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Docs’ In-Office Testing Showing Mixed Trends - The Dark Intelligence Group

Docs’ In-Office Testing Showing Mixed Trends

New technologies and the need to improve patient care may stimulate growth in POLs

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CEO SUMMARY: Despite the burdens of CLIA certification and reduced reimbursement for lab tests, many medical practice experts are advising doctors to expand in-office testing. However, diagnostic technologies for near-patient testing are still not robust enough to support this trend. Early attempts to expand testing in physicians’ office laboratories show the technology is still not quite ready for “prime time.”

IN-OFFICE LAB TESTING by physicians remains a substantial portion of the estimated $36 billion that’s paid each year for clinical laboratory testing.

At the beginning of the 1990s, it was believed that physicians’ office laboratories (POL) accounted for about half of all lab testing done on behalf of patients outside of hospitals. However, that percentage shrank throughout the 1990s.

Two factors contributed to this decline. The implementation of CLIA certification requirements early in the decade increased the cost and effort of operating a physicians’ office laboratory. At the same time, the well-documented decline in reimbursement for laboratory testing throughout the 1990s changed the economics of POL testing for the worst.

Yet the number of CLIA-certified laboratory sites has trended upwards in recent years. Some experts attribute this increase to the number of waived tests that have become available. Also, the obstacles to operating a POL may be overcome by the introduction of new technologies in information systems and diagnostic instruments. One source of valuable insight into the POL testing segment is C. Anne Pontius, President of Laboratory Compliance Consultants, Inc., based in Raleigh, North Carolina.

Developing Opportunities

Her company provides a full range of consulting services specifically targeted at physicians’ office laboratories. “Although POL activity trended down immediately after CLIA, I see several developing opportunities that would make POLs more attractive to physicians in the future,” observed Pontius.

“There’s obviously a recognition that CLIA certification requirements and falling reimbursement make it more difficult for physicians to support in-office lab testing. But the remaining POLs have value to their physicians and I’ve not seen many examples of physicians abandoning existing POL testing activities in recent years.

“In fact, many physician specialties are being told that in-office testing is a good way to offset reimbursement declines in other portions of their practice, while offering the important benefit of allowing them to provide their patients with a higher level of clinical care,” explained Pontius.

“Doctors are hearing this recommendation in a variety of settings and from any number of experts,” she continued. “In-office lab testing is a topic often addressed at medical specialty meetings and in specialty medical publications. It is recommended as a key business strategy to replace or supplement revenue declines in other areas of a physician’s practice.”

Even as physicians hear advice about increasing in-office lab testing, Pontius says that diagnostic testing technology has yet to provide effective solutions for physicians’ offices that might want to test smaller volumes of specimens. “This seriously limits the ability of smaller group practices, with less than five providers, to expand in- office testing,” she noted. “The cost and complexity of doing an expanded menu of routine testing continues to be a hurdle for physician groups of this size.”

New Technology

Genomic and proteomic technology is expected to produce a flood of new diagnostic tests in coming years. However, Pontius believes these types of assays will probably not find their way into POLs in the near future. “The complexity of many of these tests will lead them to be performed in core lab settings, not POLs,” she predicted.

“However, I do think it is reason- able to expect the total volume of in-office testing to increase over time,” added Pontius. “As testing technology and information systems become simpler to use and more cost-effective, more tests will move closer to patients.”

Pontius believes at least one wild card exists that could stimulate big increases in POL testing. “The growing movement to reduce patient errors and improve the quality of healthcare outcomes is closely linked to effective use of laboratory tests,” she said.

In-Office Testing Solutions

“As doctors come under pressure to reduce measurable errors and do a better job of using the right diagnostic tests, many will see in-office testing as a solution. For example, we all know what happens to many lab specimens when, after collection, they must be transported long distances, accessioned at a central laboratory, then moved through that laboratory for testing and eventual storage.

“Doctors know the frequency with which lab specimens are lost or their
integrity is compromised as they are handled by a send-out lab,” continued Pontius. “The ability to maintain control of the specimen by keeping it within the physicians’ office, along with the faster turnaround time for results, can certainly encourage many physicians to increase in-office lab testing as a way to reduce patient errors and improve their clinical outcomes.”

THE DARK REPORT believes another factor may encourage more in-office lab testing by physicians. The steady evaluation towards clinical integration of healthcare services may provide new justifications for near-patient testing, such as in physicians’ offices. As it becomes possible to collect clinical data closer to the patient and allow it to follow the patient throughout the health system, that capability may well motivate more physicians to expand in-office testing.

Slow Changes To Status Quo

In the meantime, Pontius believes that swift changes to the status quo for in-office testing by physicians is unlikely to happen in the near future. “For the most part, POLs I work with are not planning a major expansion in either their specimen volume or the menu of tests they perform on site,” she said.

“I believe it would take either a healthy boost in lab test reimbursement or some hot new ‘must-have’ diagnostic technology to get doctors to expand their POL operations,” added Pontius. “At this time, neither of those two developments are likely to happen.”

Since it’s unlikely that reimbursement for laboratory tests will be boosted by any significant amount, it will take improvements in diagnostic technology to stimulate more POL testing.

Careside’s Routine Testing Systems Fail to Sell in Physician’s Office Market

ONE AMBITIOUS ATTEMPT to introduce routine laboratory testing into smaller physician office settings has fizzled.

Careside, Inc., based in Culver City, California, developed an instrument sys- tem capable of doing blood chemistry, electrochemistry, and coagulation testing in 15 minutes in near-patient settings. The company obtained FDA approval in 1999 and began marketing its Careside Analyzer primarily to physicians’ offices. (See TDR, November 22, 1999.)

But Careside was plagued with numerous problems. Early in 2000, performance issues surfaced with Careside units in the field. These involved both the software and hardware of the system. There were also technical problems with the electrochemistry tests. Careside stopped selling units until these problems were corrected.

In October 2002, the company filed for protection under Chapter 11 bankruptcy laws. It had placed less than 100 instruments over the past several years. The company has downsized significantly and its future plans are uncertain.

Careside’s attempt to bring a point-of- care testing solution to the physicians’ office market is instructive on several points. In speaking with a variety of experts about its use in physicians’ offices, THE DARK REPORT identified three main problems.

First was cost. The instrument itself was relatively expensive for the specimen volume it could handle. That was equally true of the cartridges required to run the tests. Because it was a new company and lacked manufacturing economies of scale, it could not offer more competitive pricing.

Second, in actual use in physicians’ offices, the Careside Analyzer proved to be more complex than anticipated. Since throughput was slow, it was difficult for multiple users to share one instrument.

The third issue is quite fascinating and involves proficiency testing. It took Careside a long time to develop an effective proficiency testing network among its users. Without this type of resource, and in combination with the recognized problems of the early generation’s software and hardware, this made the product vulnerable during the early stages of its market introduction.

These observations demonstrate that introducing more sophisticated diagnostic testing technology into physicians’ offices remains a tricky proposition. Physicians need simplicity, reliability, and productivity from a near-patient testing solution. Careside’s solution was a credible attempt to meet these requirements, but the product did not meet the expectations of its prospective physician customers.

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