Project Santa Fe Labs Deliver Value with Tests

Member labs are innovating in ways that add value to lab services and improve patient care

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CEO SUMMARY: No bigger threat looms over the financial security of the nation’s clinical laboratories than healthcare’s transition from fee-for-service payment to value-based reimbursement. To navigate that transition successfully, medical labs and pathology groups will need to adopt the Clinical Lab 2.0 model. Member labs of Project Santa Fe are themselves working to develop and implement lab services that add value for which health insurers will want to reimburse.

PROJECT SANTA FE IS ON THE MOVE.  In recent months, the four participating medical lab organizations incorporated a foundation and selected an executive director for that foundation. Last week it conducted its second annual national conference on value-added lab testing services in Chicago.

Founded in 2015, Project Santa Fe is a collaboration of the clinical laboratory organizations of four prominent health networks. The primary goal is to develop value-added lab services and demonstrate the improvement in patient outcomes and reductions in the overall cost of care. Although health insurers are not yet paying for these services, they have expressed an interest in doing so.

Replicating Lab’s Success

Next, as one lab’s value-added program delivers clinical improvements, the Project Santa Fe lab members intend to replicate those same value-added programs in their own institutions. The four institutions will publish the results of these programs in peer-reviewed healthcare journals to educate health policy-makers and payers about how these programs and laboratory professionals can contribute to improved patient outcomes and lower costs of care. (See TDRs, Jan. 30, May 15, and June 5, 2017.)

The four Project Santa Fe laboratory organizations are:

Henry Ford Health, Detroit;
Geisinger Health, Danville, Pa.;
Northwell Health, Lake Success, N.Y.;
TriCore Reference Laboratories, Albuquerque, N.M.

The four chairs of pathology of these laboratory divisions incorporated the Project Santa Fe Foundation, Inc.(PSFF) and are working to register it as a 501(c)3 not-for-profit company.

The new Executive Director of PSFF is Khosrow R. Shotorbani, MBA, MT (ASCP), the former CEO of Tricore Reference Laboratories. Shotorbani is the founder and CEO of Lab 2.0 Strategic Services, a consulting firm in Salt Lake City.

The project’s second annual Clinical Lab 2.0 Workshop attracted 115 attendees. They represented hospital and independent lab professionals, along with professionals from in vitro diagnostics (IVD) and lab software companies.

At its core, Project Santa Fe aims to guide labs in their efforts to stay ahead of the transition away from fee-for-service reimbursement and to payment for value. “For clinical labs, the danger of not shifting along with health systems as they move to pay for value is that labs could be left behind,” stated Shotorbani. “Under that scenario, labs would be responsible for little more than delivering test results as a commodity.

“Labs that do not work closely with their parent health systems and insurers to deliver value will be left collecting payment based on volume only,” he added.

To describe this new model for lab services that add value, Project Santa Fe has developed the concept of Clinical Lab 2.0. “Labs ready to make this transition need to think in three strategic ways,” advised Shotorbani.

“First, pathologists and lab managers need to set a value for the longitudinal data they have from producing clinical lab test results on patients over many years,” he noted. “These data are stored in patients’ electronic health records, data warehouses, or other secure locations.

Payments with Financial Risk

“Second, clinical labs need to use that longitudinal data to support the delivery of value-based care to health systems operating under models of payment in which they have assumed financial risk,” he said.

“Health systems operating as accountable care organizations (ACOs) in which they get paid under shared-savings arrangements for caring for Medicare patients are one example,” he continued. “Health systems running bundled payment and patient-centered medical homes are two other examples.

“Third, to facilitate this shift, clinical labs need to negotiate new forms of payment from health systems and health insurers that reward the work of labs delivering data to support value-based care,” he stated. “To do so, clinical labs will need to move away from what we call the Lab 1.0 model. Under Lab 1.0, insurers and health systems pay for volume and often fail to recognize the value clinical labs can deliver in improving patient care.

“By contrast, the lab operating as the Clinical Lab 2.0 model has the mission of working with integrated health networks and health insurers to support physicians in keeping patients well and helping them manage patients with chronic conditions in a proactive manner,” explained Shotorbani. “To do that effectively, a clinical lab needs to do three things: intervention, prevention, and cost avoidance.”

New Ways to Help Patients

As Executive Director of the Project Santa Fe Foundation, Shotorbani will showcase the work of its clinical lab and health system members who are developing new ways to deliver value to physicians, payers, and patients, he said.

“One goal at Project Santa Fe is to change the conversation among health systems and payers and clinical labs,” noted Shotorbani. “Changing the conversation is a critical factor for clinical labs now because, under the Protecting Access to Medicare Act of 2014, payment from Medicare to labs has been slashed and is scheduled to continue to decline.

“If we do nothing, then clinical labs will continue to head toward what I call the commoditization of lab results,” he commented. “No one in the lab industry wants that. But if we don’t change the conversation, that will happen.

“Clinical labs still organized around the volume mindset will not survive under new payment models,” he predicted. “That’s why I view the foundation’s role as spreading the word about how labs can deliver value to health systems and payers.”

Last year, the Journal of Applied Laboratory Medicine (JALM) published an article by researchers from TriCore Reference Laboratories. Before starting his consulting practice, Shotorbani led Tricore’s efforts to demonstrate how physicians can use lab data to improve patients’ outcomes and lower costs using clinical lab results strategically.

In the JALM article, the researchers explained that TriCore and other labs can “provide meaningful clinical diagnostic insights for population health initiatives that result in improved short- and long-term patient outcomes while supporting cost-effective care.”

Labs can do so by analyzing patients’ longitudinal laboratory data over many years, identifying targeted interventions for specific patients, and developing clinical decision support tools, wrote Kathleen Swanson and colleagues. Swanson is TriCore’s Director, Enterprise Clinical Solutions. Three clinical conditions stood out as being potentially appropriate for value-based care based on the use of longitudinal lab test results, the researchers explained. Those conditions are diabetes, acute kidney injury that can lead to costly chronic kidney disease, and premature births.

For patients with pre-diabetes, a lab could identify and track these patients to avoid disease progression, a method that would be less costly than waiting for these patients to develop uncontrolled diabetes, which costs health systems an average of $10,500 per patient per year.

For a project designed to prevent premature births, TriCore identified lab tests and screening methods needed to monitor pregnant women and create a work list that was integrated into the health plan’s daily workflow for care coordinators. “Value for the demonstration project was measured using premature births, hospital costs, reimbursement for prenatal and postpartum quality measures, and ER visits,” wrote the researchers. As of last year, the three projects and associated data collection were still ongoing in New Mexico.

Insurers Use Lab Data for Clinical Insights

WHEN CLINICAL LABORATORIES PURSUE new ways of contracting, they want to know how health insurers will respond. The goal is to find ways that laboratories can be paid for contributing value to clinical care.

In recent years, TriCore Reference Laboratories of Albuquerque, N.M., developed new informatics solutions that use lab data and other clinical information to show how the lab can best serve health systems and payers delivering care under value-based payment arrangements.

To date, health insurers have not yet started paying for this work, but they are beginning to use lab test data for clinical insights, said Michael J. Crossey, MD, PhD, TriCore’s CEO and Chief Medical Officer. Among some insurers, there is interest to pay labs such as TriCore that are on the leading edge of the Clinical Lab 2.0 movement, he added.

“Tricore has a contract in which it’s paid on a per-member-per-month basis to provide clinical insights, and that PMPM contract is outside of the lab services contract we have with that insurer,” he commented. “This contract might be the first of its kind for a lab.

“In addition, we have several prospective contracts under review with other insurers that we work with here in New Mexico,” he added. “What we’re learning is that lab data is not necessarily a magic bullet to control healthcare costs.

“That’s because somebody on the clinical delivery side of care has to deal with those patients who are revealed through lab work as needing some form of intervention,” explained Crossey. “Using lab data to put up a red flag isn’t going to bend the outcomes and cost curves. There has to be a system in place to initiate further action by clinicians.”

Contact Khosrow Shotorbani at 801-209-9337 or


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