CEO SUMMARY: As growing numbers of people enroll in consumer-directed healthcare benefit programs, laboratories will need to develop ways to directly service the needs of patients interested in ordering their own laboratory tests. That’s one reason Pathology Associates Medical Laboratories was motivated to develop and offer direct access testing to consumers in Spokane, Washington during the past two years.
DESPITE HIGH INTEREST in direct access testing (DAT), only a handful of laboratories currently offer such programs to consumers. Consequently, both labs and consumers have more questions than answers about DAT.
To fill that information vacuum, THE DARK REPORT recently caught up with Lawrence Killingsworth, Ph.D., who has a major role in ResultsDirect™, the DAT program operated by Pathology Associates Medical Laboratories (PAML). Located in Spokane, Washington, PAML’s DAT program launched in September 2002.
“Dealing directly with consumers creates new opportunities and new challenges for the lab,” said Killingsworth. “It takes a different mindset to appropriately serve the needs of consumers. Also, both operational protocols and the service infrastructure of a DAT program are different from traditional arrangements used to support the testing needs of office-based physicians.”
In making the decision to offer laboratory testing to consumers, PAML knew it was entering uncharted territory. “The ResultsDirect team did a consumer-readiness survey, consulted with area physicians, then spent months planning and designing our DAT program. When we launched ResultsDirect, it was with the notion that we would listen to our customers and learn as we go,” said Killingsworth. “There were plenty of unknowns, but that didn’t deter us.”
Reaction of Physicians
One big question was whether physicians in the area would react negatively to the fact that consumers could order laboratory tests without having to visit their doctor. “This turned out to be a non-issue,” Killingsworth said. “There was little concern within the physician community, either prior to our DAT program launch or during the two years of its operation.
“A few physicians were concerned that people might substitute lab test results for a full medical examination. This could lead to over-utilization of lab tests or false reassurance from normal results. Some doctors were also concerned about the potential liability of receiving results on patients they had not seen,” he explained. “Although ResultsDirect encourages customers to share their test results with their doctors, we only send the results to the customer. By not sending a report directly to the physician, we avoid putting the physician in a position of liability.”
Most consumers interested in ordering their own laboratory tests can be described as the “worried well,” observed Killingsworth. “Not surprisingly, these consumers are well-educated baby-boomers. They are health- conscious, have the discretionary income to pay for laboratory tests, and are motivated to monitor the status of their health.
“Despite the sophistication of many of our customers, it seems they have little interest in accessing their laboratory test results via a Web-based reporting system,” stated Killingsworth. “To date, our experience is that most customers prefer to either pick up their lab test results in person or have them mailed to their home address. What makes this particularly curious is that a significant number of our customers visit our Web site to view the test menu, check prices, and find a draw site.
“Our Web site also allows them to complete and print a lab test requisition form. They can then bring this with them when they come to the patient service center,” noted Killingsworth.
PAML’s ResultsDirect DAT testing program does use the Internet in a unique way. “DAT puts the laboratory in the retail business. This means we must collect payment from the customer at the time they order the test,” said Killingsworth. “To handle cash, we needed a system that allows the patient service center to conduct these transactions. That’s why we created a ‘Web-based cash register’ for them to use. This solution turned out to have other benefits. When we offer testing at remote locations, like health fairs and at community events, our ‘Web-based cash register’ is available to process consumer payments.
Tracking DAT Activity
“This is an example of the creativity required to establish a direct access testing program,” he added. “In fact, we developed comprehensive financial accounting software using Microsoft.Net. It allows several levels of detail. We offer this software package, called “Go Retail,” for sale to other labs interested in the DAT business.”
Establishing pricing for tests offered directly to consumers was another challenge. “Our goal was to develop pricing appropriate for our marketplace,” noted Killingsworth. “Our pricing strategy is to use the patient list price of our laboratory as a starting point and base the DAT retail price within a close range of that price. A factor in that decision is to know our fully-loaded cost per test. When selling at retail like this, it is important to charge a price that allows the laboratory to make a reasonable profit margin.”
From its inception, PAML had modest expectations for ResultsDirect. “Like other laboratories, we recognize that consumer-directed healthcare is a growing trend. We believed our DAT program would give us first-hand experience at meeting the needs and ever-higher expectations of consumers,” observed Killingsworth. “It has certainly worked out that way.
“From its initial launch, ResultsDirect continues to attract a steady flow of customers,” he explained. “They have a high level of satisfaction with our services. From a revenue standpoint, specimen volumes are stable and ample enough to support the program.
“To promote ResultsDirect, we have paid for a modest amount of advertising. Remember, this is a consumer market—the more you advertise, the more business comes in. Direct access testing requires a laboratory to adopt a retail mindset. We’ve also participated in health fairs and even given away free tests to promote ResultsDirect,” said Killingsworth.
Experience With DAT
PAML’s experience with direct accessing testing is similar to that of other laboratories which have implemented this program. There is small core of consumers keenly interested in regularly ordering tests. But DAT must be considered a niche business for most clinical laboratories.
“That’s certainly been our experience,” offered Killingsworth. “We’ve kept our expenditures to a minimum and developed a DAT program that complements our regular clinical testing activities. It’s been a cost-effective way for us to learn. It’s also allowed us to start building public awareness about our laboratory and prepare for the day when consumers will play a larger role in deciding which doctors and which laboratories will serve them.”