CEO SUMMARY: In Manassas, Virginia, a five-physician gastroenterology group is using its in-clinic anatomic pathology laboratory to advance patient care, while boosting revenue associated with this ancillary service. In this exclusive interview, the group’s physician business leader shares the different ways that this in-house pathology service benefits both patients and physicians. Patients like the faster turnaround times for reports and doctors like the close clinical consultations with their pathologists.
MANY PATHOLOGISTS KNOW THAT urology groups and gastroenterology groups are busily establishing their own in-clinic anatomic pathology laboratories. This trend is actively reshaping the form and structure of the anatomic pathology profession.
Yet, despite the importance of this trend on the clinical and financial future of private pathology group practices, little information has been made public about the impact that in-clinic anatomic pathology laboratories have on the urology groups and gastroenterology groups that operate them.
To fill that knowledge vacuum, THE DARK REPORT went searching for a representative case study and found one in manassas, virginia. This is where Associates in Gastroenterology, P.C., is now in its second full year of operating its own anatomic pathology laboratory.
As a direct result of adding this clinical service, the five physicians at Associates in Gastroenterology found they have: 1) improved patient care; 2) increased practice revenue; and, 3) added to the value of their medical group practice.
“Once our in-house pathology laboratory opened, we saw a major improvement in the average turnaround time for pathology test results,” stated kenneth N. Josovitz, m.D., who is President of the group. “Both patients and physicians consider this a major benefit.
“We spent between $300,000 and $350,000 to open our in-office pathology service,” noted Josovitz. “At that time, we hired two part-time pathologists with experience reading gastrointestinal cases.”
Since then, the practice has added a second gastroenterology practice of 10 physicians who send tissue specimens to the new in-office pathology lab. “To accommodate this increased case volume, we hired a third part-time pathologist,” he commented. “This in-house clinical service helped Associates in Gastroenterology increase annual revenue by an estimated 5% to 10%.”
Two Other Groups Join
A third gastroenterology practice is about to start sending specimens and a fourth is considering the option, said Bernie Ness, a consultant with In-Office Pathology of Lakewood Consulting in Lake Forest, Illinois. Josovitz worked with In Office Pathology to open the new pathology service in his practice. In August, the laboratory passed its CLIA inspection.
“Previously, we sent out all our tissue specimens,” said Josovitz who founded the gastroenterology practice in 1998. “we saw the importance of having the ability to run pathology tests on site and get the test results the next day. Before we started our in-office anatomic pathology service, we often had to wait several days for the pathology results. Now we get the results right away.
“Also, by keeping the specimens in- house, attending pathologists have much more control over the samples and over the quality of the process,” he continued. “Because specimens stay right here, we have more confidence in the process.
“Let me explain that,” said Josovitz. “when a group like ours refers tissue specimens to an outside laboratory, the referring physicians do not know where the specimens are being processed.
“Similarly, we won’t necessarily know the quality of the physicians who read and interpret the test results,” he added. “we don’t know if a breast pathologist or a dermatopathologist is reading our gastroenterology specimens.
“It’s not necessarily bad to send out specimens,” he commented, “but it is much more comfortable for us as gastroenterologists to have a pathologist experienced with GI reading our GI samples.
“Further, we get an extra level of comfort about the quality of the professional service because we hired our own pathologists, meaning we selected pathologists we already knew from previous experience,” observed Josovitz.
Before opening the in-office pathology service in April 2010, the practice hired one pathologist and later added two more. Each has years of experience in GI pathology and is paid on a fee-for-service basis. “Initially, at the launch of operations, we had one part-time pathologist,” stated Josovitz. “ A second part-time pathologist was added so we had back-up and coverage in case of a vacation or illness.
“In June of this year, we added the tissue specimens from a 10-member GI group also located in Northern virginia,” he said. “That’s when we hired our third part-time pathologist. In each case, we hired senior- level pathologists we had known previously.”
Josovitz’s group has three offices in Northern virginia. It operates two endoscopy suites, and has a 30-member staff. This includes three histotechnologists and one medical technologist.
Number of Tissue Specimens
“Even before we added the pathology specimens from the second group, we had five physicians collecting patient samples from our two endoscopy centers,” explained Josovitz. “Now, we have samples coming from two groups and that means we may run 20 to 200 samples per day, or roughly 1,000 jars per month.
“As a physician, it is comforting and reassuring for me to tell the patient that when we remove a specimen, we will look at it right here,” he commented. “we can also communicate directly to tell the pathologists that, although a particular specimen may not be a medical emergency, that patient may be worried about the test results. Having that close interaction and comfort with our pathologists really makes the process tick.
“Another advantage of the in-office pathology service is that our multiple pathologists allow us to get a second opinion within our own group,” he added. “For most patients, a second opinion may not be needed. But for the difficult case, having two or more GI pathologists who can look at that sample is quite reassuring for the physician and for the patient.
An Increase in Revenue
“In addition to improving patient care, the service also has increased our revenue,” Josovitz said. “Even though it’s a small percentage of our total revenue, in a time of decreasing compensation, this service plays a big role for us and possibly for other physicians as well. It is somewhere in the range of 5% to 10% of total revenue.”
On the subject of accountable care organizations (ACO), Josovitz said that he did not know if the in-office pathology service will be helpful were his group to want to participate in an ACO. “At this time, we are not considering participating in either an ACO or a medical home,” said Josovitz. “However, we do consider having an in-clinic pathology laboratory as a valuable tool when we are ready to recruit new physicians, both because of its clinical value and how it adds financial value to the practice.”
Gastroenterology Group Went to Consultants for Help to Establish Its In-Clinic Pathology Lab
LIKE MANY SPECIALIST GROUPS INTERESTED in operating an in-clinic pathology laboratory, Associates in Gastroenterology, P.C., decided to utilize an outside consulting company. This would help the group design an efficient laboratory and meet all compliance requirements with a minimum of delays.
“The group, based in Manassas, Virginia, needed about 300 square feet of space and an investment of approximately $300,000 to $350,000 in equipment,” stated Bernie Ness, a laboratory consultant with In-Office Pathology in Lake Forest, Illinois. Ness is also the founder of BJ Ness Consulting, LLC, in Toledo, Ohio.
“To start offering its own in-office pathology services, the group needed a pathologist, of course,” Ness explained. “The group also needed a tissue processor, a multistainer, embedding stations, along with slide and cassette writers. The most expensive of all this equipment is the immunohistochemical stainer.
“The value of the in-house pathology laboratory is that the specimens never leave the practice,” he said. “For a gastroenterology practice, this eliminates the need and expense of logistics and shipping.
“When tissue specimens must be shipped overnight, the overnight delivery companies can make mistakes and can easily lose or damage specimens in transit,” noted Ness. “Moreover, when the tissues are shipped out of town, the reimbursement for these cases does not stay in the local economy.
“In some communities, sending out $2 million to $3 million per year of pathology testing would be a significant hit to the local economy,” Ness explained. “The in-clinic pathology laboratory allows those specimens to remain in the community. Plus, by hiring local people and local pathologists, that also helps the local economy. In a small town, that might be noticeable.
“Under current regulations, practices may share a pathology laboratory,” he added. “Since the GI groups sharing this laboratory do not serve Medicare patients, they do not need to be in the same building. The practices share the lab expenses monthly and each has its own laboratory information system (LIS) to prevent co-mingling of patient specimens and test reports. This arrangement is technically known as a ‘block-shared lease agreement’.”