KC Regional Lab Network Makes Steady Progress

Nine-laboratory network in Kansas City now has a full-time executive director

CEO SUMMARY: In Kansas City, members of the Regional Laboratory Alliance (RLA) had a common purpose in forming their network four years ago—to preserve their status as laboratory provider for a major managed care plan in their area. After successfully attaining that goal, RLA’s member labs are preparing to raise the bar and implement some ambitious service enhancements.

IN KANSAS CITY, nine member laboratories of the Regional Laboratory Alliance (RLA) continue to expand their network and add services.

RLA currently has contracts with two managed care companies, involving about 400,000 beneficiaries. To prepare itself for the next generation of service projects, it hired its first executive director on June 1, 1999.

“After four years of operations, we were ready to have a full-time executive director lead the expansion of our network’s capabilities,” said Anne B. Byrd, Administrative Director at St. Luke’s Hospital in Kansas City. “We’ve done well with our existing infrastructure, but we need become more sophisticated if we are to move to the next level.”

“Since my arrival in June, we’ve discussed three areas for attention,” said Terry Kirby, RLA’s new Executive Director. “The biggest priority and first on the list is connectivity of our infor- mation systems. It’s time for all of RLA’s data input and reporting needs to be handled in a uniform manner.

“Second, we are actively working to expand our disease management resources,” he noted. “RLA now provides a variety of data to managed care plans that support their HEDIS and NCQA monitoring needs. However, we want to proactively move ahead on that curve. RLA wants to be first to provide payers with a more complete spread of disease management information and data.”

Single-Source Billing

“Third, we need single-source billing and collections. This will strengthen our relationship with payers and the physician offices served by our outreach program,” stated Kirby. “RLA’s member labs are ready to tackle this project.”

RLA was originally founded in 1995 in response to the news that the area’s major managed care plan was going to move to an exclusive laboratory provider panel. This threatened to exclude the lab outreach programs of RLA’s nine member labs.

It is organized as a messenger model network. Mayo Medical Laboratories (MML) acts as the messenger and provides reference lab testing services. RLA’s executive director is a full-time employee and his compensation is funded by the members of RLA.

“RLA’s defining mission has been to maintain our labs’ access to the payers,” explained Byrd. “For that reason, we have not emphasized shared testing among our members. RLA labs have their own courier arrangements, and Mayo contracts with our couriers to pick up their specimens.

“Our network is funded by the member hospitals,” she continued. “Each month, all expenses of the network are tallied and the member hospitals pay their proportional share.”

One interesting aspect of the RLA network is that it has not stimulated the pathologists at the nine participating laboratories to develop some type of collaborative marketing relationship.

Core Support Group

“That may be because each of our member labs is concentrating on its own laboratory outreach program,” offered Byrd. “From the start, however, there has always been a core group of pathologists among our nine laboratories who’ve provided consistent support to RLA and its goals.”

One confirmation of that support and the respect RLA has gained among local physicians is a recent request for assistance. “A PSO [physician system organization] contacted us several weeks ago,” said Byrd. “They were thrashing with the problem of how to evaluate their physician members, as required by many HMOs.

“The PSO contacted RLA because they wanted to go further than simply looking at utilization patterns of their physicians,” she continued. “They wanted other ways to look at the quality of care provided by a physician, as demonstrated by how physicians used laboratory testing in their practice.”

As this episode demonstrates, Kansas City’s Regional Laboratory Alliance has earned the respect of physicians in the community, as well as the managed care plans it serves (see sidebar above). From this perspective, it has succeed in one of its primary missions.

On the other hand, for more than four years, RLA’s member labs have hesitated to explore consolidation and integration opportunities available to them through their lab network. This illustrates one of the weaknesses of the regional laboratory concept.

The independence of member labs in the network inhibits the ability of the network to generate even greater benefits to its members. Notwithstanding this fact, RLA’s sustained string of operational and market successes should be recognized as a positive accomplishment.

Managed Care Plan Prefers Its Hospital Lab Providers

“Creating this laboratory network was the best move we ever made,” said Anne B. Byrd, Administrative Director of St. Lukes Hospital. “Our relationship with HealthNet, the major managed care plan in our area, is superb.

“In the four years since we began, HealthNet has increasingly become more exclusive in favor of our network,” added Byrd. “They tell us they get virtually no complaints from the outreach testing services our hospital labs provide to their physicians and patients.

“In fact, recently one of the hospitals in the city changed its lab outreach program,” she continued. “We were surprised and pleased when the managed care company actually called our network and asked us to provide lab testing services in that sector of the Kansas City metropolitan area! That vote of confidence certainly confirms that RLA’s service is competitive with other laboratory providers!”

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