Lab Soft News

Interactions Between Lab Professionals and Hospital Executives

I was struck by the following quotation when I encountered it and decided to use it to launch a discussion about the interactions between lab professionals and hospital C-level executives. My goal here is to respond to the chronic complaint of lab personnel that they can't communicate with hospital executives. They are right, they can't, and there are very good reasons for it.

It is difficult to get a man to understand something when his job depends on not understanding it.  - Upton Sinclair

I believe that the jobs of hospital executives depend, in part, on not understanding the needs of the labs despite one's best efforts to articulate them. In order explain this phenomenon, I first want to list what I believe are the three major goals for most hospitals executives: (1) increase revenue through increased clinical activity; (2) expand the healthcare system (e.g., purchase other hospital systems, construct new buildings) in order to increase revenue; and (3) satisfy those clinicians who generate revenue. Note the absence of "enhance the quality of care" from this list. In my opinion, C-level executives will talk about quality but they will rarely fund it directly -- they assume that quality is a byproduct of good personnel and good facilities.

Hospital executives view clinical lab operations largely as a fungible utility like heat and electricity. They don't worry about how the electricity gets to the wall outlet -- they only worry about what it costs and what steps to take when the lights in the hospital go out. They will provide capital and operational funds to the labs only to achieve a level of performance that satisfies those clinicians who generate revenue for the system. They certainly do not want the labs hunkering down in valuable hospital real estate that can be repurposed to clinical revenue-generating activities.

So let's assume that, as a pathologist or lab professional, one is dissatisfied with the above scenario. What course of action should you pursue? The future of healthcare will be a focus on the diagnosis and treatment of disease using sophisticated and highly customized drugs. This is sometimes referred to as personalized medicine or the ability to offer the appropriate treatment to the right person, only when needed.

Pathologists and lab professionals, in order to have "adult conversations" with hospital executives, need to become an integral and indispensable part of the cohort of hospital professionals who diagnose disease and manage the appropriate therapy for the diagnosed conditions. In so doing, they become part of the clinical cohort that generates revenue for the hospital executives. The fusion of diagnosis with drug therapy has been called theranostics. It is insufficient to merely diagnose disease because, in so doing, one provides only "ancillary' services to those who actually treat the diseases.

Using Blackberries to Facilitate Patient Referrals

Hebrew SeniorLife, a long-term care facility for the elderly in Boston, is placing "technology" in the hands of field nurses to give them an edge in facilitating patient referrals from hospitals. These field liaison nurses were equipped with BlackBerry devices with wireless connections and special software. These devices allow them to quickly transmit patient data directly to the Hebrew SeniorLife’s admissions office for evaluation.

Here is the link to the story and below is an excerpt from it.

Hebrew SeniorLife operates two medical units — a 31-bed long-term acute-care hospital and a 46-bed transitional care unit — where patients receive more intense care than they would in a nursing home bed, but less than in a regular hospital. Competition for referrals is stiff in individual markets around the country, and Boston is no exception....hospitals typically give patients and their families a list of three competing nursing facilities that operate long-term acute care beds or a transitional care unit. Each of the three facilities on the list also is notified that a patient is about to be discharged, so they can send a nurse screener to perform an evaluation and insurance check, typically performed on a 10-page form. Now she fills out forms on her Blackberry screen and transmits them to the computers in the admissions office at Hebrew SeniorLife.

I found this story to be very refreshing -- that a long-term care facility for the elderly in Boston has discovered that field referrals can be facilitated using Blackberry devices to rapidly transmit an evaluation and insurance information back to the corporate admissions office. In general, I think that PDAs are underutilized for healthcare applications. Some of the barriers that deter physicians from integrating PDAs into their practice as communication devices are listed below (link here):

Lack of infrastructure — For a physician to use a PDA for electronic prescribing, electronic medical records, or electronic lab orders, pharmacies must be able to receive electronic prescriptions, medical records must be electronic, and laboratories must be able to receive test orders and send results electronically. This is rarely the case today.
Lack of connectivity standards — While there is a standardized vocabulary for medical care in regard to administrative connectivity (e.g., medical record coding), there is none for clinical connectivity.
Device shortcomings — In general, battery life is not long enough for wireless PDAs with Internet access.... Also, PDA screens are not ideal for medical imaging. Finally, many physicians would like to have a keyboard for entering information, yet they want the PDA to fit in their hands.

Indexing the Conents of Your PC and Collaborative Networks

You may be familiar with software like Google Desktop (download the software here). Among other things, the application searches your computer for emails, web history, and other files (e.g., PowerPoint presentations) in addition to searching the web. After you install it on your PC, it indexes the contents of your local drive so that when you perform a search, it alerts you to hits using your  search terms, both locally on your PC as well as on the web.

Software developers are now tumbling to the idea that the indexed contents of your PC is a powerful surrogate for your range of interests (e.g., web sites and blogs that you frequent) and who you know (e.g., emails you both send and receives). John Markoff of the New York Times discusses here a new category of software that enables the development of collaborative networks of individuals and determines who has special expertise and knowledge in various topic areas. Below is an excerpt from his article:

Tacit plans to start testing the service, called Illumio, next month....The system works by transparently distributing a request for information on questions like "Who knows John Smith?" and "Are Nikon digital cameras better than Olympus?" to the computers in a network of users....Because the information used to determine if someone is an expert on a particular question stays on local computers, Tacit's executives said Illumio would avoid potentially troubling privacy questions. The Illumio software is installed on users' PC's, where it is connected through a software interface to either Microsoft or Google's desktop search programs that index local user content, including documents and electronic mail....The Illumio software uses a reverse auction model to restrict the answer to the best expert.... For example, in response to the question, "Who knows John Smith?" each Illumio local system would independently determine who had the best relationship in the network based on parameters such as who had recently exchanged the most e-mail with John Smith. If the local system found a strong relationship, the local Illumio client software would pop up a request on that user's screen asking whether the user wished to respond to the person asking the question.

In a sense, blogs such as Lab Soft News already create a learning environment where individuals interested in the clinical labs and lab software can "hang out." Ideally, such environments are interactive if blog readers comment on posted notes. With software such as Illumio, the value of these learning and collaborative environments can be enhanced and extended and I, for one, am looking forward to this change. Read more about Illumio here.

QuesTest Bails Out of the DAT Market

After five years of competing in the direct access testing (DAT) market, QuesTest, the DAT arm of Quest Diagnostics, has called it quits. Here is the notice that has been posted on its web site (link here):

Important Notice to QuesTest Customers: Effective March 31, 2006, QuesTest consumer-selected laboratory testing services will no longer be available through Quest Diagnostics.

Below is an excerpt from an excellent article in the American Pathology Foundation (APF) newsletter (Winter, 2003) describing some of the trials and tribulations of the QuesTest business model in it early days. Link here.

Under its “QuestDirect” initiative, the company opened six retail locations at strip shopping malls in various markets in the Midwest in early 2001 with great fanfare. These lab stores were aimed at attracting consumers to walk in and order a lab test on their own and then pay by cash or credit card. However, low demand for the service led Quest to shut down all of its DAT retail sites last year. Quest spokesman Gary Samuels says that stand-alone retail lab centers turned out not to be an easy or cost effective way to attract demand. ...Meanwhile, Samuels says Quest has switched to using existing patient service centers as its “store front” for interacting with direct-paying customers. He says that this lower-cost model is being used in certain cities in seven states, including Nevada, Utah, Colorado, Montana, Missouri, Kansas, and Virginia. Kate Langevin, consumer health director for Quest, says the company is promoting QuestDirect in these markets through a combination of marketing brochures and newspaper and radio advertisements.

Beginning in 2002, QuesTest launched a new strategy for its DAT operations, using retail drug chains and grocery store chains to sell plastic cards representing various types of test panels (e.g., men's health panel). Following the purchase in a retail outlet, the customer would report to a Quest patient service center for venipuncture. Test results were mailed to the customer and could also be obtained on the web site. QuesTest begins offering testing services in Tampa, Florida and Columbus, Ohio, CVS stores in 2002 and also began to offer "Consumer Health Testing Services" in Connecticut with Stop & Shop in June, 2003. Links here, here, and  here.

Throughout the life of QuesTest, there has always been interest in how Quest, a national reference lab with a market cap of $11B, could offer DAT services on a nation-wide basis given that such testing is not permitted in about half the states without a physician test order. Below is the explanation of how this was accomplished with the link here.

Quest Diagnostics contracts for a physician to review your test request to determine which tests are medically appropriate, order the test(s), receive a copy of and release your results. In some states, a health care professional will meet or talk with you to determine which tests are medically appropriate, and may deny your request for testing. If your request for testing is denied by a physician or health care professional you will be provided with a full refund of payment.

I never personally believed that DAT was a good fit for Quest so I am not surprised that they have backed out of this activity. Below are my reasons for this conclusion:

• Pursuing DAT business created a conflict in the company's business channels because test-ordering physicians account for a large portion of their business. They were circumventing their physician clients with their DAT line of business and thus risked alienating these important customers.
• Physician office business and hospital lab reference work involves wholesale sales whereas DAT is retail, more analogous to the fast food business but with an information product. Satisfying customers in the retail sector is quite different than providing services to physicians and their office staffs.
• There was little likelihood that the DAT revenue would ever begin to approach even a fraction of the revenue from Quest's other lines of business, so the activity was forever destined to be a minor sideline for the company.

Lab Test for Chronic Alcohol Abuse

I came across an article recently about the use of capillary electrophoresis (CE) to measure the level of  carbohydrate-deficient transferrin (CDT) in serum, which is used to detect and confirm chronic alcohol abuse. Here is the link to article and below is an excerpt from the article.

Carbohydrate-deficient transferrin (CDT), currently considered the most specific marker of sustained heavy drinking, is being widely utilized for risk assessment in life insurance testing laboratories across the U.S. It is also used to detect relapses to drinking in alcohol rehabilitation centers around the world, and, most interestingly, seven European countries are using the CDT test in the public safety sector as part of the assessment, evaluation, and monitoring of intoxicated drivers....CDT is a variant form of transferrin, a glycoprotein that carries iron in the body. For reasons that are not yet fully understood, heavy drinking (four drinks a day for the previous 7–10 days) leads to the loss of some carbohydrates of transferrin, hence the name carbohydrate-deficient transferrin.

Below is additional information about this test from the Specialty Labs web site (link here):

The microheterogeneity of serum transferrin as analyzed by isoelectric focusing is altered in subjects who abuse alcohol. Over 80% of individuals drinking more than 60 grams of ethanol per day for 7 to 10 consecutive days show increased CDT concentrations in serum; these return to normal after 3 weeks of abstention. Detailed information of potential causes for false-negative and false-positive results have been reported recently. Briefly, patients with nonalcoholic liver diseases like primary biliary cirrhosis, hepatocellular carcinoma and hemochromatosis do not show abnormal CDT measurements unless there is excessive alcohol consumption.  However, some individuals infected with viral hepatitis C show elevated CDT concentrations despite lack of drinking.  Other sources of false-positives for CDT are conditions with low prevalence such as the genetic D variants of transferrin and the carbohydrate-deficient glycoprotein syndromes. Hormonal status and high and low ferritin concentrations also influence serum concentrations of CDT.

The various settings in which CDT is utilized got me thinking about some of the ethical implications of a lab test that unmasks the presence of a chronic "life-style" condition -- you may or may not want to call chronic alcoholism a disease. The individual tested may not want the condition revealed. In the case of an insurance physical where a blood sample is taken, is the applicant informed that a blood test may be performed that reveals chronic alcoholism?  Can her or she then refuse the blood testing, understanding that this may jeopardize the insurance policy application?

Of even more interest is the reference above to the use of CDT in Europe for testing intoxicated drivers. I will assume that these drivers have been tested for  blood alcohol and exceed the legal limit. However, what additional value is obtained by public authorities by the determination that they are chronic alcoholics by testing for CDT? It's probably likely that more stringent are measures then taken to rehabilitate them. From the perspective of public safety, this make sense in decreasing the recidivism rate for additional drunk driving arrests but it also appears to me to be a violation of individual rights.

Student Athlete Drug Testing at the University of Iowa

I came across an interesting article at the Hawk Central web site, the Iowa City Press Citizen's source about the University of Iowa (Hawkeye) sports, about drug testing of student athletes. Here is the link and below are excerpts from the article (bold face emphasis mine). This is a topic about which I had little knowledge so I found the article very enlightening.

Drug testing might not be popular, but it is common in today's society. College and professional athletes are tested on a regular basis, and now some high schools are doing it. Student-athletes at the University of Iowa are tested for drugs at least once during the school year, and nobody gets overlooked....The University of Iowa did approximately 950 drug tests on 550 to 600 student-athletes during the 2004-05 school year. Statistics show that less than five percent of the tests came back positive.....The tide started to shift in 1986 when the NCAA mandated random drug testing for student-athletes in all sports....A student-athlete who tests positive for steroids is immediately suspended from competition. A second positive test for steroids is grounds for dismissal.....The university has the capacity to test for alcohol, but it's harder to enforce a broad-based policy because some student-athletes are of the legal drinking age. It costs on average between $20 and $22 for a student-athlete to be drug tested at Iowa. The university spends approximately $50,000 each school year on drug testing. The test samples are shipped to a clinical laboratory outside of Iowa City. UI officials are prohibited from identifying the lab because of privacy laws....Student-athletes are required to sign a release form during orientation that allows them to be drug tested. The tests are done by screening a student's urine or saliva. No warning is given before a test is administered, and the results ultimately are sent to the president's office.

This article was very well written and very detailed, providing various insights into the drug testing program in a major university.  Here are some of my initial reactions to it:

• If a single university generates $50,000 in lab business each year for routine drug testing of student athletes, the total volume of business in the U.S. for all such programs must be substantial.
• According to the article, the ceiling for the percentage of positive tests is  5% ("less than five percent of the tests came back positive"). In a previous note on workplace drug testing in this blog (link here), it was noted that "4.3% of all workers tested positive for some sort of drug in the first six months of 2005 against 4.5 % in 2004." I am frankly surprised that student athletes test positive in a drug screening program at about the same rate as "all workers." I would have predicted that student athletes would have a lower rate of drug abuse although the group obviously skews to a younger age.
• I was somewhat surprised that the name of the testing lab cannot be disclosed on the basis of "privacy laws." I am not sure what this has to do with privacy -- it may have more to do with protecting the performing lab from legal entanglements.
• I am not sure why abuse of steroids is considered a more flagrant violation than other drugs of abuse. It may be because the steroids are performance-enhancing and give the athletes an edge on the field. The culprit is thus doubly damned -- he hurts himself and the program.

A Company that Brokers Medical Tourism

I have written a series of notes about medical tourism and offshoring of healthcare services. You can read some of them here, here, here, and here.  I just came across an article describing a Canadian company that serves as a medical tourism broker (medical travel agent?) for various types of operations in India, France, Turkey and other countries. In the article, a company representative suggests that the "wait lists" for operations in Canada are helping to fuel the medical tourism boom in that country. Here is the link to the article and excerpts from it below (bold face emphasis mine).

A Canadian company says wait lists at home are driving Canadians' demand for its services. MedSolution.com has fielded 2500 inquiries from Canadians interested in private cardiac and joint replacement surgery since it began operating in late 2005....So-called "medical tourism" is a well-established industry in Asia and the UK, but companies promoting it in Canada are relatively new. India has become a destination of choice because treatment is less expensive than in the US and doctors are often Western-trained...Getting a hip replacement, for example, costs about US$40 000 in the US, but US$15 000 in France and US$6000 in India. Although there is no guarantee that Canadians who have the surgeries performed out of country will be reimbursed by provincial health insurance plans, that is not a major obstacle for MedSolution's clients...Waiting lists are so out of control in [Canada], many patients are willing to pay anything to obtain swift access to the services they need....In one well-publicized case in Alberta, the province reimbursed Aruna Thurairajan of Calgary for the $3000 she spent having spinal surgery performed in India. The flight cost her an additional $2000.

Here is the link to MedSolution web site that is referred to above.  This web site is truly astonishing. There is a display on the home page that flashes the names of the countries where various surgical procedures are performed with a comparison of the cost of the procedure in Canada versus the country. Some examples for India: (1) total hip replacement, $40,000 vs. $5,800; (2) liposuction, $7,000 vs. $1,750; (3) heart pacemaker, $15,000 vs. $2,000. France, Poland, Turkey, Brazil, and Malaysia are listed as current or future participating countries.

It's no surprise that various types of cosmetic surgeries are being made available through this channel because these types of procedures are generally paid for out-of-pocket by patients. I had also suggested in a previous note about medical tourism (link here) that the prime potential clients for offshore operations would be individuals from countries such as Canada and the U.K. with governmental medical systems who did not want to wait in the queue for semi-elective procedures. This obviously seems to be occurring in Canada.

What I had not taken adequately into consideration until now is that the Canadian and U.K. health systems would consider reimbursing individuals who elected to travel to other countries for surgical procedures. Although this would undoubtedly result in some political backlash in the country, the cost savings will probably be too enticing to pass up and the length of the surgery queues could be shortened. I could also easily foresee health insurance companies in the U.S. providing incentives for their customers to travel abroad for procedures in preapproved hospitals by reducing or eliminating the co-pay for the procedures.

Here's a business idea -- someone should start the equivalent of a "Frommer's guide" to evaluate the quality of the various medical tourism offerings by country. The opinions of a "medical tourism broker" like MedSolution might be questioned as not being impartial.

Introduction to a Commercial Surgical Pathology Lab

Water Street Capital Partners, a Chicago-based private equity firm, has completed the acquisition of a majority ownership stake in Lakewood Pathology Associates (LPA). LPA is a provider of multi-specialty anatomic pathology services to clinicians in more than 21 states. Here is the link to the article and here is the link to the Lakewood web site.

Given this show of interest in LPA by a private equity firm, I thought that it would be useful to review the LPA web site. Here is a sample of a prostate report generated by the lab and samples of other reports can be viewed here. Another interesting feature of this web site is the option of clicking on a button to "log in for live access to reports." With the correct password and IT, it appears that clients can review the reports that are ultimately routed to them at the time that they are being printed.

For me, the most interesting aspect of the home page was labeled "purchased services" on the web page and it is to this topic that I will now turn. Here is a link to a diagram of LPA's "revenue share model." There is a caveat posted here that says: Model may not apply in states that mandate direct client billing. The underlying principle to revenue sharing is that surgery centers and physician offices, mainly gastroenterology and urology practices, are invited to send their tissue specimens to LPA which acts as a surgical pathology subcontractor to them. LPA charges the practices discounted (i.e., wholesale) fees based on a published schedule. The practices then bill the patients' third-party payers (private insurance only; Medicare patients excluded) a higher fee, bringing in additional revenue for them.

The LPA provides in PDF format the opinion letter of a law firm (link here) that discusses the legality of pathology service agreements between LPA and physician practice groups with references to both Stark (i.e., physician self-referral) laws and anti-kickback laws. In the executive summary portion included in this document, the opinion concludes that Stark is not a barrier to the LPA agreements because the physicians submitting specimens to LPA do not have a "financial relationship" in LPA. Similarly, the document states that the anti-kickback laws do not come into play because Medicare patient (i.e., those in a federal healthcare program) are excluded from the LPA pathology services agreements and also because the fees established by LPA have been established to reflect fair market value and are not influenced by the volume of specimens submitted by a physician group.

This is a very contentious topic with strong opinions on both the sides of the question. Here is a link to an article whose author opposes having pathology groups serve as subcontractors to physician groups. One of his major points in that there are limits on both the amount of the discount that can be offered and the amount that can be billed such that the net profit to the physician groups may not be that attractive. I suspect that this is an issue that will not go away in an era of shrinking reimbursement to clinicians.

Putting Some Numbers to the Paternity Testing Market

Caroline Caskey, CEO of Identigene, has just commented on my note of May 20,2006, titled: Reference Lab with a Money-Back Guarantee. I didn't want her response to be buried so I am repeating a portion of it below (bold face emphasis mine).

Your assessment of the market, as well as Jennifer’s comment above, is absolutely right. The paternity testing market is quickly expanding and has been since our company first began marketing paternity tests directly to consumers in 1993. The market has since continued to grow with other DNA testing laboratories marketing direct-to-consumer DNA test options.... In 2005, the American Association of Blood Banks, who regulates and accredits laboratories for parentage testing, conducted a study that determined that more than 390,000 paternity tests were performed in 2004. AABB also estimated that one million people were tested during that time frame, a 10% increase over the case volume in 2003.As with any market, as the demand increases, so does the competition. There are roughly 40 AABB-accredited labs in the world that offer paternity testing services, many of which rely on resellers to market and advertise their services in the local community. The troubling thing is that there are numerous companies marketing paternity testing services that aren’t accredited to do so....So many of the unaccredited labs offer extremely low prices ($150 - $200) and the consumer may not be getting an accurate test from them.

I would respond in the following way to her comments:

• Given that this segment of the lab industry is all, or primarily, direct access testing (DAT), my discovery of an estimated test volume in 2004 of 390,000 was a surprise as is the number of labs in the world, 40, that offer paternity testing services.
• Given that this number of labs is already oriented toward performing DNA test procedures under the DAT model, it strikes me as obvious that these labs will seek to expand their DNA testing repertoire as more test procedures become available.
• Caroline's comments also reveal her opinion about the current test price floor in the industry for the unaccredited labs -- $150-$200 per test.
• I also want to commend Caroline and her company for monitoring the blogosphere, representing her views, and participating in this dialogue.

The "Subservient Chicken" and the Clinical Laboratory

Burger King and its advertising agency have scored a home run with their "subservient chicken" web site (link here). When you connect to it, you are confronted with rather tacky living room and a large chicken standing at attention in the middle of it. You are invited to type in any action command that you choose and the chicken then subserviently obeys your command. That's it. Don't be shy -- try it!

Here is the link to a more detailed description of this web site with a quotation from the article below (bold face emphasis mine):

A plucky Burger King Web site has racked up 46 million hits in one week and inspired countless blog entries....The site...features a chicken-suit-garbed human embodying the classic BK tagline, "Have it your way." In a nod to adult "cam" sites, users type in commands and the bird obeys....There's a wiki with a list of things the chicken will and won't do, the Subservient Chicken Request List. [Link here] There's a site that's reverse-engineered so users can get the chicken to do, er, naughty things....And that's probably the charm of the whole thing...trying to figure out what commands the chicken obeys.

Some of you may be wondering, after having just visited the web site, about the relationship of "the chicken" to the clinical lab. Well, I may be reaching a little bit here, but take a moment to think of the technology that lies behind this web site. In order to construct it, one first needs to develop a library of hundreds of digital video clips of various actions to be taken by the chicken. One also need a software agent that interprets the various commands submitted in natural language by visitors and selects the relevant clip to display that best matches the command entered.

Fast forward to yourself trying to install software on your PC or train personnel on some new instrument in your lab. The directions that came with the product may be inadequate or difficult to interpret. You may not be able to get through on the technical support line. What if the company provided a "help web site" with a "demonstrator" (no chicken outfit this time). You would simply submit your question in simple language (e.g., How do I load  specimens on the device? How do I run QC samples?) and you would then be shown a movie clip in response to your question. The clip could include computer screen shots that you could freeze at various critical steps in the process. Wouldn't that be helpful?