CEO SUMMARY: Described by its CEO as “an information company that happens to do laboratory testing,” PeaceHealth Laboratories of Springfield, Oregon, is moving swiftly to develop and deliver value-added services to its client physicians. The lab’s goal is to help referring doctors achieve improved patient outcomes.
HEALTHCARE IS CHANGING RAPIDLY, and perceptive pathologists and laboratory directors recognize that clinical labs must do more than simply deliver lab test results quickly and accurately. Today, all laboratories need to offer useful, actionable information to their client physicians.
Two distinct forces are driving this marketplace change. One is the transition from fee-for-service reimbursement to value-based reimbursement. This factor alone has major implications for how labs are organized and deliver clinical services in the coming years.
The second force is equally significant and the subject of this intelligence briefing. It is the transition to integrated clinical care and is best illustrated by the formation of accountable care organizations (ACOs) and patient-centered medical homes (PCMHs).
Physicians practicing in these settings not only need timely and accurate clinical laboratory test results, but they also need something that labs are perfectly positioned to provide: helps physicians to improve patient outcomes and control the cost of care. Without this information, physicians could be penalized for going over budget or could be unable to share in any savings that represent a considerable proportion of reimbursement.
Clinical laboratories that recognize this changing environment are moving to deliver useful and actionable information to physicians. Among them is PeaceHealth Laboratories, in Springfield, Oregon.
“Early on, PeaceHealth Laboratories began developing several strategies to help clinicians in ways that add value,” stated Ran Whitehead, the lab’s CEO and Chief Mission Officer. “One strategy involves building a data warehouse. This is both an internal and external strategy because it helps us within the lab. It also creates new ways for us to support physicians, patients, and providers in our service area.”
Whitehead made these remarks during his presentation at THE DARK REPORT’S 18th Annual Executive War College last spring in New Orleans, Louisiana. In his presentation, Whitehead explained the specific ways that PeaceHealth Laboratories is positioning itself to deliver useful information as physicians join PCMHs and ACOs.
PeaceHealth Laboratories already has innovative service offerings, such as physician scorecards that support improved patient outcomes and identify the physician’s use of obsolete tests. It now offers a patented and proprietary pain management assay that delivers improved detection for a wider range of drugs. It is also developing different physician and patient portals that can be accessed by mobile applications.
In fact, PeaceHealth Laboratories is building the foundation needed to be a player as “big data” assumes a larger role in the healthcare system. “We’ve already spent hundreds of thousands of dollars developing a data warehouse,” noted Whitehead. “We are using it to mine information in new and creative ways for our customers.
“This data warehouse launched with a valuable asset,” he said. “Our laboratory information system (LIS) has 16 years worth of data on patients throughout the Pacific Northwest. That’s a lot of laboratory information that our providers are anxious to use to improve patient care.
“In addition, we added a business intelligence (BI) capability on top of that data warehouse,” stated Whitehead. “Business intelligence allows more people on our lab’s front line—in real time—to get detailed answers to the questions they have and improve our service to physicians.”
The laboratory is part of a large health system. “Our parent is PeaceHealth,” he noted. “This is a $2.5 billion organization with a network of hospitals, physician groups, clinics, and laboratories in Oregon, Washington, and Alaska.
“In the health system, there are about 16,000 employees, whom we call care-givers,” he continued. “In that number are more than 800 physicians. The number of physicians has risen sharply in the past few years from 250 or so to the current total.
Serving a Wide Area
“Our central laboratory facility is in Springfield, Oregon, and we have 11 other laboratories interspersed around the Pacific Northwest, particularly around the hospitals that we serve, some of which are in very rural areas,” explained Whitehead. “We operate 27 patient service centers in and around all those locations. About 1,000 caregivers work in our clinical labs.
“There are 45 pathologists in four pathology groups that work with our laboratory,” he added. “Three are contracted groups: Lower Columbia Pathologists, NW Pathology, and Pathology Consul-ants, PC. The fourth group is called PeaceHealth Southwest Medical Center Laboratory and Pathology. Pathologists in this group are employees.
“This year, our laboratories will do about seven million billed procedures and generate about $120 million worth of net revenue,” said Whitehead. “About half of this revenue is from our lab outreach program that serves physician offices outside of the PeaceHealth system.”
In recent years, the lab team recognized the shifts taking place in healthcare. “At that time, the laboratory administrators had a strategic retreat in which we talked about how to prepare for the future,” recalled Whitehead. “We tried to answer a series of questions, including these: Should we aim to be the highest-volume and lowest-cost provider lab? Should we try to do every test known to man, as is done by Mayo Medical Laboratories and ARUP Laboratories?
“Our answer to these questions was, no,” he said. “We concluded that the asset our lab has is information and we should leverage that as a way to add value.
Adopting a New Mission
“That became our tagline and mission: As a laboratory, we are an information company that just happens to do lab tests,” noted Whitehead. “Plus, who is in a better position to be an aggregator of laboratory information than laboratorians?
“In order to provide information that makes a difference, every lab must first do other things well,” commented Whitehead. “One element is a strong menu of the best diagnostic tests that can be processed at a low cost and with excellent turnaround time (TAT).
“Regarding TAT, we aim to produce results for our outpatient clients in less than two hours,” he said. “That is measured from the time the sample arrives at our laboratories until the results leave. We have consistently been above 99% for five years. In 2009, we were at 99.4%, and this year, we are at 99.7%. One part of our strategy to achieve this goal included hiring a full time process improvement individual,” stated Whitehead. “He taught our lab teams how to improve using Lean technologies. It is one of the best investments we’ve made.
“Another success factor is for a lab to maintain a low cost per test,” he added. “Our fully-loaded average cost has been under $19 for the past five years and is about $18.37 this year.
“For many labs, this number would be high,” he stated. “But within these numbers are the costs for us to operate laboratories across a large service area that includes rural communities.
“For example, our lab in Ketchikan, Alaska, operates 24/7 and is in an expensive market,” observed Whitehead. “What is important is that our laboratory organization has continously driven down our unit costs over a multi-year period.
“At the same time, our staff productivity has risen continuously since 2007,” noted Whitehead. “For example, in that year, we did 3.52 billable tests per tech hour. It is now at 4.26 billable tests per tech hour.
“These are strong metrics, but keep in mind that our over-arching strategy is to convert lab data into actionable information for clinicians,” he continued. “That allows us to use the patient data we generate in ways that make a difference to our physician customers.
“For example, we empower physicians by giving each referring physician a score-card that shows different metrics on how the physician uses our lab,” said Whitehead. “This includes the lab test results that the physician gets in key clinical areas of his or her practice. (See sidebar below.)
“For an individual physician, this score-card shows the overall test volume and which tests are ordered,” he continued. “A second component is a report on test turn-around times. This is included to show not only the physician’s performance but our performance as well.
“If the physician has patients on pain management medications, we can show his or her discrepancy rates,” he said. “These numbers give us an opportunity to talk about patient safety and legal liability.
“Our physician scorecard includes a section on obsolete tests,” Whitehead stated. “This information allows us to talk about which tests the physicians may not be using correctly. We can also offer other recommendations about better tests to order in these situations.”
As payers begin reimbursing physicians on the patient outcomes they deliver, Peacehealth Laboratories has created information-rich reports that physicians can use to manage individual patients effectively. “The scorecard we provide to physicians is perhaps best at showing the physicians their patients’ key health indicators,” observed Whitehead.
“In our region, accountable care organizations are forming and physicians are being asked to do population health management,” he said. “Two of the biggest challenges they face is managing patients with diabetes and cardiovascular disease.
“Therefore, the scorecard lists hemoglobin A1c, LDL, and HDL scores,” stated Whitehead. “Those scores are compared with what we have in our data warehouse.
“This is one way we can convert data into actionable information for physicians,” he said. “In step one, the data in our warehouse allows us to look for any abnormal hemoglobin A1c results among a doctor’s patients for the past three years.
“In step two, we fast forward and review the past five months to see if there’s been any follow up on those patients,” noted Whitehead. “Step three is where we show the physician the percentage of patients who had follow up based on the results of their hemoglobin A1c test.
“These results are significant because they help physicians identify gaps in care, which is very important to health plans, ACOs, and PCMHs,” he added. “As an example, we can show how, for one particular physician, maybe there was follow up only 58% of the time.
Comparing Physician Scores
“Step four in this use of actionable information is to show an individual physician how he or she compares with other physicians in the community,” Whitehead stated. “Most doctors are data driven and very competitive. Not one of them wants to be an outlier. They have keen interest in our scorecard and how it can help them.
“Armed with this scorecard, our sales team is having much different conversations than they do without it,” Whitehead commented. “Rather than telling a physician, ‘We’ve got this great serum cholesterol test you should use,’ they can talk about how the physician can manage patients more effectively. It makes our lab a team player in the physician’s effort to improve patient outcomes.
“Physicians know that, in the near future, they will participate in population health management strategies in which physicians will be on the hook for financial losses, but can also share in any savings,” he noted. “Physicians will be paid or penalized based in how effectively they manage their patients. Laboratory information like this will be extremely useful to them.
“Internally, we are converting data into actionable information that our team can use to deliver more value to clients,” continued Whitehead. “We recently invested in a customer-relationship management (CRM) system to support this effort.
“Today, our CRM system—along with the scorecard data—can be viewed on iPads,” he stated. “Our sales and our service reps—before they meet with the physicians or staff at a particular account—can look up any of this client’s current problems or needs.
“Having that information in real time before a call empowers our reps to suggest ways that our laboratory can provide better service to clients in the form of actionable information.”
Whitehead was careful to point out that his laboratory continues to pursue excellence in all the routine, daily functions that physicians expect of their lab providers. “It is essential that our laboratory delivers the lab testing services that complement the needs of client physicians,” he said. “That has always been true and it won’t change moving forward.
“What is different today is that our lab also provides useful and actionable information to physicians,” Whitehead explained. “That’s a value-added service as opposed to what we used to do, which was deliver test results quickly and accurately.
“We still do that, of course,” he concluded. “But now we put those results in context in a way that empowers physicians in this new healthcare environment. If we do it correctly, the physicians will succeed and we will succeed as well.”
Lab Delivers Actionable Information To Physicians Involved in Pain Management
ONE FAST-GROWING SECTOR IN CLINICAL CARE is pain management. The executive team at PeaceHealth Laboratories recognized an opportunity to provide actionable information to physicians treating these patients.
“In tandem with Lean efforts and similar improvement projects, we considered how to deliver greater value to physicians,” said CEO Ran Whitehead. “For example, we wanted to respond to the changes unfolding in pain management services. We decided there was an opportunity to help physicians who treat these patients.
“This segment of clinical care is growing due to the aging population,” he noted. “Physicians are putting more patients on significant narcotics. The problem with these medications is that—if the patients are not appropriately monitored—they can die. In fact, each year, more Americans die from medication overdoses than by automobile accidents.
“To deliver more value to the pain management clinicians, our team here at PeaceHealth Laboratories used mass spectrometry to develop a test we call PT Protect,” he recalled. “The algorithms in our report are simplified so physicians can understand the results easily. That contrasts directly with the typical reports that toxicologists produce, which can be like trying to read hieroglyphics.
“We filed a patent application for this test and received a U.S. patent in November 2011,” noted Whitehead. “The patent covers the technical analysis that goes into the test and the algorithms in the report we send to the physicians.
“Consistent with our strategy to add value, the patent allows us to license the PT Protect test to other laboratories,” he emphasized. “We held discussions with select labs across the country to explore their interest in licensing this test. We are optimistic that licensing this test will generate a new source of revenue for us.”
Once the new assay was introduced, Peacehealth Laboratories produced a study that showed the improved performance of this proprietary assay. “When matched against the offerings of competing pain management companies, our PT Protect test detected positive results 37% more often than our leading competitor has,” explained Whitehead.
“This data changes the conversation our sales professionals have with physicians,” he noted. “When discussing the patient safety issues involved in pain management and the accompanying legal liabilities, physicians will often counter that they know all their patients well and their patients wouldn’t do anything untoward.
“But we can show that, on average, at least 37% of the time we found other things in the patient’s urine sample that the physician might want to know about,” stated Whitehead. “Upon learning this, physicians see the value that our lab offers to them, compared with competing pain management companies. Our pain management expertise is an excellent example of how we use information to empower our client physicians.”
Physician Scorecard Helps Improve Test Utilization
PeaceHealth Laboratories Has Lab Test Solution to Help Physicians Manage Readmissions
WANTING TO DELIVER MORE VALUE to physicians and patients, lab scientists at PeaceHealth Laboratories decided to tackle the problem of “polypharmacy.” This is when physicians prescribe many medications for a single patient.
“In particular, older patients are at risk for this condition,” said Ran Whitehead, CEO and Chief Mission Officer of PeaceHealth Laboratories, in Springfield, Oregon. “With different specialists issuing prescriptions, it is not uncommon for the patient’s primary care physician to be unaware of all the drugs that have been prescribed for his or her patient.
“Our lab can help with this problem,” he noted. “We adapted our experience from pain management to see if we could use mass spectrometry to develop a screen to identify the multiple therapeutic drugs that a patient is taking.
“This approached worked,” stated Whitehead. “We can tell a physician at any point in time what’s onboard with a specific patient. We started with the most-prescribed medications. Now we are about halfway to our goal of having the capability to accurately identify 400 prescribed drugs.
“We believe this type of testing will have significance for hospitals treating patients with conditions such congestive heart failure and pneumonia who are discharged but readmitted in 30 days,” he continued. “Currently the federal Centers for Medicare & Medicaid Services fines those hospitals for each readmission within 30 days.
“The main reason most patients get readmitted they don’t take the medications that physicians prescribe, which can cause a relapse and that leads to a readmission,” added Whitehead. “By using this new diagnostic technology, we are getting closer to the day when we can give physicians a timely report on the specific medications these patients are taking. That would give physicians the opportunity to intervene before that 30-day window is reached. Further, we have a patent pending on this diagnostic test.”