEN HEALTHCARE E-COMMERCE COMPANIES decide to offer services involving clinical laboratory test data, they frequently recruit executives from the clinical laboratory industry.
At Caresoft, the position of Chief Operating Officer (COO) went to Ed Gallo. Gallo is a veteran of the clinical laboratory industry. He was Vice President of Healthcare Informatics at SmithKline Beecham, PLC. Prior to that, he was an executive with Corning Medical Informatics and MetPath, Inc.
Caresoft President and CEO Jagjot (JJ)Singh has a background in information management and systems integration in healthcare. Prior to Caresoft, he was General Manager of Teknekron Healthlink Systems, a healthcare data warehousing company.
“In both cases, these are serious and complicated issues that need resolution,” continued Singh. “More than one year has been spent working with lawyers at the state and national level to insure that both Caresoft and Quest Diagnostics handle lab test results in a manner which is highly ethical and absolutely legal.
“We have invested considerable resources into the areas of security, privacy, and confidentiality,” he said. “Each is a separate challenge. We have upwards of ten specific security elements built into every aspect of our company. These include everything from user authentication to digital encryption.
“Also, to my knowledge, we are the only company in the industry to retain an outside company to do a privacy audit. PricewaterhouseCoopers is doing quarterly privacy audits and we post the results on our Website,” added Singh.
In launching this consumer-focused service, both Quest Diagnostics and Caresoft were navigating unexplored waters. No laboratory had ever tried to offer such large numbers of consumers the opportunity to access their personal lab test results. Moreover, consumers were unaware that it might even be possible to gain direct access to their lab test results.
Concept Is Validated
“Even we were surprised at how readily patients responded to the opportunity to view their own test results,” marveled Singh. “Internet polling and consumer focus groups had validated this concept, but the reality certainly outpaced our expectations.
In fact, Singh brings up a point which should be of high interest to both laboratory executives and pathologists. “Even as recently as nine months ago, consumers did not know that a service like this was even feasible. When many Internet polls asked ‘What healthcare services do you want on-line?’, it would list ten items, none of which included lab test results.
“About four months ago, three different surveys were conducted and each asked this question ‘Do you want lab test results?’,” added Singh. “In two of the three surveys, access to personal lab test results ranked #1 with consumers. It ranked #3 in the remaining survey.
“Moreover, in one poll, consumers ranked getting lab test results higher than getting e-mail from their doctor,” he noted. “Moreover, 25% of the population said they were willing to pay to have access to their personal lab test results! This is certainly compelling evidence that consumers’ expectations are changing in a big way.”
Making lab test results available to patients is only part of the implementation project. The way Caresoft communicates with physicians is equally important. “As we launched this service, we did pilot projects in a number of regions to study and understand how consumers and physicians would react to this service,” said Singh. “We’ve learned that it is equally important to involve the doctors and keep them in the loop.
“Our research during these pilot studies indicated that as many as 70% of the doctors wanted to offer this type of service to their patients,” noted Singh. “Doctors could see two benefits. First, it would save time in their offices because it would reduce the number of incoming and outgoing calls to find out whether lab test results were back and what they were. Second, it established a stronger bond with the patient and demonstrated that the physician was providing more services to the patient.”
Acceptance By Physicians
According to Singh, both consumers and physicians have embraced the concept of direct access to personal lab test results because of evolving expectations in the marketplace. “Nationally, we see consumers shifting from a traditional position as a reactive and passive patient. Increasing numbers of patients are becoming proactive. They are taking an active role in their personal healthcare and that of their family members. The weapon they are using is information. It’s just that simple.
“We are in the early stages of a profound shift in healthcare practices,” noted Singh. “Traditionally, the healthcare system reacted to elementary data. This is no longer adequate. The need is for ‘value-added’ information which empowers patient and physician alike. Laboratories, as ‘data- producing factories,’ must react to this shift if they are to succeed.
“More specifically, it will no longer be adequate to print a numeric value of, say 240, on a test result report and leave it to the doctor and the patient to determine what that means and how to respond to it,” predicted Singh. “The market will soon want another six or seven layers of value added to that raw data to make it an easy-to-use service for consumers. Our role is to help laboratories and physicians boost the value of lab test information to increase the way it benefits their patients.”
It is important to understand that lab test result reporting is only one service that Caresoft is developing. The company is actively moving forward with services involving pharmacy, clinical trials, payer-provider-patient communications, and biotechnology. This is consistent with its mission of enhancing the patient-provider bond.
More Lab Relationships
Now that Caresoft has demonstrated the viability of its laboratory test results reporting service targeted at patients, it is developing business relationships with more clinical laboratories. “We wanted to spend the time to make sure we understood every part of the value chain and the business model with a partner such as Quest Diagnostics, but it is our intent to offer this service to any and all clinical lab- oratories,” declared Singh.
“Agreements with other laboratories are in various stages of negotiation,” he added. “As agreements are finalized we have the capability to swiftly get our new laboratory customers on-line with their physicians and patients. It requires two things.
“First, we need to connect our technology to the laboratory so the data can be transferred in a secure manner. Second, the lab simply needs to announce to its physicians and patients that the service is available,” explained Singh. “We can accomplish both items in a matter of weeks and we intend to replicate it across other sites.”
Evolving Pricing Model
Caresoft currently has sales reps in the field calling on potential laboratory clients. The pricing model is evolving and closely tied to volume. “We’ve driven the cost down to a very low level because we want it to add value for the laboratory and its patients and physicians. Labs who understand the value chain and how to use this to strengthen their relationships with doctors and consumers will be fastest to adapt this to their strategic business plan.”
Caresoft and similar healthcare e- commerce companies represent both an opportunity and a threat for the lab- oratory industry. As an opportunity, such companies represent business tools for progressive lab executives to use to increase the added-value benefits of the raw lab test data they generate in the laboratories.
As a threat, these companies represent the competitive market forces which will create new groups of winners and losers from today’s existing laboratory organizations. Labs that respond to the healthcare system’s demand for enhanced laboratory test information products and services will prosper. Labs which are slowest to react will find themselves at a competitive disadvantage.
Another Wild Card
This is occurring because consumers (as patients) and physicians are changing. As users of laboratory testing, they are changing their beliefs about what constitutes a high-quality, high- service clinical laboratory. As lab users come to expect higher levels of services, laboratories must respond with services that meet and exceed the higher expectations of their patients and physicians.
The arrival of Caresoft and similar healthcare e-commerce companies is evidence that the marketplace is receptive to enhanced lab testing services, and willing to pay for them if necessary!