CEO SUMMARY: Many of the nation’s more innovative laboratory organizations are paying closer attention to laboratory productivity and operational performance. To achieve improved operations, these labs are putting three tools to greater use. They are using targeted automation solutions and giving middleware a greater role in the effort to squeeze ever more productivity from every aspect of lab operations. Lean and Six Sigma quality management methods are also growing in popularity.
NATIONALLY AND INTERNATIONALLY, clinical laboratories are becoming savvier about operational issues. That was a key theme which emerged from this year’s Executive War College on Laboratory and Pathology Management, held in Miami, Florida on May 3-4.
In the pursuit of more efficient and effective operations, early-adopter laboratories are using a mix of automation, middleware, and quality management methods. It is this willingness to blend several solutions to achieve operational improvement which is a change from earlier years.
In fact, the growing interest in middleware across the lab industry is specifically rooted in the expanded use of laboratory automation and, to a lesser degree, use of quality management methods to improve work processes within the laboratory.
The triple themes of targeted automation, middleware, and use of quality management methods could be heard within many of the 50 presentations delivered at this year’s Executive War College. This is not a surprise, because it is a rational management response to such trends as declining reimbursement and growing shortage of medical technologists (MTs) and medical laboratory technologists (MLTs).
Moreover, when used together, these three tools of targeted automation, middleware, and quality management methods can produce greater benefits than when each is deployed individually. Lab directors and pathologists recognize this, which is why many first-mover laboratories have implemented all three approaches, often simultaneously.
Not only do these pioneering laboratories have lessons to teach, but they provide us with an early peek at how each of these three “mini-trends” contributes to operational efficiencies and work flow improvement. What follows is an analysis of each solution.
Lab Solution One:
1. Targeted or “Piece-by-Piece” Laboratory Automation
First is the use of automated solutions. Today’s marketplace for laboratory automation looks very different, than, say, 10 years ago. In 1996, automation generally meant TLA (total laboratory automation). This was the concept of starting a specimen in pre-analytical and moving it through analytical and into storage without the need for humans to manually handle the tubes.
Ten years ago, there were only three primary vendors of TLA equipment and systems in the United States. As well, there were few laboratories buying the TLA solution. Even today, the number of sites in the United States where TLA has been installed remains a relatively small number.
What happened to laboratory automation over the past 10 years is a business school case study in customer demand. The demand for laboratory automation was strongest for task-targeted solutions that did not require a major overhaul of the entire laboratory’s workflow.
This was first revealed in the demand for pre-analytical automation systems. From 2000 forward, sales of automated systems for pre-analytical functions grew steadily. Demand for such systems is directly related to an operational truth for almost all clinical laboratories.
It is widely-understood that labor is a major cost component of laboratory operations and that accessioning labor represents a significant proportion of total labor costs. Moreover, accessioners are relatively low-paid and turnover is high. Invariably, the need to actively recruit, train, and manage pre-analytic labor places great demands on management.
Thus, when looking at opportunities to use automation, it was logical for lab directors and pathologists to focus on pre-analytical systems. Starting in 2000, sales of pre-analytical automated systems began to grow. Typically, these systems had a stock- yard for sorting specimens according to their destination. Among other functions, labs could include automated decapping, centerfuging, and aliquotting in their pre-analytical automation.
Sorted racks of tubes were delivered from this automated system to testing instruments by “sneaker power”—people walking from one station to the next. This avoided the expense—and inflexibility—of an automated transport line.
Over the past six years, demand also surged for another type of automated solution: the consolidated workstation. For example, putting chemistry and immunology testing into an integrated instrument suite has proved popular. This allows a laboratory to rearrange a high-volume work cell (without the need to reconfigure workflow throughout the entire laboratory) and significantly increase the productivity of technical staff in this work cell.
Within the United States, the demand for laboratory automation has centered around specific, targeted solutions. It also means that many lab- oratories in this country are buying and installing automation in a piecemeal fashion.
This is an important point, and pro- vides some understanding about today’s lab management mindset. Use of specific automation solutions to increase the productivity of labor is directly linked to laboratories’ demand for middleware. It is also linked to the steadily increasing use of quality management methods in American laboratories.
After all, if a laboratory is installing automation in a piecemeal fashion, it runs up against that well-known imperative: “Don’t automate bad work processes!” Task-targeted automation will speed up throughput in a specific work process within the laboratory. But, without work process redesign of the lab’s entire work flow, this task-targeted automation solution can create interesting problems to work flow upstream and downstream from the automation.
As laboratory management recognizes this situation, it can choose two tools to help it resolve many problems related to automation. One solution is middleware. The other solution is the use of quality management principles to redesign work flow and improve or eliminate flaws in individual work processes within the laboratory.
Automation Examples At the Exec. War College
LABORATORY AUTOMATION was a major theme in several presentations. For example, the newly-opened Century City Doctor’s Hospital in Century City, California built a highly-automated laboratory specifically to take advantage of the latest technology. The objective was for the laboratory in this 190-bed hospital to operate 24/7 with just 15.5 FTEs, including phlebotomists.
At the laboratory of Ingalls Memorial Hospital in Harvey, Illinois, automated systems were installed in the core lab. Currently an automated, wireless system is being implemented in phlebotomy in order to achieve further productivity gains across the pre-analytical and analytical processes.
Lab Solution Two:
2. Middleware Solutions To Unlock Productivity
This is a perfect segue into middleware and the reasons why laboratory use of this solution is exploding. Piecemeal introduction of laboratory automation creates a demand for software solutions that can maximize the productivity of the automation, as well as help resolve some of the upstream and downstream workflow problems created by automation.
But there are two other factors which fuel the increased demand for middleware seen in the lab marketplace today. One factor involves how hospitals currently spend money on information technology. The second is linked to the increased number of hospital laboratory outreach programs which entered the marketplace during the past six to eight years.
In its simplest definition, middleware can be described as “software agents acting as an intermediary between different application components” (per Wikipedia.com). Laboratories have used middleware for years. Middleware is the software that connects different instruments to the LIS (laboratory information system). Middleware is the interface that allows different applications to interact with the LIS. Discrete software products to enable Web browser-based lab test ordering and lab test reporting are examples of middleware.
Historically, the laboratory’s LIS vendor was a primary source of middleware. Whenever the lab wanted a new function, its LIS vendor would generally write the code necessary to support that function. Under this arrangement, few laboratories viewed these customized solutions as “middleware.” They were generally considered to be enhancements to the LIS.
Another source of middleware has been in vitro diagnostic (IVD) manufacturers. As they introduced new instrument systems, these companies would provide the interface (middleware) that allowed the new instrument to communicate with the LIS.
This is why, during the 1990s, the primary vendors of middleware were the LIS and IVD companies. However, for a variety of reasons, most lab directors and pathologists did not view these products as “middleware.”
In recent years, this long-standing status quo in LIS function has been altered. Multiple and fundamental changes in the healthcare marketplace are disrupting the long-standing relationships laboratories have maintained with their LIS vendors and IVD vendors.
Hospital IT Spending
One primary factor is how hospitals have redirected much of their spending on IT (information technology). In recent years, hospitals and health systems have devoted increasing amounts of money to integrate all their clinical data repositories, such as laboratory, radiology, and pharmacy. The hospital’s goal is to present the physician with a single-screen view of patient data and to lay the groundwork necessary to implement a full EMR (electronic medical record) system.
This is the necessary step to enable the electronic medical record. In response to this shift in hospital IT spending, healthcare IT companies redirected their product development efforts to support this demand from their biggest-spending customers. But this shift in product emphasis within the IT vendors had consequences for laboratories.
Improving LIS Products
It means that fewer resources are devoted to enhancing and improving LIS products. It also means that hospitals are less inclined to invest in the newest generation of LIS products. First, they are putting most of their IT budget into IT integration. Second, hospital administrators recognize that there is relatively little incremental value in upgrading to a new LIS.
Because they are selling fewer LIS upgrades, IT vendors don’t have an economic incentive to build new features into their products. Moreover, they are less inclined to agree to write custom code for their existing LIS customers.
This is the source of the squeeze which pushes laboratories to seek out a third-party source to write the specific middleware solutions the labs need to maximize the productivity of their automation.
It means that fewer resources are devoted to enhancing and improving LIS products. It also means that hospitals are less inclined to invest in the newest generation of LIS products.
When first approached by their lab customers about such solutions, many LIS vendors answer in one of three ways: 1) “We don’t have the resources to create this code for you,” or, 2) “It will take us many months or even one year to deliver the software solution you want,” or, 3) “Here’s the tens of thousands of dollars you’ll need to pay us to program that software function.”
Faced with any or all of these alternatives from their primary IT vendors, it was inevitable that lab managers and pathologists would look for third-party IT vendors who would say: “Yes! We can do this. We can do this in just a few weeks or months, and you will find the cost to be quite reasonable.”
This phenomenon has been rein- forced by steady improvements in computer hardware, software, new IT standards, and capabilities of the Internet. Collectively, these ongoing enhancements make it easier for a third-party vendor to create an effective software solution for a laboratory in an acceptable time period at a reasonable price.
IT Vendor Priorities
Thus, one reason laboratories have been encouraged to look past their traditional LIS vendors for middleware solutions is the fact that these same companies are busy serving the overriding IT priorities of hospitals and health systems. These IT firms have a motive to serve the larger needs and bigger IT budgets required to implement these hospital-wide IT projects.
But there is another major factor that encourages laboratories to purchase middleware from third-party sources. Each time a hospital decides to launch a laboratory outreach pro- gram, it creates the need for additional IT capabilities. These range from courier/logistics management, specimen tracking, and offering electronic lab test ordering/results reporting to office-based physicians, to coding, billing, collections, compliance, and customer service.
What makes these laboratories customers for middleware is the fact that they have an LIS that was designed to serve an inpatient testing environment. In this role, their LIS may have performed quite satisfactorily. But, it was never designed to handle the needs and functions demanded by a hospital laboratory outreach program.
This makes middleware a perfect solution for the hospital laboratory that wants to ramp up an outreach program. Middleware gives the laboratory the outreach functions it needs—without having to upgrade or replace its LIS. Further, middleware is a way the laboratory can add specific outreach functions sequentially, whenever needed and as warranted by increased specimen volume. Best of all, profits from the outreach program can pay for each additional middleware solution.
Lab Solution Three:
3. Lean/Six Sigma Quality To Drive Improvements
The third trend, use of quality management systems like Lean, Six Sigma, and ISO-9000, dovetails neatly with “piece-meal” automation and the increased use of middleware. Quality management systems give lab administrators and pathologists effective tools for improving productivity, reducing waste, and increasing the reliability of individual work processes.
Use of quality management methods has two consequences Each directly touches the lab’s use of automation and middleware. One, it gives lab managers an effective tool to resolve the upstream and downstream work flow issues that can be created by automating a single part of the lab’s work flow. Two, it creates an immediate and compelling need for accurate, detailed information in real time. That’s because Lean/Six Sigma teams must gather accurate, immediate, and ongoing information about the work processes they are studying.
Lean/Six Sigma Examples At the Exec.War College
INVARIABLY, LABORATORIES WHICH ADOPT Lean and Six Sigma management methods achieve spectacular results.
This was certainly true at 1,500-bed Jackson Memorial Hospital, located in Miami, Florida. Not only did attendees at the Executive War College get to hear directly from the lab’s Lean Team which implemented a redesign of the high-volume core laboratory, but many took advantage of the opportunity to do a site visit of the laboratory to learn how Lean projects helped the lab slash average turnaround time for inpatient testing, accompanied by a 50% improvement in productivity.
Another remarkable Lean project is happening at Washington Hospital Center in Washington, D.C., where the laboratory team is using Lean to redesign workflow. The goal is to improve workflow to allow it to completely remove an existing total laboratory automation (TLA) system in the high- volume, core lab.
Middleware is one way to meet that demand for detailed, real-time information, for all the reasons described above. It can be implemented quickly, it is reasonably-priced, and it can be customized to provide the precise data sets needed by management.
Work Flow Redesign
Further, once a laboratory decides to make a major commitment to implementing quality management methods, it begins to look at work flow in a holistic fashion. Rather than to view a problem as related to a specific work process, quality management systems teach laboratory staff how to identify upstream and downstream factors which contribute to or compound, the bad effects of a specific work process.
As published on THE DARK REPORT in recent years, effective use of quality management systems, such as Lean and Six Sigma, has triggered substantial improvements in projects that require just 12 to 16 weeks to implement. It is common for the outcomes to include a 50% reduction in the average test turnaround time for inpatient testing, and 40% to 50% improvements in productivity and reductions of both errors and costs.
Having explained each of these three trends—increased use of automation, increased use of middleware, and increased use of quality management systems—I would like to step up to a higher strategic perspective and answer two questions. Why have these three trends appeared almost simultaneously in the last six years, but not earlier than 2000? And why are these three trends interlocked and interrelated?
I answer the first question by pointing out that the decade of the 1990s was unkind, even brutal, to the laboratory industry. The disruptions caused by managed care and closed-panel HMOs were extremely destructive. Reimbursement fell precipitously. Access to patients was denied to laboratories that were not part of an HMO’s provider network. Labs lacking contract access to patients lost major shares of their local market.
Providers, including hospitals, physicians, and commercial laboratories, moved swiftly to create regional consolidated organizations and use the critical mass of these lab organizations to negotiate more favorable terms with managed care companies. Within the hospital laboratory sector, consolidation of hospital ownership into multi-hospital health systems thus triggered widespread consolidation and integration of the laboratories within the health system.
This consolidation and integration of laboratory services was generally accomplished by 2000. Thus, as hospital and health system administrators established operational and cost-control targets in subsequent years, pathologists and laboratory directors began looking at ways to streamline lab operations and boost productivity.
Not surprisingly, targeted automation solutions, useful software enhancements, and redesign of workflow and individual work processes were seen as effective methods to achieve the operational improvements needed to meet institutional goals. Moreover, all three solutions can be combined to further increase the benefits which accrue from their use in refining laboratory operations.
Publicity About Outcomes
It was the lab industry’s first-movers and early adopters who were quick to see the potential gains from using these management tools. They were also willing to share their successes and lessons learned in public presentations and stories in the lab industry press. As other lab directors and pathologists saw the outcomes from these projects, it made it easier for them to convince hospital administration to provide the capital budget and other resources needed to introduce these tools into their own laboratories.
Thus, it is not surprising that so many presentations at this year’s Executive War College included a discussion about the use of lab automation, middleware, and quality management systems. These three trends are proving to be highly-effective tools in the drive to improve the performance of laboratory operations while controlling or reducing costs. This is why it would be timely for labs to review their strategic priorities and look at ways to deploy these three management tools.