CEO SUMMARY: Two trends are driving a movement to standardize laboratory operations across large regions: the integration of clinical care and the need for hospitals and health networks to improve patient outcomes continuously. In Michigan, Ascension Health is an example of a lab team working to standardize lab testing activities among seven organizations, 14 hospitals, and 18 laboratories. The goal is to use standard instrumentation, tests, and best practices across all sites while sustaining growth in Ascension’s laboratory outreach program.
ONE-BY-ONE, MAJOR HEALTH SYSTEMS in the United States are recognizing the need to evolve into fully-integrated care delivery networks. Integration makes it possible to eliminate gaps in care, maintain a complete health record of all patients, and improve patient outcomes while reducing healthcare costs.
An essential step in these integration efforts is to standardize and consolidate clinical laboratory services throughout the health system. Pathologists and lab administrators know that a complete record of a patient’s lab test data allows physicians to identify gaps in care and be more effective in how they diagnose, treat, and monitor patients.
All of these reasons are in play at one of the nation’s largest projects to standardize clinical lab testing services. For the Michigan region of Ascension Health, an ambitious integration of clinical laboratory testing services is underway. This project involves seven member organizations, including 14 hospitals and 18 laboratories.
During a presentation at the THE DARK REPORT’S Executive War College in May, Carlton Burgess, MSM, Vice President of Laboratory Services at Ascension Health’s St. John Providence Clinical Pathology Laboratory in Grosse Pointe Woods, Mich., outlined six primary goals for this ambitious lab program. They are:
- Faster workflow and shorter cycle times;
- Improved identification and elimination of non-value-added processes;
- Increased adoption and use of continuous improvement, Lean, and similar methods;
- Better use of sophisticated informatics and real-time analytics;
- Collaboration with other providers to deliver more value from lab test results; and,
- Measurable improvements in patient outcomes and lower costs of care.
“Essentially, all the Ascension labs in Michigan are working to align their mission and values with those of the parent organization by improving the quality of care and cutting needless spending,” stated Burgess. “In addition, our labs are working to implement the Ascension quadruple aim at about the same time that the health system itself is doing so.
“Ascension Michigan’s quadruple aim involves: 1) delivering the highest quality care; 2) improving the patients’ experience; 3) improving the providers’ experience; and 4) delivering care at the lowest possible cost,” said Burgess.
From Costs to Revenue
Another goal in this statewide reorganization and standardization of these laboratories involves generating revenue. “When fully implemented, this project will transform clinical laboratory operations from a financial cost into a revenue generator,” he added. “Our first target is to deliver $5.3 million in additional net revenue annually.
“These four goals are a challenge for a system as large as Ascension in Michigan,” noted Burgess. “In just our one state, we have seven member organizations, 14 hospitals, and 18 laboratories. In addition, we havesix different LIS systems, myriad different registration and electronic medical record systems, and an enterprise master patient index.
“Our pursuit of Ascension’s quadruple aim puts our labs at a crossroads between quality and finance,” Burgess commented. “Does that mean finance or quality will drive these initiatives?
Low Costs or High Quality?
“The commitment to the quadruple aim forced us within the organization to look at the financial opportunity versus the effect on quality,” he noted. “When we did, we found there was much support from senior leadership to lean toward quality. This means our lab initiative is never to affect the patients’ or the providers’ experience negatively just for the sake of getting down to the absolute lowest cost.
“Once we knew that, it became much easier to get buy-in from senior leadership for our proposed lab standardization project,” he added. Plus, he explained later, the accounting department showed that the project would help increase revenue.
In support of the quadruple aim, the path to regionalizing and standardizing Ascension’s 18 Michigan labs required all labs to work together. “To achieve this, the labs will be linked in four regions, a process we describe as regional integration,” he said.
“Each region has a core lab and rapid response labs and each region will be responsible for building lab volume through increased outreach testing,” he added. “In addition to changing how labs serve each region, our statewide standardization project has three objectives:
- “Repatriate existing send-out lab testing back into Michigan;
- “Establish standard test menus for each facility; and,
- “Renew each lab’s focus on growing lab outreach business.
“To accomplish these goals, Ascension Health in Michigan has eight labs operating as rapid response labs (RRLs) and this number will rise to 12 RRLs,” he said. “The lab at the Saint John Hospital and Medical Center (SJHMC) in Detroit will be expanded into that region’s core lab.
“In addition, we are already nearly standardized on Roche automation equipment,” Burgess explained. “This will help us standardize test methodologies and reference ranges across all laboratories. This automation also will handle the increased volume that will come from repatriating tests that are currently sent outside of Michigan, as well as handling the increased volume from growth and consolidation.
“Currently, Ascension Health labs sends more than 25,000 tests annually outside of Michigan,” he stated. “By bringing those tests back into our labs, we can save those costs.
“Other parts of the project include integration of our informatics systems,” he noted. “We will interface the SJHMC Atlas system to all of the EMRs in use at Ascension facilities in Michigan. We plan to use the Cerner PathNet LIS at all labs and the MedSpeed courier service to manage the logistics of moving testing. In addition, the sales and marketing teams at SJHMC will expand to grow the outreach business statewide.
A Goal of Full Integration
“At the start of this project, lab leadership had a high-level perspective of what it wanted to accomplish,” he said. “That included full integration within the four regions and the 18 laboratories, supported by a modern core laboratory in every region.”
Burgess used Ascension’s term “ministries” for each region: Borgess in Kalamazoo; Mid-Michigan-Genesys in Grand Blanc; Saint Joseph Health System in Tawas City; Saint Mary’s of Michigan in Saginaw; Crittenton in Rochester Hills, and Saint John Providence in Detroit and the surrounding areas.
“It is not in our plans to upgrade a core lab in Detroit to handle highly-esoteric tests,” he added. “We don’t want to replicate what a lab like ARUP already does, for example. On the other hand, we definitely want to keep the right testing in Michigan.
Right Test at the Right Time
“We are like many other health systems in that way because we want to do the right test at the right time in the right location,” Burgess added. “Our goal is to keep our lab testing in our system.
“Another goal is ensure that each facility has rapid response capabilities commensurate with the medical services that facility offers,” Burgess said. “Doing so will help us expand lab outreach programs in each region and regionalization will improve outreach program efficiency at each site.
“We plan to expand the outreach program to cover the entire state,” he explained. “In fact, the lab at SJHMC is a model for what we could do with our outreach program in each region.
“In our core laboratory at SJHMC, we have a system that is highly standardized on the Roche platforms, and that’s true in most of the regions,” he added. “While we do not yet have 100% of our facilities on Roche automation equipment, we are a long way toward standardizing in that way.
“As we look toward the future, we aim to standardize on our instrumentation as much as possible,” he continued. “That will help us avoid the problems that result when reference ranges come from different platforms.
“As mentioned, one of our goals is to repatriate all of the more than 25,000 tests that we send outside of Michigan each year,” he said. “To do this, we do not need to make a new or substantial investment because that testing capacity is already available in the Detroit core laboratory. But in the other regions, that testing is getting referred outside the system to external reference laboratories. Therefore, repatriation is the low-hanging fruit that we can do quickly and with no added investment.”
After discussing the basic strategies for lab regionalization, Burgess discussed how information technology would support standardization.
“One of the most important aspects of this project involves how the labs interface with Ascension Health’s EMRs,” he said. “For our interface, we use Atlas LabWorks as our primary connectivity product at SJHMC. We plan to use that same system in the other regions so that we can bring connectivity to the facilities that don’t have it already.
“Also, we’re considering standardizing on Cerner’s PathNet as our common LIS,” he said. “Right now, standardizing on Cerner PathNet is a long-term reach. We have a few different LISs in the system and five different versions of Cerner PathNet. As a health system, Ascension is heavily invested in Cerner, so there’s a natural fit to use those products going forward. Converting all of the LISs may take some time.
Ascension’s Lab Team to Regionalize Testing in All Michigan Hospitals and Laboratories
IN RESPONSE TO THE TRENDS OF INTEGRATED CARE AND FULLY-INTEGRATED HEALTH NETWORKS, the laboratory team at Ascension Health in Michigan has embarked on a program to fully regionalize, standardize, and consolidate laboratory services. What makes this a particularly ambitious project is that there are seven system organizations involved, not to mention 14 hospitals and 18 laboratories.
The map of Michigan below shows the location of the member health networks. The bullets below identify the manner in which the laboratory team will reorganize existing clinical laboratory facilities throughout Michigan, along with the primary goals for this ambitious laboratory regionalization initiative. Nationally, Ascension Health is the largest Catholic health system and is one of the largest non-profit health networks. It will take several years to achieve full regionalization of lab testing services throughout Ascension’s facilities in Michigan.
- Regional lab integration.
- Regional core laboratory.
- Facility-based rapid response labs.
- Regional market lab outreach.
Goals of Laboratory Regionalization:
- Repatriate send-out testing back into Michigan.
- Regionalize through rationalized testing menus for each lab facility.
- Renew focus on outreach growth.
Vendor Integration Too
“For our couriers, we have standardized throughout Ascension and within Michigan on MedSpeed,” he said. “We did that under a partnership formed a few years ago. Not only does MedSpeed provide courier services, but it also transfers supplies from point-to-point among facilities and departments as needed. Therefore, MedSpeed is a tightly integrated operation already.”
Following his discussion of the logistical aspects of standardization, Burgess explained the project’s expected financial results.
“When we first considered standardization, all of our discussions were at a very high level,” he explained. “But over time, we looked at the effect the project would have on our test menus, equipment at each location, staffing, and IT options.
Assessing Staff Needs
“We needed to know if we had the staff to support this project and if the people on staff would have challenges with it,” he said. “We also needed to know what kind of referral options we had and what those referrals would cost. Also, of course, we needed to know the IT status at each location so that we could determine what each location needed.
“For each facility, we needed detailed information, including the LIS in each organization and the lab equipment in each facility,” he said. “We also needed to know how much point-of-care testing each facility did, how the POC testing was done, how those results were disseminated, and how much the lab was involved.
“To help us with this aspect of the project we got support from the finance department and we brought in business analysts as early as possible,” Burgess said. “We also needed people who could help us with cost accounting and we invited in people from Ascension Health’s internal group purchasing organization, called The Resource Group. They do a lot of contracting across the Ascension Health system and they have an active lab subcommittee.
“Getting the finance people involved early was important because they helped us answer a lot of questions that were bound to be asked,” he explained. “At this point, we’re getting into the gritty details of the project. For example, when we looked at standardizing the testing menu, we needed to know if we could do so based on the equipment in each facility. If the goal was to standardize or regionalize electrophoresis testing, we had to have the same equipment in each hospital.
“Using that approach, we recognized that—instead of having seven electrophoresis instruments around the system—we needed two in the regional laboratory,” he explained. “Assuming that was done, how much could we get in potential savings by dropping service contracts and repair expenses on those extra pieces of equipment that were no longer needed? What’s the future value of dollars for that instrumentation that would no longer be needed? These are questions that the team in finance is helping us answer.”
Ascension’s Finance Dept. Helped Lab Team Evaluate Different Aspects of Regionalization
“IT IS INTERESTING TO NOTE that we often hear how cost accounting is not a strength in many hospitals or in hospital laboratories,” said Carlton Burgess, Vice President of Laboratory Services at Ascension Health’s St. John Providence Clinical Pathology Laboratory.
“But as we developed our regionalization plan for the 18 laboratories at Ascension Health in Michigan, the folks in finance made a significant contribution in analyzing one difficult question after another,” he stated. “With their help, we could do deep-dive cost accounting on every test that we perform, including those in the core laboratory.
“They helped us consider whether changing a referral pattern would increase or reduce costs,” noted Burgess. “Together, we could analyze whether moving testing from one lab to another, or bringing it into the core laboratory, would make sense financially. For certain tests, we learned that it would cost more to do them in the core laboratory, than keeping those tests at one of our sister labs.
“This team approach with finance helped us evaluate tests that we send out,” he added. “We learned it would be better to keep some tests in-house. For some of these tests, the GPO had negotiated the contracts for us and we asked it to renegotiate based on what we learned from finance about how we could do those tests in-house at a lower cost than what we were paying when we referred them out.
“For us, there were clear benefits of doing a deep dive on cost accounting with the finance folks,” Burgess commented. “Because the laboratorians were collecting the data for our analysis and sending that data to finance, the accountants could develop a pro forma look at what financial results we might expect from this laboratory integration.”
This lesson is an important one, Burgess suggested. “Having a financial analysis of the project helped to lower the barriers for justification when we presented our plan to senior leadership,” he said. “And, having the financial people present when we made our presentation to leadership meant that when we got a question about any of the content, we could ask the finance staff to provide the answer.
“As a result of this experience, I recommend that if your lab has a good relationship with your institution’s finance department and you can get them involved in analyzing the financial aspects of a lab project like this, then include those people in your planning,” recommended Burgess. “They will be very, very helpful moving forward.
“For our lab project, they created a five-year financial model on the effects of regionalization and standardization,” stated Burgess. “The model included a snapshot of an optimized financial statement for fiscal years 2018, 2019, 2020, 2021, and 2022. The report included fully-loaded costs, including the costs of staff and benefits and all other expenses.”
Contact Carlton Burgess at 313-343-3350 or firstname.lastname@example.org.