CEO SUMMARY: By offering client-physicians an electronic medical records (EMR) system, Spectrum Lab Network expects to gain competitive advantage. The EMR solution supports Spectrum’s strategy of providing enhanced and integrated informatics services to all users, including physicians, payers, and patients. Until now, no lab has ever offered to be a source of EMR sales and service to office-based physicians.
COMPETITION IS HEATING UP among laboratories using enhanced information technology (IT) services to compete for the business of office-based physicians.
In Greensboro, North Carolina, Spectrum Laboratory Network is now selling an electronic medical record (EMR) system to its physician-clients. THE DARK REPORT believes Spectrum is the first laboratory company in the United States to offer an EMR system for sale.
Called “Spectrum Plus,” it is an ASP (application service provider), thin-client software system. Developed by eCast Corporation of Raleigh, North Carolina, Spectrum Plus includes a fully integrated and bi-directional lab ordering and resulting module.
Spectrum’s strategy is based on a belief that it can differentiate itself from competing laboratories by offering enhanced information technology services to referring physicians. It is a sign of ongoing changes in the competitive marketplace for lab services.
In recent years, larger national competitors, like Quest Diagnostics Incorporated and Laboratory Corporation of America, have regularly added functions to their basic IT products. Along with Web browser-based lab test ordering and results reporting, lab companies have added direct interfaces to the physicians’ practice management and EMR systems, improved integration with electronic pharmacy ordering systems, and similar types of features.
Benefits To Physicians
“To avoid any compliance issues, our clients sign an agreement that Spectrum Plus will be used solely to support our laboratory services,” stated Nate Headley, CEO of Spectrum. “Benefits to client-physicians include the elimination of all manual charting and labor cost savings. Physician groups can achieve savings of 1.5 to 2 FTEs after implementing Spectrum Plus.
“In the Spectrum IT model, we do all the connectivity programming, host the system, and provide the laboratory test results,” stated Headley. “Our Atlas Labworks® connectivity solution is embedded in Spectrum Plus.”
“There’s another significant benefit for physicians,” continued Headley. “By converting from paper records to our Spectrum Plus EMR, the physician is now positioned to participate in various pay-for-performance programs. EMR systems can provide a data repository to allow clinicians to more easily demonstrate high quality practice standards to their third party payers in order to negotiate higher reimbursement.”
Advanced IT Strategy
In recent years, aggressive use of information technology has been a fundamental business strategy at Spectrum Laboratory Network. Internally, the company uses advanced IT solutions to capture data and integrate the flow of that data throughout the organization.
Externally, Spectrum Laboratory Network has been equally aggressive with its use of IT. It has worked diligently to convert existing and new client-physicians to its Atlas electronic system for lab test ordering and results reporting. As technology and economics improve, the eventual goal is to eliminate the paper test requisition and have 100% of test orders and lab results transmitted electronically.
“In many respects, Spectrum sees itself as an information services company, increasingly organized around the Internet,” explained Headley. “We use a network approach—Internet and automation in the field—for ordering and results. Each day, we serve an average of 11,500 patients and 81% of test orders and results are transmitted over our network.”
Spectrum’s high volume of electronic requisitions has slashed many costs within the laboratory. It has also improved work processes in ways that contribute to higher customer satisfaction. “By reducing the volume of paper requisitions, we’ve dramatically cut the need for manual data entry in our lab, along with the costs associated with that function,” noted Headley.
“In fact, the core lab has seen an 86% reduction in data entry FTEs,” Headley observed. “Errors associated with this work have been reduced to an average of three per month! These savings are compounded when you con- sider the reduction in calls to clients triggered when an error occurs, plus the potential for additional errors that can occur during communication.”
Spectrum finds that physicians are receptive to IT solutions that can benefit their practice. “Clinicians are becoming very alert to efficiencies, such as e-charting, offered by electronic systems,” said Headley. “They have become conscious of time and motion. To sustain revenues, they need to see more patients. That is why anything that increases practice efficiency is of interest. We’ve created an electronic interface with our laboratory that is simple and intuitive. We can fully train new users on our Atlas order entry system in as little as 30 to 60 minutes.”
Ease of use is not the real secret of Spectrum Lab Network’s success in converting so many clients to electronic lab ordering and test resulting. A major factor has been the performance of Spectrum’s sales force and field service staff. “Rapid deployment is a key factor in gaining clients. If the physician’s office has broadband in place, we could install the Spectrum system the same day. If the necessary broadband is not in place, our implementation time is 10 to 12 days,” stated Headley.
“The thin client architecture allows us to make changes at the controller level and all accounts are automatically updated,” stated Dave Moore, Spectrum’s CIO. “With a thick client system, different software versions are scattered throughout the network causing inconsistencies in test compendium, specimen requirements, etc.
“We believe our thin client system gives us a distinct competitive advantage,” added Moore. “We can do all our upgrades—software, test catalogue, nomenclature—on our server at the core lab. All back-ups occur automatically from the server. We maintain client accounts and monitor client usage from a single, central location.”
Given Spectrum’s fast rates of growth in patients and revenues during recent years, Moore probably understates the impact that Spectrum is having in North Carolina, South Carolina, Virginia, Tennessee, and Georgia. As the 1990s ended, Spectrum was doing about $22 million per year in outreach revenue. For 2005, it generated an estimated $125 million in net revenue.
Headley attributes this substantial and sustained growth to the Spectrum’s business objectives. “Our marketing strategy is two-pronged,” he stated. “First, we market based on superior service levels that factor in both IT and business capabilities. Up front, we identified customer expectations and then defined service levels we believed would give us competitive advantage.
“We go through a fairly exhaustive process to find out how people perceive the services we provide to them,” continued Headley. “We align our organization and IT services with end-user service level expectations, then exceed them. We believe Spectrum is defining competitive service levels in our markets. That puts competitive pressure on existing benchmarks for service.
“The second prong of our marketing strategy is to use sophisticated IT capabilities to give client-physicians enhanced services,” he said. “Our goal is to use IT tools to create integrated flows of information, to replace manual processes with automation wherever possible—including client offices, and electronically connect all users within the Spectrum family. This is a major undertaking. We have 740 Atlas sites and 22 service reps in the field to do installs and training of our Atlas system.
Two Business Challenges
“We now have two business challenges,” observed Headley. “The first is to keep upgrading our information technology capabilities to retain that competitive edge. The second is to maintain our growth rate. We get 40 new accounts every month and two-thirds become users of our Atlas-based system.
“To sum up,” stated Headley, “our goal is to lead the field in our region in IT integration. We’ll continue to expand our test menu, particularly with regard to personalized medicine. We’ll continue to seek out value-added opportunities in service levels. In the end, that’s really where the competitive advantage is. Technology is great, but it all goes for naught if you lack quality service.”
THE DARK REPORT observes that, in making the decision to offer EMR products to its clients, Spectrum Laboratory Network is introducing a new variable into the laboratory services marketplace. Lab directors and pathologists will want to watch the competitive response to Spectrum’s innovation.
Step-by-Step, Spectrum Lab Network Built its Information Technology Platform
WHEN SPECTRUM LABORATORY NETWORK began taking active steps to build the information technology (IT) infrastructure necessary to support enhanced services to office-based client-physicians, it was playing catch-up to the national laboratory competitor who dominated the North Carolina market.
“In order to compete, we started in 2000 with a product called Quextron, which is a DOS-based interface program,” recalled Nate Headley, CEO of Spectrum. “This technology came with a major benefit. It allowed us to introduce a series of bar-coded requisitions. These reduced manual data entry in our laboratory.”
As next-generation technology evolved, Spectrum Laboratory Network selected Atlas Labworks, developed by Atlas Development Corporation. This was a product designed around central server architecture. The new technology allowed Spectrum to create integrated IT networks which link laboratory production facilities with client offices. “We evaluated four or five products before selecting Atlas Labworks,” stated David Moore, CIO of Spectrum. “It met our specifications for functionality, scalability and configurability.
“We actually collaborated on research and development with Atlas for about six months in 2002,” noted Moore. “We wanted to expand the functionality of the program to give us additional competitive benefit in the marketplace. On our side, the development team included a cross-section of drivers, specimen handlers, field reps, billing clerks, IT people, and MTs from our lab. Our goal was to develop a system that allows us to gain maximum efficiency.”
“A major feature developed from this collaboration was touch screen capability,” stated Headley. “The touch screen capability was a key unifying element allowing all applications to function and to look exactly the same for our clients.”
Following that round of product development, Spectrum began to deploy its IT solution. “In the summer of 2002 we did alpha installs in client offices,” explained Moore. “In November and December 2002, we began introducing the system to our clients. By January 2003, we hit our stride. Installations accelerated from this point forward.
“Using feedback from users of the system, throughout 2003 and 2004 we issued several new releases of the system, constantly adding functions,” he said. “During this time, we also merged our thick-client and thin-client systems to assure consistency in appearance and use. We’re now working on a version that will be able to transmit AP (anatomic pathology) images. Soon we will introduce the ability to interact Atlas Labworks with PDAs used by client-physicians.
“Currently we are in our sixth version of Atlas Labworks,” stated Moore. “Within the last couple of weeks we’ve embedded Atlas with an eCast product, significantly expanding the functionality of our system. We’re super-excited about this innovation.”
“We believe that Spectrum Laboratory Network has a three-year lead on any laboratory trying to enter this industry now,” observed Headley. “That’s how long it has taken us to both develop and roll out our system. A competitor would have to set up an automated laboratory and be prepared to provide the electronic service capabilities equivalent to what LabCorp, Quest, and Spectrum now provide—just to meet the competitive threshold in our markets.”