CEO SUMMARY: Demand for specialized reference and esoteric testing is so robust at Dartmouth Hitchcock Medical Center in New Hampshire that the academic center is building an expanded laboratory facility to accommodate the increased volume of tests it handles each year. A favorable trend supporting these developments is the steady decline in the cost of performing molecular testing. This is particularly true for assays that utilize next-generation gene sequencing technologies.
ACADEMIC MEDICAL CENTERS are well situated to be important regional sources of reference and esoteric testing. One example of this trend is Dartmouth Hitchcock Medical Center (Lebanon, New Hampshire) and the Geisel School of Medicine at Dartmouth in Hanover, New Hampshire.
In fact, the robust demand for advanced lab testing is one reason why DHMC is about to spend $116.5 million on a new six- story building that will house laboratories for molecular pathology, microbiology, and translational research.
The expansion of laboratory testing at DHMC is an excellent example of how a pathology department at an academic medical center can generate specimen referrals for reference and esoteric tests across the immediate region it serves. In this case, the lab at DHMC serves physicians in New Hampshire and parts of Vermont.
“As a regional medical center located between Boston and Montreal, we treat a large number of patients who are very sick,” stated Gregory J. Tsongalis, Ph.D., HCLD, CC, Director of Molecular Pathology and Co-Director of the Translational Research Program in the Department of Pathology at the 396-bed DMHC. “These patients are referred to us from smaller hospitals, often after clinicians were unable to identify the clinical problems for cases that are often very complex.”
Demand for specialized testing at DHMC is such that hospital administrators estimate that the medical center will recoup its $20 million investment in the new clinical laboratory in eight years. “That is a realistic goal,” commented Tsongalis.
Increased Specimen Volume
“Our current lab facility was built in 1993,” he noted. “Since 2004 the volume of tests has more than doubled and the number of specimens is increasing at a steady pace.
“For these reasons, we are becoming more of a regional reference lab, particularly in the automated areas such as hematology, clinical chemistry, and microbiology,” Tsongalis said. “Other hospitals send us tests they can’t do or because we can offer them better pricing through our expansive outreach program that we maintain with all the hospitals in the area.
“Expansion of our laboratory facility is also needed so we can set up new tests that we currently send out,” he continued. “The current budget for send-out testing is $8 million annually. That is a big number and we expect to bring it down by keeping those tests in house when we expand.”
In the current lab facility, the 300-member Pathology Department has about 25,000 to 30,000 square feet. In the new facility, space devoted just for molecular pathology and microbiology will total 15,000 to 18,000 square feet, Tsongalis said.
“Molecular and genetic testing is our biggest area of growth,” he noted. “These new molecular diagnostic tests also happen to make up the majority of our send-out test costs. Of that $8 million send-out bill, a significant amount goes to about 15 to 20 small esoteric labs that do just a few gene tests.
Evaluating Send out Costs
“Our cost may be from $2,000 to $10,000 per test for these send-outs,” explained Tsongalis. “Thus, there is immediate financial benefit when we can perform these assays in our lab.
“Of course, specimen volume plays a role in determining which send out tests we can shift into our lab,” he stated. “There are the tests for unusual conditions that we typically see only once or twice a year. Those we would continue to refer to outside laboratories. But for everything else, we expect to do those tests in house.”
Tsongalis said the ongoing improvements in diagnostic testing technologies are benefiting their laboratory. “A big game changer in molecular and genetic testing is the technology for next-generation gene sequencing,” he said. “That technology is allowing us to quickly sequence a lot of genes at a very low cost.
“The cost of this technology has come down dramatically in recent years,” noted Tsongalis. “You see that in the declining prices for the next generation sequencing instruments manufactured by Illumina and Life Technologies, among others.
“This is a benefit to our molecular lab in two ways,” continued Tsongalis. “First, gene sequencing equipment is relatively inexpensive today compared with the cost of other analyzers that we have in the diag- nostics laboratory. Second, our experience is that the cost of next-generation sequencing and other molecular testing is declining steadily.
“That’s why we review our send-out testing each month,” he said. “We track those numbers over time. If a particular test is high volume, then we’ll consider bringing that test in. If it’s a lower volume test—but the cost of sending it out is so high that it will be prohibitive—then we will consider bringing that test in as well.
“Within molecular diagnostics, our fastest growing area is in oncology,” noted Tsongalis. “In fact, at an April retreat for the staff at the cancer center, we presented our newest data on the tests we can run using next-generation sequencing applications. This retreat gave our oncologists their first look at new ways of detecting the disease and new information for tailoring therapeutic management strategies for our patients.”
In the new building, molecular pathology and microbiology will occupy the fourth floor. “The other five floors will house translational and investigative research,” observed Tsongalis. “Our institution recognizes that pathology must be involved to have a successful translational research program. It is impossible to transition basic science discovery into clinical practice without the involvement of pathology. Our department bridges that gap.”
Construction of a new lab facility to support the sustained growth in molecular and genetic testing at Dartmouth Hitchcock Medical Center shows that academic medical center labs can successfully develop a robust lab outreach business within the region that they serve.