3/14/2016. The Changing Laboratory Financial Paradigm. Title. Learning Objectives. After attending this program, the attendee should be able to:

Transcription

1 The Changing Laboratory Financial Paradigm Leo Serrano, FACHE, DLM(ASCP) cm Clinical and Operational Consultant FIRSTPATH Laboratory LLC Pompano Beach, FL rep T Title The speaker has no conflict of interest to report. The speaker has no conflict of interest to report. he speaker has no conflict of interest to report. The speaker has no conflict of Learning Objectives After attending this program, the attendee should be able to: Recognize the differences between traditional and new paradigms. Identify changes in emphasis on the financial reports Develop tactics and metrics for the future. 1

2 COMMON PARADIGM Lab is a cost center. Thinking restricted to inside the box. (Leery of radical change) Bureaucratic organization Lack of autonomy- multiple levels of signatures required. Lack of urgency in decision making decisions made above lab level. Required to use hospital IT and billing systems. Management reports lacking most concentrate on Financials, lack of detailed productivity, business and efficiency reporting. Outreach if present, is a sideline afterthought and underfunded. Often revenues are co-mingled with Hospital. COMMON PARADIGM (continued) Most budgets and revenue estimates still based on Fee For Service (FFS) mindset. Financial mindset is the more you do, the better. Management emphasis on revenues. Pressure is to lower the costs without real evaluation of value. Metrics are still holdovers from the FFS management days. Revenue/UOS Expense/UOS > Supply expense, Personnel expense GROSS TRENDS TODAY Cost Containment/Controls. Physician Practice Acquisition. Adoption of Best Practices/Process Improvement. Change from treating to preventing diseases Move from In-patient to Out-patient. Consolidations Departments, Hospitals, Systems Trying to determine what works. > New revenue streams? 2

3 NEW PARADIGM COST CONTAINMENT Reduced reimbursement mandates cost containment We either contain costs or will face RATIONING. PHYSICIAN ISSUES Rational Intervention Philosophy > Is it really necessary-does it bring value? Use of Best Practices must have demonstrated value. Too many drugs, procedures, need for revenue enhancement PREVENTATIVE MEDICINE Move from Treatment based mentality to Prevention based mentality > Examples: Asthmatics with household pets (dogs/cats). > Under vaccinated children and adults > Obesity control, Smoking Cessation, etc. MOVE FROM IN-PATIENT TO OUT-PATIENT > Are we over bedded? NEW PARADIGM Data-based Population Health Use of Generalized Patient Data for determination of overall health direction. Datamine EMR Data and share data with insurers, etc. Chronic Disease prevalence. > By gender, age, State, County, Zip Code Acute Disease Prevalence > By gender, age, State, County, Zip Code > Life-style Malignancy Prevalence > By gender, age, State, County, Zip Code > Life style, co-morbid conditions New Paradigms for Hospital Laboratories Future is Less Volume More value Utilization Management- reduce duplicate and un-necessary testing. Elimination of questionable tests un-proven diagnostic/prognostic value Implementation of true Process Improvement Systems. Education of Providers by Laboratorians Progressive laboratories are educating their medical staff members Academic Medical Centers Laboratory Grand Rounds Rounding with the clinicians Elimination of diagnostic silos. Look for Synergies Laboratory Pharmacy collaboration antibiotic stewardship, etc. Laboratory Pathology Radiology/Imaging collaboration 3

4 New Paradigms for Laboratories Fact- The hospital Financial Department/CFO will not change his report just for the lab! Action- We need to develop our own Lab Generated Metrics to augment and supplement the standard Financial Metrics produced by the Finance Dept. This will be made easier by lab specific analytics software. > Visiun > Viewics > Orchard and others New Paradigms for Laboratories Manage to net income, not just revenue or expenses. Evaluate tests on basis of both Clinical AND Financial viability. Evaluate supply expense on the basis of actual procedures performed. Most Budgets are still based to a greater or lesser degree on FFS values. Predict revenues on number and mix of billable tests. Estimate expenses on previous historical expenses. New Budget Paradigm needed Calculate revenue allocation based on outcomes contribution. Develop a Laboratory Formulary Committee to address utilization. Change to a cost per reportable result philosophy BY PROCEDURE! NEW LAB METRICS You will need to consider some new metrics to monitor and manage. # tests/hospital visit (both overall and by patient) Specific test frequencies by patient and by doctor > Routine tests subject to over-use Once in a Lifetime Tests (Genetic) that are repeated Esoteric tests/patient/doctor Shotgun genetic tests such as NGS panels 4

5 New Paradigms for Laboratories Consolidation and Validation of Platforms and Vendors Look at control of shipping costs, etc. Look at in-stock inventory do you do JIT (Just In Time) inventory? Vendor validation using ISO type criteria. Evaluate new Acquisition methodologies > Rent Buy Lease CPRR -??? Better Utilization of Staff Pressure to control personnel costs. > What percent of your total costs are personnel? Are you utilizing the right mix of staff? > Generalists vs. Specialists > 4 year vs. 2 year vs. non-technical support? Establish new revenue streams Out-Reach/In-Reach Programs > If you have employed physicians- start there (In-Reach program). > Will require competitive pricing and customer service. Non- Testing Programs > There are companies that buy left over, non-identified specimens from labs. Ensure that all HIPAA guidelines are met. Can be significant income. Veterinary Services STRATEGIES > Requires some changes/customization of normal ranges, etc. > Anatomic Pathology is very similar. Have a Veterinary Pathology consultant available. STRATEGIES LOOK FOR SYNERGIES Within and outside of your organization. Look at Outpatient Diagnosis Centers in conjunction with Pharmacy/Imaging and co-locate near physician office concentrations. > Ensure ease of access for patients/families. > Look at this from the patient/consumer perspective. > Goal is a one-stop visit for the patient/family. 5

6 STRATEGIES Establish laboratory utilization or formulary committee. Should be multi-specialty, all physician, backed by Management. Establish educational programs for your providers. Should be doctoral level presenters to get respect. Grand Rounds, food based programs. Goal is to educate to manage utilization. Look at everything with fresh eyes! Ask why you do things a certain way (ask WHY 5 times). Bring in a non-lab colleague to look at your operation. > They may see things that you are so accustomed to seeing that you miss them all together. ASK YOURSELF (and your staff) DO WE HAVE TO CHANGE THE WAY WE LOOK AT THE LAB? Why do we do things the way we do? What can we change to thrive in the new environment? IF YOU ALWAYS DO WHAT YOU VE ALWAYS DONE; YOU LL ALWAYS GET WHAT YOU ALWAYS GOT! INSANITY IS DOING THE SAME THING OVER AND OVER, THEN EXPECTING A DIFFERENT RESULT. ACTIONS Examine your operation with new vision. Ask why you do things the way you do? (Ask why 5 times) Why are you organized the way you are? Is your layout the most efficient? Is your staff up to date on the science AND the practicality? Do you have a long range plan for your operations? > How do you select the equipment and test menu? Examine your operation with a variety of inputs. Your Pathologists Your staff not just the supervisors/managers Your senior administration members 6

7 ACTIONS Introspective examination is hard (on you and the staff). Insecurity and fear of the unknown will need to be addressed in a positive way. This is normal. Make sure your senior management is at least comfortable with your desire to change. May well require a change in Culture. This will be difficult on both you and your staff. It is a pre-requisite for survival in the future. SUMMARY The paradigm is rapidly changing. The new paradigm will rely on information. In the future- Less is More (utilization management) Less volume- MORE value. Physician education is key. Get out of the laboratory- use your pathologists. Eliminate Silos look for synergies with others. Pharmacy and Imaging are excellent partners SUMMARY Develop Lab Financial/Performance Metrics in addition to those from the hospital financial department. Laboratory Analytics can help immensely. Manage to Net Income -not revenues/expenses Use a cost per reportable result philosophy. New Metrics to consider: > # of tests/hospital visit > Specific test/patient and doctor 7

8 SUMMARY Evaluate Ordering Patterns By physician, ICD-10 code, etc. Esoteric tests, Once in a Lifetime genetic tests. Shotgun NGS profiles for malignancy. Evaluate Vendors and Platforms Look for revenue streams outside of the usual. Look at your lab with Fresh Eyes. Question everything. Ask why 5 times for a true answer. Evaluate downstream effects of change before fully implementing. SUMMARY Be prepared for pushback. Explain your vision of the future-(in a positive light). Change is frightening- answer truthfully. Cultural change will most likely be needed. Be patient but firm. Make sure you have backing from the C-Suite. FINALLY REALIZE THAT WE ARE ALL IN THIS SAME BOAT. We may not have all of the answers but we are going to persevere. Don t let the Negative Insurgency win! We will ADAPT IMPROVISE OVERCOME! 8

9 Questions?? 9