New Business Models for Pathology, Clinical Labs

New Business Models for Pathology, Clinical Labs

EXPERTS OFTEN PROCLAIM THAT THE U.S. HEALTHCARE SYSTEM is slow to change and slow to adopt the management approaches, operational innovations, and new technologies that other industries use.

One example is adoption of the quality management techniques that W. Edwards Deming and the Japanese developed by the 1970s. Today, these are described as Lean, Six Sigma, and process improvement. They are incorporated in the quality management system (QMS) of ISO 9001 and ISO 15189.

It wasn’t until the 1980s that Americans “discovered” Deming and his management tenets gained widespread favor. When did healthcare providers wake up to these developments? Outside of Intermountain Healthcare in the late 1980s, it took about two decades—roughly the second half of the 2000s—before significant numbers of hospitals, labs, and physician groups began to apply these quality management principles to their operations.

This historical perspective is useful as pathologists and clinical lab executives consider how to organize their labs to meet the changing needs of hospitals, health systems, physicians, patients, and payers. Will the U.S. healthcare system give pathology group practices and clinical labs as much as 20 years to respond to their changing needs, as was true for adoption of quality management systems?

The obvious answer is: No! Today’s patients no longer tolerate the poor service, bad quality, and medical errors that their parents and grandparents accepted without question. Today’s younger generations expect speedy service that meets and exceeds their expectations. Payers expect appropriate utilization of clinical procedures, such as lab tests, that produce superior patient outcomes.

Speakers at this year’s Executive War College earlier this month in New Orleans identified these market forces and urged pathologist-business leaders and lab administrators to recognize why new business models for lab testing will be required for the laboratory medicine profession to make the transition from a volume-based payment system to value-based reimbursement.

Moving into the future, the challenge will be for pathologists and clinical laboratory scientists to acknowledge the new imperatives in healthcare, then act quickly to orient their lab organizations to meet those expectations, In this cycle of change, providers will not wait 20 years for labs to catch up.

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