CEO SUMMARY: It was a groundbreaking first for both sides of the Atlantic. Senior pathologists and laboratory directors in the United Kingdom spent two days learning from their North American counterparts about the challenges and difficulties in laboratory consolidation and regionalization. For their part, the North American faculty gained useful insights about the way laboratory medicine is practiced in Great Britain.
GLOBALIZATION of clinical laboratory testing services is a reality, but the long-standing rule that “healthcare is local” continues to trump all other factors in shaping the management of clinical laboratories.
This was the consensus of more than 100 senior pathologists and laboratory administrators from the United Kingdom, Canada, and the United States following two days of presentations and networking last week in London, England.
The meeting, called Frontiers in Laboratory Medicine (FiLM), was conducted February 3-4 at the Royal College of Physicians. Co-produced by THE DARK REPORT, Britain’s Association of Biochemists and IBC (a private conference company), the meeting was modeled after the Executive War College in response to the impending nationwide restructuring of laboratory testing services in Britain.
“Our National Health Service (NHS) is in the midst of planning for ‘pathology modernisation’,” stated Dr. Ian Barnes, Pathology Modernization Advisor to the Department of Health. “The goal is for existing laboratories to collaborate in the formation of regionalized service organizations.
“In many ways, our pathology modernization is expected to follow parallel paths of laboratory consolidation and regionalization already traveled by laboratories in Canada and the United States during the last decade,” he added. Dr. Barnes addressed the conference and chairs the NHS development team which is studying how best to proceed with “pathology modernization” in his country.
To help pathologists and laboratory directors in the United Kingdom learn more about the process of laboratory consolidation, restructuring, and networking before they begin implementation, THE DARK REPORT and ABC worked together to assemble a panel of speakers from North America who could speak from direct experience about the process of restructuring and consolidating laboratory testing services.
Four strategic laboratory case studies were given. From the United States, it was Kaiser Permanente Northern California (based in Oakland) and Sentara Health System from Virginia Beach, Virginia. The Canadian experience was documented by Toronto Medical Laboratories in Toronto, Ontario and a province-by-province overview of laboratory consolidation. Specialized presentations on different aspects of lab management included the topics of labor productivity, courier and logistics issues, point-of-care testing, standardization, organizational forms for lab consolidation and regionalization, and bench- marking best management practices.
“I can say without qualification that our pathologists and laboratory directors gained valuable insights from their counterparts in Canada and the United States,” stated Dr. Michael Hallworth, Chairman of ABC and co-organizer of the event. “What proved remarkable is that the key issues in managing laboratories are so similar, despite the differences in the healthcare system and how laboratories get paid across our three countries.”
Three Important Insights
Along with the “healthcare is local” theme, I could identify three additional important and relevant conclusions from this groundbreaking event. Lab administrators in Canada and the United States are far ahead of their U.K. counterparts in three important respects. First, they are much more sophisticated about the financial management and performance of the laboratories they manage.
Second, relative to their U.K. counterparts, North American lab administrators are further along in institutionalizing the process of continual improvement. They use a wider array to management tools and reports to accomplish gains in productivity and quality while lowering the cost of laboratory testing services.
Third, it is much easier for North American laboratories to get the capital budgets needed to implement productivity improvements and deploy new diagnostic technologies. This is an important component in the ongoing drive to lower the costs associated with laboratory testing.
How Labs Get Paid
These three management attributes directly result from how the Canadian and U.S. healthcare systems reimburse providers. In future years, laboratory administrators in the United Kingdom can be expected to develop similar skills as identical pressures to drive out unnecessary laboratory testing costs take a larger role in the United Kingdom.
In one important measure—-the breadth and quality of laboratory testing—there seems to be no appreciable difference between Canada, the United States, and the United Kingdom. “Both faculty and delegates were in common agreement that a patient in any of these three countries would have access to an equally high level of laboratory testing services and technology,” observed Dr. Hallworth.
One significant difference that impressed the North American faculty was the specialization that seems much further advanced in British laboratories. In both clinical pathology and anatomic pathology, a much larger portion of pathologists are specialists compared to the United States and Canada.
Within Great Britain, the “pathology modernization” project will be all-encompassing. There are approximately 300 laboratories in the country and “pathology modernization” is expected to create around 40+ regional lab organizations. Each unified laboratory project will be designed to serve between 1 and 2 million of Britain’s 60 million people.
Although the National Health Service has declared its intent to push “pathology modernization” forward, it is allowing local lab clusters to develop their own restructuring plan. As some of the early adopters move ahead, diagnostic vendors and information services companies are responding to RFPs in the United Kingdom.
Britain’s Baby Boomers
Not surprisingly, the U.K. has its own baby boomer demographics. This means more utilization (referred to as “demand” in the U.K.) in coming years along with an aging work- force of laboratory technologists and scientists. Many laboratories are already unable to recruit adequate numbers of med techs. As a result, a handful of automation projects have either recently been implemented or are in development.
Funding for laboratory services is probably a key reason for many of the differences in management style observed between the United Kingdom, Canada, and the United States. During the past decade, healthcare trusts in the U.K. have kept laboratory funding at consistent levels. In contrast, in Canada a number of the provincial health plans squeezed laboratory funding at various points to accelerate laboratory restructuring. In the United States, Medicare funding failed to keep pace with inflation even as private payers were using capitation and exclusive contracts to push down the reimbursement paid for laboratory testing.
Within Canada and the United States, pathologists and lab directors were forced to cope with significantly less money. They learned to pay close attention to detailed measurements of lab productivity and financial performance, even while maintaining or even improving the laboratory testing services offered to local clinicians.
However, time and again, the U.K. delegates were astonished at the emphasis North American speakers gave to increasing the number of tests performed per med tech or driving down the average cost per test. For the past decade, a relatively constant funding base in the U.K. has meant that extreme laboratory restructuring was not needed. This allowed our British colleagues to sustain their focus on clinical care and the quality of laboratory testing services.
“It was a real eye-opener for us in the United Kingdom,” stated Dr. Hallworth. “Although clinical services and the state of laboratory technology seem very comparable between the three countries, we’ve not yet been forced to give financial management of the laboratory the same emphasis as has happened in North America.”
Among the North American speakers, similar observations had been made. “I was impressed by how pathologists in Britain have developed a level of specialization that we tend to see mostly in academic centers and larger health systems,” noted Gene Pawlick, M.D., Clinical Director, Integrated Laboratories at Kaiser Permanente Northern California. “However, because Britain does not have the same level of venture capital activity as we do in the U.S., I’ll bet that not as much of their laboratory research moves toward commercialized clinical uses as would be true here in the United States.”
In addition to speeches and net- working during the two days of FiLM, on Wednesday, February 5, the North American faculty met in the offices of the National Health Service to provide input and consultation for the NHS team responsible for establishing the framework for the nation’s “pathology modernization program.” This was followed by a laboratory tour of one of the first U.K. hospital labs to implement total laboratory automation.
“These were energizing sessions,” stated Richard Moriarty, M.D., Medical Director of Clinical Laboratories at Sentara Health System. “It is obvious that the United Kingdom is poised to launch the same type of laboratory consolidation and regionalization projects that were done over the last 12 years in the U.S. and Canada. Their pathologists are motivated and keenly interested to learn from our experience so they can get many more things right the first time.”
In fact, the sessions were so energizing that British colleagues enthusiastically asked us to hold this mini-War College in London again next year. A management-exchange program was also established between some of the North American faculty and their British