CEO SUMMARY: Deteriorating finances at many rural hospitals and smaller community hospitals is a growing trend. It is also a new consulting opportunity for local pathologists because financially-strapped hospitals often give their labs inadequate working capital and lack the staff needed to comply fully with state and federal compliance requirements. In Shreveport, Louisiana, Delta Pathology Group, LLC, has expanded its lab consulting business to meet demand from area hospitals for help with their lab compliance.
WHEN THE FINANCES of a rural or small community hospital deteriorate, one result is that the hospital’s clinical laboratory lacks the funding and resources needed to appropriately fulfill all regulatory and compliance requirements.
Because more smaller hospitals are struggling financially across the nation, a new demand for lab consulting and laboratory management services has appeared. These are often high-stakes situations, particularly if lab regulators have identified serious deficiencies and the hospital lab must take immediate corrective action or face closure.
Hospital Lab As Cost Center
Often, as the financial woes of a hospital increase, administrators tend to identify their clinical laboratory as a cost center. This is particularly true when the lab has no outreach program or outreach revenue. Once administrators view their hospital lab as a cost center, a downward spiral can begin and compliance or patient-safety failures may follow.
However, starving the hospital laboratory of needed funding and resources is a high-risk strategy. Failure to comply with state and federal regulations, particularly those of the Clinical Laboratory Improvement Amendments (CLIA), can result in sanctions, loss of license, or even closure of the hospital lab.
During the past year, exactly that has happened at 173-bed Peninsula Hospital Center in the Far Rockaway section of the Borough of Queens in New York City and at 37-bed E.J. Noble Hospital in Gouverneur, New York. In both cases, regulators from the New York State Department of Health (NYSDOH) inspected the hospitals’ laboratories and issued orders to close the laboratories due to deficiencies identified during on-site inspections of the respective labs.
Revocation of its lab’s CLIA license caused Peninsula Hospital to close permanently. As of this date, it remains closed. E.J. Noble Hospital did close after the NYS-DOH order revoking its laboratory’s license. However, within weeks, Noble reopened after hospital administrators negotiated a lab testing agreement with another nearby hospital that was approved by state lab regulators.
Further evidence of this trend can be found in Louisiana. It was last month when THE DARK REPORT profiled the hos- pital laboratory consulting activities at Delta Pathology Group, LLC, of Shreveport, Louisiana. It was 2005 when Delta’s pathologists founded Pathology Resource Network, LLC, (PRN) to serve as a management company to hospital laboratories in Louisiana and other states. Delta’s pathologists currently serve as laboratory directors in approximately 50 hospital laboratories.
Filling a Variety of Needs
Back in 2005, PRN would be an “…opportunity to offer value in a new type of relationship with hospitals,” recalled Vivek K. Khare, M.D., FCAP, a Delta pathologist. “We would offer a business solution to the problems some of our hospitals were facing with their laboratories. The solutions ranged from organizing traditional delivery of professional and technical services to offering solutions for laboratory consolidation and assistance with the due diligence required to assess whether or not to outsource the clinical laboratory.”
Fast forward seven years. PRN indeed provides these services. However, its fastest-growing service line today is helping hospital administrators address problems with their laboratories’ regulatory compliance. Often, these requests come from hospitals that give their labs inadequate working capital and resources.
Patient Safety Issues
“Probably the most common problems faced by labs in smaller hospitals today involve patient care and patient safety issues,” stated Marilyn Bullock, Chief Compliance Officer at PRN. “More specifically, there are issues related to management, transfusion services, proficiency testing (PT), and quality assurance and quality control (QA/QC). We also see technical issues, such as test and instrument validations. The staff in these labs also need education on compliance issues.”
“Demand for PRN’s consulting services is strong,” noted Linda Price, PRN’s Practice Manager. “If the hospital lab is short-staffed, the senior lab staff has to do more line testing and therefore may neglect administrative functions such as those required under CLIA. If a lab gets a CLIA inspection during this time and the inspectors find deficiencies, the lab must address those deficiencies within the prescribed time frame.
“CLIA compliance can be a significant challenge for a short-staffed hospital laboratory,” she added. “If a subsequent inspection finds continued violations, the lab could lose its CLIA license and therefore must cease operations. This step could result in closure of the entire hospital as well.”
Lab Compliance Problems
Seeking to avoid these problems, a growing number of hospitals in Louisiana have requested PRN consultation on CLIA compliance, such as when the hospital’s lab faces sanctions or a license revocation.
“One consulting project included a lab that CLIA inspectors sanctioned for inadvertently referring a proficiency test,” explained Price. “The hospital lab had to cease all laboratory operations or find new management within a week. In this case, Pathology Resource Network assumed operation of the entire lab, obtained a new CLIA number, and brought the lab into operation as a new clinical lab.
“In another case, CLIA inspectors cited a lab for severe deficiencies defined as ‘Immediate Jeopardy’ (IJ),” she added. “The hospital developed a plan of correction for its laboratory but did not follow through on it. With the pending revocation of its CLIA certificates, this facility of the rural hospital faced closure due to its inability to provide compliant laboratory testing support for the patients.
“PRN provided a new plan of correction for deficiencies in both the lab and the hospital,” continued Price. “We worked with CLIA officials to gain approval to allow a new entity, our Omega Diagnostics Services, to manage the lab under a new CLIA number. “Subsequently the laboratory passed both CLIA and state follow-up inspections,” she stated. “Omega obtained the necessary CLIA certificates and today PRN provides oversight management for this facility’s two rural clinic labs.
“It should be noted that most of the compliance work we do is with smaller rural facilities seeking to be proactive,” explained Price. “These hospitals want to prevent problems by having us do focused audits, assist with test validations, and make recommendations for documentation and process improvement.
“One out-of-state CLIA consultation we conducted involved working with a pathology group in the Northeastern United States,” stated Price. “CLIA inspectors cited the laboratory for a failure in its histology lab. When the lab was in imminent danger of receiving sanctions, the lab director asked for our assistance in developing a plan of correction.
Policies And Procedures
“PRN provided the policies and procedures,” she stated. “It worked with the lab staff to implement a QA plan to ensure ongoing compliance. The QA plan provided the framework for the leadership to make improvements and this laboratory was subsequently fully accredited.”
Two useful insights can be found in the experience of Delta Pathology and its PRN consulting subsidiary. First, there is growing demand by both rural hospitals and smaller community hospitals for consulting help in managing their labs’ regulatory and compliance needs. Second, local pathology groups can benefit by providing those consulting services.
No Surprises Among Frequent CLIA Citations
IN ITS WORK WITH HOSPITAL LABORATORIES throughout Louisiana, Pathology Resource Network of Shreveport, Louisiana, identified the most significant citations issued to laboratories by CLIA officials.
- Failure to participate in proficiency testing (PT) on regulated analytes.
- Repeated failure of PT.
- Collaboration with another lab on PT results.
- Failure to document corrective action for failed quality control.
- Failure to have diplomas on testing staff, including nurses performing non-waived point-of-care testing.
- Inadequate documentation of competency.
- Inadequate monitoring of the storage temperature of all reagents and materials and ensuring all are within the expiration date.
Among the factors that contribute to laboratory non-compliance are:
- Inadequate staffing that forces the laboratory manager to the bench rather than allowing the manager to attend to managerial duties, creating a backlog or loss of required regulatory documentation.
- Inadequate financial resources to provide for improvement in instrumentation.
- Physician demand to perform more testing in-house, causing a burden on staff.
- Loss of relief staff due to increased transportation costs to rural facilities.
- Lab manager vacancies filled with an inexperienced staff member when the financial resources needed for manager training are unavailable.