Labs Begin Applying Lean to Cut Costs, Add Value

At Lab Quality Confab 2017, lab directors outline steps on the journey from volume to value

CEO SUMMARY: In more than 40 presentations by 55 speakers, two big themes dominated the 11th annual Lab Quality Confab in New Orleans last week. One theme is the urgent need to cut clinical laboratory costs. The second theme is the need for both clinical labs and anatomic pathology groups to deliver more value to stakeholders. To measure such value, the most innovative labs are working to improve patient outcomes and reduce the overall cost per healthcare encounter.

SMART COST-CUTTING that supports added value was one significant theme at this year’s Lab Quality Confab in New Orleans last week.

The need for labs to cut costs has greater urgency because of the Medicare Part B clinical laboratory test price cuts scheduled to become effective Jan. 1. Speakers at Lab Quality Confab shared how their labs are responding to this development and a second important trend.

That second trend involves healthcare’s transition from volume to value. These speakers acknowledged the need for clinical laboratories to develop enriched lab testing services that deliver more value because they help physicians improve patient outcomes while also reducing the overall cost of each patient’s encounter with the healthcare system.

Lacking a clear vision from payers, many of the nation’s most forward-looking clinical labs have begun to define value by adopting their own versions of the laboratory value pyramid, which THE DARK REPORT has covered in detail. (See TDRs, Sept. 22 and Nov. 24, 2014, Feb. 17 and March 30, 2015.)

In general session presentations, three lab leaders discussed the innovative ways their lab organizations are adding value. Two labs are specifically using the laboratory value pyramid as a road map to guide their lab teams on this added-value journey. In all three presentations, the speakers noted that focusing on costs alone is not sustainable. Instead, they recommended improving processes.

One way to add value is to help physicians improve their utilization of lab tests.  This is the focus of a team at the Cleveland Clinic laboratory. Leading that effort is Gary W. Procop, MD, Medical Director and Co-Chair of Cleveland Clinic’s Enterprise Laboratory Stewardship Committee.

Improving Patient Care

“Have faith,” advised Procop. “If you do the right thing, good things will follow, including cost savings.” He also challenged attendees to focus on long-term goals such as ensuring that any gains continue into the future. “Long-term maintenance is essential,” Procop said. “Chasing savings is just chasing savings. Improving patient care is sustaining.”

In her presentation, Denise Uettwiller-Geiger, PhD, Clinical Chemist and Director of Clinical Trials at John T. Mather Memorial Hospital in Port Jefferson, N.Y., outlined how her lab uses the laboratory value pyramid as a blueprint for its journey from volume to value.

Similarly, David Layton, a Lean Expert and Improvement Engineering and Operations Leader at ARUP, and Bonnie Messinger, a Six Sigma Black Belt, Process Improvement Manager, explained how teams at ARUP Laboratories in Salt Lake City use the laboratory value pyramid to achieve an enterprise-wide Lean transformation with the goal of achieving best in class.

Lab Test Order Management

Although Procop did not specifically mention the laboratory value pyramid, his remarks were clearly focused on moving from volume to value. In his presentation, he explained how the lab at Cleveland Clinic built on its initial foray into lab-test utilization management to deliver added value in a second-generation effort.

At Mather Memorial, Uettwiller-Geiger introduced a series of steps to manage how tests are ordered. “Patient outcomes improve when the correct test is ordered,” she said. The key questions for Mather’s physicians to consider when ordering tests are these:

• Is the test meaningful?
• Does the test enhance decisions?
• Is this an appropriate order?
• Is the test highly useful?
• Will the test change how patients are managed?

“The goal is to improve patient outcomes while reducing the cost per episode of care,” she added. “The lab can spend a bit more money but contribute to millions in cost savings.”

For the Mather lab, Uettwiller-Geiger aimed to maintain and improve quality levels to free up time and resources, to leverage intelligence, to drive decisions, to create real-time knowledge for better patient outcomes, and to ensure patient safety with patient-centric care.

Improving Patient Outcomes

One part of the plan involved answering a series of questions:

• How can lab resources, skills, core competency, automation, and technology support the organization’s strategic plan, vision, and priorities?

• How will automation and technology fulfill our mission and vision moving forward?

• What advantages can be created by implementing the newest automation and technology?

• Will automation and technology strengthen the hospital and the laboratory’s overall competitive position?

To answer these questions, the lab sought to improve turnaround time by identifying the biggest barriers to productivity, by streamlining processes, eliminating duplicate tests, and creating a culture that was proactive rather than reactive.

As an example, Uettwiller-Geiger explained how the lab improved TAT for lactate tests and a basic metabolic panel ordered by the emergency department. For both tests, the percentage of such results that exceeded allowable turnaround times declined sharply from 2012 to 2015, she said. In 2012, more tests were delivered within 30 minutes, which was the goal, while in 2013 through 2015, more than 74% of basic metabolic panel results were delivered within a half hour. For the lactate tests, more than 80% of results were delivered within 30 minutes, she said.

Uettwiller-Geiger’s detailed presentation included examples of how the lab saved $88,044 by improving urine specimen processing, reducing hospital-acquired infections, and adopting the Choosing Wisely campaign.

Procop also outlined the savings his lab test utilization management program achieved in the initial phase (see TDR, June 1, 2015) and in a second-generation effort. In the first phase, the Cleveland Clinic’s lab test utilization program established what he called a soft-stop warning in the EHR to alert the physician when he or she was about to order a duplicate test.

Soft Stop Shifts to Hard Stop

“Later the soft-stop warning in the EHR became a hard stop, meaning the physician could not order a test until he or she called client services to request a waiver,” explained Procop.

Few clinicians called client services to place a duplicate order, he said, and when they did, the lab could educate those physicians about how to limit certain testing. In the first phase to improve the utilization of lab tests, the lab hired a genetic counselor and implemented lab test ordering alerts for physicians in hospitals outside of the main campus.

In the second phase, Procop introduced more stringent requirements for expensive tests. With this effort, the lab averted 158 test orders and saved $224,435. Over four years—from 2013 through 2016—these policies helped the lab avert 514 expensive tests and save $787,834.

“A strategic phased approach to lab test utilization builds trust and future support,” noted Procop. “In addition, improvements in test utilization can address each issue that the Institute of Medicine highlighted in its landmark reports on healthcare quality.” Adopting the principles of the IOM’s reports is one way to implement the laboratory value pyramid.

Patient-Centered Ordering

In his conclusion, Procop said the lab-test utilization program at Cleveland Clinic ensures that test ordering is:

  • Safe, because interventions facilitate running the right test at the right time;
  • Effective, because the lab can demonstrate its results;
  • Patient-centered, because it involves implementing best-practice guidelines;
  • Timely, because interventions are done at the point of order entry;
  • Efficient, because it helps to avoid unnecessary testing; and,
  • Equitable, because interventions are activated for all.

Safe, effective, patient-centered, timely, efficient, and equitable are all tenants of the IOM’s reports, noted Procop. These are also consistent with the goals of the Choosing Wisely campaign, which is recognized by most medical specialty associations and encourages physicians to improve utilization of diagnostic tests.

More International Attendees

About 300 lab professionals attended this year’s Lab Quality Confab, including attendees from Portugal, Switzerland, Russia, Canada, Curaçao, Tanzania, and Saudi Arabia.

Contact Denise Uettwiller-Geiger at; Gary Procop,MD, at, Bonnie Messinger at, or David Layton at

ARUP Laboratories Team Describes How It Customized Lab Value Pyramid to Its Own Needs

IN THEIR JOINT PRESENTATION, David J. Layton, MSOM, and Bonnie Messinger, CPHQ, of ARUP Laboratories in Salt Lake City, explained how the lab customized the laboratory value pyramid to suit its culture.

The laboratory value pyramid has four levels, they explained. On level one, the goal is to achieve normalcy and predictability. Level two is to establish and meet standards of value; on level three, deliver value that exceeds expectations, and on level four, use benchmarks to achieve best in class.

Layton and Messinger described how one of the nine lab divisions within ARUP adapted the pyramid so that on level one, the lab is focused on Lean Kaizen; on level two, it has achieved manager-led Lean (meaning some labs are on Lean level two), on three, it has employee-empowered Lean, and on four it is a Lean enterprise. The goal is to achieve what Layton and Messinger called “best in class” enterprise status.

Perhaps most enlightening about their presentation was the idea that it’s a mistake for labs to begin by focusing on costs. Instead, ARUP found that the best-in-class method for process improvement involves starting with eliminating waste. Doing so makes the work easier to accomplish. Then “easier” leads to better quality, “better quality” leads to faster TAT, and “faster TAT” leads to cheaper, they said.

To describe ARUP’s efforts to be the best among clinical labs, Layton and Messinger said the lab needed to educate and train the staff to be best in class. The first stage in a four-stage training program is the preparation and the assessment of challenges. In this stage, called the set up, it’s important to ensure that all staff are empowered to participate in all process-improvement projects. To assess lab employees’ willingness to participate, Layton and Messinger offered 10 statements to get a snapshot of workplace sentiment:

1. I believe I have an impact in the lab’s overall mission and strategic direction.

2. I feel comfortable communicating with my direct supervisor.

3. I feel comfortable communicating with my peers.

4. When problems or mistakes occur, communications received are constructive.

5. When I provide feedback or raise concerns, it is responded to appropriately.

6. Our work practices result in consistent, high quality products or services.

7. I have adequate opportunities to acquire new, valued skills in the workplace.

8. I have adequate opportunities for advancement.

9. I am proud to be part of my team.

10. I feel valued at work.

The second of the four stages is the training itself. In stage three, the staff works on projects, the first of which are called “quick wins.” These are small projects that can be accomplished quickly and that produce fast results. The last part of the projects stage involves sharing how the projects were done and what results they produced. The fourth stage is sustainability, they said.

Sustainability includes what Layton and Messinger called the five bridges to excellence, as follows:

1. The ability to manage change.

2. A structure that supports and drives execution.

3. Employees are involved in decisions and empowered to execute.

4. Alignment between leader behavior and vision or values.

5. Coordination and cooperation; then harmonization.


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