Lab Soft News

Making Hospital-Based Labs More Consumer Friendly

I believe that most lab professionals believe that key "customers" for hospital-based labs are the test-ordering physician rather than hospital patients. The major problem with this perspective is that we are now entering an era of consumer-dominated healthcare and high-deductible health plans. Healthcare consumers are going to be much more active in shopping for value and quality of services. This has major implications for hospital labs. This theme was picked up in a recent story from Dark Daily (see: Clinical Pathology Laboratories Stand to Benefit as Patients Gain Control Over Their Healthcare Spending Through High-Deductible Health Plans). Below is an excerpt from it:

Smaller clinical laboratories and pathology groups should benefit from shift toward consumer-driven healthcare. High-deductible health plans (HDHP) are increasing in popularity as more consumers opt for lower annual premium costs in exchange for larger out-of-pocket expenses. This shift in health insurance could result in direct benefits for smaller clinical laboratories and pathology groups as more patients have a choice in where they purchase medical laboratory testing services. From a policy perspective, employers and healthcare strategists hope that using HDHPs to engage consumers will help put market forces back into medicine. Because clinical laboratories and pathology groups increasingly find themselves excluded from provider networks, and fighting to keep access to patients, they should welcome the trend to consumer-driven healthcare. A logical response to the HDHP trend would be for labs to begin posting their lab test prices on their websites. It would be equally useful to also post quality-performance and customer-satisfaction survey results to allow consumers to make informed choices about the labs they want performing their tests.

The advice from the Dark Daily about how to appeal more to consumers is the following: labs... [should] begin posting their lab test prices on their websites. I am not so sure that this is a good idea, at least at the present time. The cost of lab tests in many hospitals is inflated far beyond that of competing labs in the community and on the web because of the cross-subsidization of other hospital units that run at a deficit such as intensive care. To emphasize this point, I only need to make reference to the web site of a company called Healthcare Bluebook that is oriented to reducing the cost of healthcare for consumers. Here's a cut-and-paste from the landing page on the topic of a complete blood count (CBC) (see: Complete Blood Count (CBC) With Differential - $20)

Cost Savings Tips And Financial Considerations

Lab tests can cost 3 to 5 times too much depending on the location of your test.

You can receive lab tests at various locations:

Hospital labs (often the most expensive)

Physician's Office

Independent lab setting (often the best value)

In some cases you will also be charged for an office visit if you go to the doctor to have your labs drawn.

Always ask your physician to help you find the lab location that will provide you the best value.

In many cases you may be able to save several hundred dollars

Let me emphasize a few points from this quote:

• The recommended price of a complete blood count (CBC) is $20. I bet that there are few hospital labs that charge this amount for the test.
• It's emphasized that hospital labs are often the most expensive location for lab testing.
• The" possible savings" for lab tests when patients shop around is quoted as "several hundred" dollars. This would obviously be of interest to self-pay patients or those with high-deductible insurance policies.
• Patients are advised to: Always ask your physician to help you find the lab location that will provide you the best value. I have no idea how most clinicians would respond to such a question.

Hospital labs are not going to get any traction with many consumers unless and until their lab prices becomes more competitive. I don't think that this is going to happen soon because the price of hospital care is closely tuned to what the health insurance companies' reimbursement levels and not what consumers are willing to pay for the service out-of-pocket (see: Why the Prices Charged by Hospital for Inpatient Care Are Irrelevant; Comparing the Details of Hospital Charges in the State of Oregon; Greater Transparency for Hospital Charges Slowly Becoming the Norm).

Time for Academic Medicine to Embrace Social Media and Blogging

I have been posting Lab Soft News blog notes for more than nine years. I have always thought that blogging is an ideal medium for academics, including pathologists, for communicating new ideas. However, I can't say that pathology blogging has evolved into anything resembling a trend during my time publishing on the web. What I have in mind here is what I have called "professional blogging" by which I mean blog notes by academic physicians writing in their area of expertise (see: Professional Blogs as Publication Vehicles for Physicians in Academic Clinical Tracks). Part of the problem is that this type of communication by academics is not yet viewed with any seriousness by their peers. With this in mind, a recent article suggesting that academic medicine should embrace social media caught my attention (see: The time for academic medicine to embrace social media is now). Below is an excerpt from it:

The integration of social media and medicine is still in its infancy and, as a result, there is no impact factor for social media contributions, which may largely go unrecognized.  Nonetheless, social media might relieve the anxiety of publishing to stay relevant. While the peer-review process is the cornerstone of scientific validation, social media offers professors, physicians and academic institutions the opportunity to publish from their own user handles in a way that is unconstrained from “pleasing” a top journal with sexy yet potentially mediocre research. In fact, social media offers many distinct advantages.  By its very nature, social media can be used as a more effective tool to disseminate medical information to larger audiences than traditional methods.  While a top journal such as the New England Journal of Medicine reaches as many as 600,000 readers weekly, a social media publication may easily reach millions and is accessible anywhere in the world. Moreover, unlike journals, social media is not shackled by membership fees, which narrows the subscriber audience.... [P]ublishing on social media may improve the public’s understanding of science. While most journals are read by professionals of that particular field, social media publications have the potential of reaching a larger audience of laypeople who may not entirely understand the language within a professional manuscript but are nonetheless interested in the topic. In addition, social media sites such as Facebook, Twitter and YouTube can connect with the general patient population to promote communication and overall public health more so than traditional methods of publication. 

This articles touches on most of the major arguments that I could personally drag out in favor of blogging by academics compared to publishing articles in peer-reviewed journals: (1) usually a larger audience; (2) avoidance of the need to "please" the editors and reviewers of journals; (3) the ability to reach out to a sophisticated lay audience as well as physician colleagues due to the absence of subscription fees; (4) the ability to quantify the number of readers-per-day which is not possible with hardcopy journal articles. This allows the easy quantification of the potential impact of written communications. I don't mean to imply that blogging is a substitute for journal publications for academics -- it's an extension of a supplement to it. Economics is one academic field where the most esteemed practitioners all have blogs (see: The Best Economics Blogs).

Twitter has evolved into a pillar of social media for major teaching hospitals such as Johns Hopkins and Sloan Kettering, governmental bodies such as the CDC, professional societies such as ASCO, ACR, and ASCP, reference labs such as ARUP, and consulting firms such as Deloitte Health Care. The tweets posted by these organizations, which I personally follow, are oriented to sophisticated readers. These organizations take care that their tweets are "newsy" and informative and lack a too-obvious marketing slant. Many are so informative that I commonly use them as the basis for new notes for Lab Soft News.

Home Monitoring of Discharged Patients by Hospitals for Cost Savings

There have been discussions about the value of home monitoring of discharged hospital inpatients for decades. Everyone seems to have understood that this was a good idea to prevent hospital readmissions but the technology was expensive and difficult to deploy (see: Cost Savings Associated with Home-Based Physiologic Monitoring; Partners HealthCare Integrates Home Monitoring Data into Hospital EHRs; Keeping Tabs on Patients Post-Discharge Via Telemonitoring). A recent article raised this topic again including an assessment of dollars saved by the parent company by patient home monitoring (see: Northern Arizona Healthcare saves $90,000 per patient in home monitoring pilot program). Below is an excerpt from the article:

Since it first started placing home health monitoring kits with patients discharged from Flagstaff Medical Center or Verde Valley Medical Center following treatment for congestive heart failure or related cardiac conditions in 2011, parent company Northern Arizona Healthcare says is has saved up to $92,000 per patient."Putting smartphones and biometric health-monitoring devices in the hands of patients empowered them to take better control of their health," ...[according to] NAH's director of telehealth services....NAH saw hospitalizations drop from 3.26 mean per patient to 1.82 and days hospitalized drop from 13.98 mean per patient to 5.13 and, based on the health system's data about the first 50 patients six months prior to enrollment and six months after enrollment, that added up to the savings of approximately $92,000 per patient. The home health kits are customized for each patient, built on Qualcomm 2net connectivity platform and HealthyCircles care coordination software, and featuring an app loaded onto a smartphone and connected medical devices specific to the patient's condition. Data captured by the devices is automatically uploaded through the 2net Hub or 2net Mobile to the [Qualcomm] HealthyCircles platform, where providers can set care management plans and communicate with patients. Those include medication reminders and alerts set to be triggered if the home health monitoring kit detects a patient's deteriorating health. Based on the pilot's success in metrics and cost savings, NAH officials said they are planning to expand the program to patients with other cardiac problems as well as people with pulmonary issues and those needing post-operative care. 

Here's an excerpt from the 2Net web page:

The 2net Platform is a cloud-based system designed to be universally-interoperable with different medical devices and applications, enabling end-to-end wireless connectivity while allowing medical device users and their physicians or caregivers to easily access biometric data. With two-way connection capabilities and a broad spectrum of connectivity options, the 2net Platform will change the way you do business.

It seems to me that home monitoring of patients at risk for readmission after hospital discharge has reached a more sophisticated level. On the patient side, we have achieved a high degree of user comfort with smart phones and can then combine them with biometric monitoring devices to provide useful information to healthcare providers. On the provider side, we see "platforms" that enable providers to establish and set care management plans and communicate with patients. The dollar savings per patient in the article quoted above seem remarkably high. However, patients with congestive heart failure have always been an important target for home monitoring programs because of their high readmission rate. These dollar savings should provide an incentive for more hospitals to make the initial capital investment to establish similar programs.

A Solution for High Drug Prices: Drug Lists with Maximum Allowable Prices

Many drug prices, particularly those used to treat cancer, have risen to astronomic levels. Medicare is prohibited by law from negotiating with drug companies to achieve lower prices (see: Drug Company Emphasis on Marketing an Unfavorable Shift for Consumers; Patient Assistance Programs Keep Drug Prices High and May Actually Be Illegal). This is partly because of the incredible power that drug company lobbyists exert over Congress. The prices being charged by pharmaceutical companies for drugs is "not illegal" but will surely cause upheavals in our healthcare system. This topic was recently discussed in an op-ed piece by Ezekiel Emanuel (see: The Solution to Drug Prices). Below is an excerpt from it:

Some independent estimates suggest that negotiated drug prices could save the federal government $15 billion or more per year. But this approach will not solve the problem of stratospheric drug prices, for several reasons. For many diseases, there exist only a couple of effective drugs, with little price competition. Also, Medicare would have little negotiating leverage since, unlike private insurers, it cannot maintain an approved drug list and exclude overly expensive drugs from coverage. The bigger problem, though, is that Medicare negotiations would do nothing to contain drug prices for the 170 million Americans who have private health insurance, through their employer, the exchanges, or by self-purchase. Having the federal government negotiate lower prices for Medicare would most likely drive up prices on the private side as drug companies tried to recoup their “lost” profits. Almost all developed countries....have an effective solution for drug prices, which is why these countries often pay less than half of what people in the United States pay for drugs. For instance, Australia’s more than 60-year-old Pharmaceutical Benefits Scheme has been the single purchaser of drugs for the country, making drugs available at fixed prices that are now listed online....

While the Australian system of price controls is one approach, another possibility is the Swiss health system, which is frequently applauded by conservative commentators. The Swiss government includes only those drugs that are effective and cost-effective on its approved drug list. It then establishes a maximum allowable price for the drug, but up to that point, companies can decide what to charge. We could cap the price based on objective, quantitative measures of value. Private payers would continue to negotiate with drug companies over prices as they do now, but there would be a ceiling to prevent prices from becoming unsustainable. Everyone, including drug company executives, believes that high prices cannot continue. Indeed, that is one reason that companies are trying to maximize profits while they can. We must come up with a comprehensive solution now.

The competitive market for many drugs is broken and Congress can't, or won't, intervene to fix the problem until the situation becomes desperate. The only feasible solution that I can envision is for the federal government to publish a drug price list of cost-effective drugs with a maximum price for each. Private payers would continue to negotiate with drug companies but with price ceilings in place. In order to move forward with such a solution, I think it's imperative for all of us to communicate with our federal representatives about this problem and potential solution. In so doing, we can partly offset the influence of lobbyists on Congress. As noted in the quote from Emmanuel above, drug company executive understand that the current situation can't persist but they are trying to maximize their company profits in the short term. Let's try to make this the "very short term." One interesting development on the political side is that Senator Bernie Sanders, a presidential candidate, is making drug prices one of the key policy issues in his presidential campaign (see: Bernie Sanders unveils bill to battle rising drug prices)

Salesforce Health Cloud as One Possible Solution to Health Data Interoperability

One of my first notes about the cloud computing and healthcare was posted in January, 2008 (see: Cloud Computing in Healthcare: Key Questions to Ask; Salesforce unwraps platform for post-EHR world). Here's a good definition for cloud computing to keep all on the same page: the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer. I believe that most hospital computing continues to involve local servers although large hospital systems frequently use networked computers managed by their central IT group. 

One of the dominant players in cloud computing, Salesforce, has announced its intention to bring cloud computing to healthcare, an almost untapped market (see: Salesforce wants to revolutionize your healthcare experience). The company began as a vendor of customer relationship management (CRM) software. Cloud computing was a sideline for this principal business but has now expanded into a profitable line for the company. Below is an excerpt from the article linked to above:

It’s undeniable that Salesforce...has transformed how companies in industries as diverse as financial services and higher education manage their customer relationships. Now it’s bringing its cloud-based technology to the world of healthcare. Salesforce... announced ...a new patient relationship management platform that it calls Salesforce Health Cloud. The product is part of the company’s new push to change how doctors and healthcare providers effectively manage the health of patients across caregiver networks. Salesforce Health Cloud combines data from multiple sources—electronic medical records, medical devices, even wearables—into a single location....By having all the information in one place, health workers will have a more complete view of the patient and, in turn, be able to make smarter care decisions, intervene earlier if issues arise, and collect data along the way for effective treatments. The software also puts that information in the hands of the patient through mobile applications...

A common goal among recently introduced healthcare technologies is the improvement of the patient experience. For example, the industry is transitioning away from a pay-per-service model and toward holistic, outcomes-based reimbursements. Medical offices know that they need to provide more comprehensive care to stay relevant. A first step is collating all of a patient’s pertinent information, regardless of where the care took place.That’s where Salesforce Health Cloud steps in. The company is working with leading software vendors and systems integrators to tie together existing medical IT systems and layer on Salesforce’s trademark customization.The challenge with healthcare IT is that most information is stuck in proprietary software silos, hindering the ability to interact across the care spectrum. About 95% of healthcare providers say interoperability challenges limit their ability to transfer data from one medical center to another, according to a study by healthcare alliance Premier.

It's fascinating that Salesforce is positioning itself as a provider of interoperability for healthcare data which seems to be both feasible technically and also an appealing marketing strategy. I have posted a number of notes about healthcare data interoperability (see, for example: Hospitals as a Major Barrier to the Pursuit of EHR Interoperability; NYT Op-Ed on EHR Interoperability Blames Vendors and Greedy Hospitals; Hospital EHR Interoperability; Are Vendor Fees Necessary or Even Appropriate?). I personally believe that neither hospitals, despite their denials, nor their EHR vendors, despite their denials, are enthusiastic about the pursuit of interoperability. For hospitals executives, this approach make health data too portable for patients and encourages price shopping. For some EHR vendors, easy interoperability is promoted and facilitated mainly among their own client hospitals.

A key question for Salesforce, as it moves forward with its healthcare cloud initiative, is whether a combination of pressure from Congress and the federal government and patients has begun to persuade hospital executives and EHR vendors that cloud-driven interoperability is an appealing option. My best guess is that EHR vendors exert a powerful hold over their hospital clients. Therefore, if and when hospital executive ever warm to cloud-based interoperability, they will probably turn to their EHR vendors rather than Salesforce to provide it. This will give the hospital C-suite and the EHR vendors a continuing opportunity to control their patient clinical data which is of paramount importance to them.

Upcoming Free API-Sunquest Webinar on How Digital Pathology Changes Workflow

The Association for Pathology Informatics (API) and Sunquest Information Systems are launching their third season of free webinars devoted to pathology informatics. The first two seasons of the program have met with wide and enthusiastic support. The first lecture for this new season is entitled How Digital Pathology Will Change the Workflow of Surgical Pathology and will be presented by Liron Pantanowitz, MD, Associate Professor of Pathology and Biomedical Informatics, Director of Pathology Informatics, Department of Pathology, UPMC Shadyside. The webinar will highlight the importance of digital pathology and how it is poised to fundamentally change the workflow of pathologists. The date and time of the event is Tuesday, September 22, 1 PM – 2 PM ET. Register today to ensure a spot for this event.

Obviously, there is a tight link between digital pathology technology and both pathology and specimen workflow (see: Digital Pathology Offered as a Service Rather Than a Product). Time also needs to be allocated after the sectioning and staining process for whole slide scanning but this can often be accomplished on a just-in-time basis. With digital pathology, pathologists no longer need to be shackled to their microscopes and can review images almost anywhere. Speciality consultations from colleagues can also be acquired instantly. If the archival slide library is digitized, review of prior cases can be quickly performed.

As in prior years of the webinar series, the 2015-2016 API-Sunquest webinar series will consist of eight or nine lectures extending from this Fall until May, 2016. The entire schedule with dates and times will be published in Lab Soft News and elsewhere. The API annual conference, the Pathology Informatics Summit, will be held on May 23-26, 2016, in Pittsburgh, and will mark the culminating event of this year's webinar series. Register for this free webinar now to hear Dr. Pantanowitz speak on a topic about which he is a recognized national expert and which is important for the future of surgical pathology.

Gag Clauses in EHR Contracts Documented; Concerns Raised about Patient Safety

I have commented in various notes about the rumored, but never firmly documented, "gag clauses" in EHR contracts that stifle discussion about defects in these systems (see: Physician & Nurse Involvement in EHR Design; Patient Safety and EHR Gag Clauses; Sutter Health System EHR Crash Reported by Nursing Union; Recall of the United HealthCare Picis PulseCheck Emergency Department Software). Politico has now documented in detail this problem (see: Doctors barred from discussing safety glitches in U.S.-funded software). Below is an excerpt from the article:

President Barack Obama’s stimulus put taxpayers on the hook for $30 billion in electronic medical records, many of which have turned out to be technological disasters. But don’t expect to hear about the problems from doctors or hospitals. Most of them are under gag orders not to discuss the specific failings of their systems — even though poor technology in hospitals can have lethal consequences. A POLITICO investigation found that some of the biggest firms marketing electronic record systems inserted “gag clauses” in their taxpayer-subsidized contracts, effectively forbidding health care providers from talking about glitches that slow their work and potentially jeopardize patients. POLITICO obtained 11 contracts through public record requests from hospitals and health systems in New York City, California, and Florida that use six of the biggest vendors of digital record systems. With one exception, each of the contracts contains a clause protecting potentially large swaths of information from public exposure. This is the first time the existence of the gag clauses has been conclusively documented. Vendors say such restrictions target only breaches of intellectual property and are invoked rarely. But doctors, researchers and members of Congress contend they stifle important discussions, including disclosures that problems exist. In some cases, they say, the software’s faults can have lethal results, misleading doctors and nurses who rely upon it for critical information in life-or-death situations....Critics say the clauses – which POLITICO documented in contracts with Epic Systems, Cerner, Siemens (now part of Cerner), Allscripts, eClinicalWorks and Meditech – have kept researchers from understanding the scope of the failures.

You can confirm all of this by yourself. Simple Google the name of your hospital EHR vendor with EHR and another relevant search term such as safety or mistake or error or bug or flaw. You get the idea. The search won't take long because not many references will be retrieved. We now know for certain why there is so little chat on the web about EHR problems.

OrchardSoftware Launches Consulting and Education Program in Lab Analytics

OrchardSoftware, a long-standing and highly respected LIS vendor, has launched a new line of business, consulting and education in lab analytics. To support these new activities, it has created a division of the company called OrchardAnalytics which is offering a free webinar on September 15, 2015, at 1 p.m. It will be presented by Dr. Brad Brimhall and is entitled Quantifying Value with Integrated Medical Analytics. One unit within OrchardAnalytics is the Orchard School of Medical Analytics. Here's a quote from its web page explaining its mission:

The U.S. healthcare system is in the process of evolving into a system that rewards quality outcomes and simultaneously must reduce overall spending in order to be sustainable. The laboratory controls the hub of clinical data that feeds diagnostic decision-making and must refocus its goals to succeed in this new value-based healthcare paradigm. Orchard understands this change and intends to support motivated pathologists and lab leaders in transitioning into a more consultative role to maximize the value of healthcare data. To meet this goal, Orchard is now offering a course in medical analytics designed to empower data-driven pathologists and other analytic-minded leaders who are interested in increasing the value and contribution of healthcare data. This four-day course will give pathologists and laboratory leaders a unique advantage—the ability to look toward the future and uncover new analytic opportunities within their facilities that will benefit their organizations and patients.

I have posted a number of notes about pathology analytics in the past (see: Lab Analytics Emerges as Hot Area for Software Development; The Use of Lab Analytic Dashboards in Anatomic Pathology; Leveraging Lab Analytic Data to Include Actionable Details to Improve Quality). I consider this one of the two most important trends currently in pathology informatics, the other being genomics. The analytics landscape now seems to encompass both software vendors and companies like Orchard that provide consulting and educational services. Most of the education and training that LIS vendors have provided in the past has been associated with new software installs and continuing software support. Various consulting initiatives have been attempted by the companies over the years but none seem to have persisted. This program by Orchard has caught my attention. It is needed and seems to be very well planned. I wish them well in the endeavor.

Epic CEO Channels Lucille Ball before Large User Group Audience in Verona

For those of you who were unable to attend the event, here's a description of CEO Judith Faulkner's executive address at the recent large Users' Group Meeting in Verona, Wisconsin (see: 'Epic, I'm home!' Epic Systems kicks off annual Users Group Meeting with nods to classic TV).

In what might have seemed like a twenty something Epic employee’s fever dream, Faulkner walked across the stage of Epic’s massive Deep Space auditorium, alternating between sharing hard facts about her company and introducing “I Love Lucy” clips....Decked out in pearls, a black and white polka dot dress, red slingback kitten heels and, of course, a towering ginger bouffant wig, Faulkner delivered her annual UGM executive address to a crowd of about 9,000 Epic customers. (Nine thousand Epic employees are also expected to participate in the meeting's four days of events.)....One presentation announced the names of Epic's newest customers. Presenters, dressed as Uncle Fester and Wednesday Addams from the classic show "The Addams Family" sang “The Epic Family” to the tune of the show's theme. “When patients need some healin’, we make ’em better feelin’ and really are appealin’, the Epic family,” they sang....The subjects may seem dry, but Epic has perfected the art of spicing things up. There will be opportunities for revelry and networking on the company’s expansive campus, including boat rides, a cow chip tossing contest and live music.

One of the questions that presented itself to me, an outsider, is what to make of all of this. Here we have the CEO and founder of one of the major healthcare IT companies and a self-made billionaire dressed in a fanciful costume to lecture to some 9.000 customers of the company. One perspective is that this it's all just pure entertainment, analogous to a Midwestern hoedown. One of the problems with this perspective is that I, for one, never went to a user group meeting of a software vendor expecting to be entertained. Perhaps I represent a different generation and my opinion about this is hopelessly out-of-date. Perhaps Epic users actually come to the meeting expecting to toss a few cow chips, literally if not metaphorically. However, if this is all about the fun, why are the media prohibited from taking her picture (see: Collaborate and innovate, Epic Systems Corp. CEO Judy Faulkner tells health care execs)? The company should allow all of us to participate in the festivities. 

A second perspective is that this playacting represents a minor eccentricity on the part of the founder of the Epic corporate culture that goes beyond pure entertainment (see: More on the Epic Culture: Is This a Cult or a Company?). One could make the case that she built the company from scratch and can dress however she likes when she addresses her customers. In addition, any of her personality quirks don't appear to be hindering the success of the company. I personally find all of this distinctly odd but am not sure if anyone else in the audience shared my opinion. It's interesting that it was mainly the Madison media outlets, linked to above, that described the Faulkner appearance in detail. And it's also in Wisconsin that she is held in the highest esteem because of he position as one of the most prominent corporate executives in the state. Perhaps none of this is unusual behavior in Madison.

Hospitals Diversify with Wellness Centers; New Facility for Population Health

I have been spending some time thinking about the current, and emerging, first-tier of our healthcare delivery system with particular emphasis on the deployment of lab testing services and IT. One new type of facility appears to be wellness/fitness centers. A recent article discussed this topic (see: Wellness centers, no longer hospital gimmicks, become money-making population health engines). Below is an excerpt from it:

Hospital-based wellness centers, once seen as marketing tools for innovative health systems, have become a major part of a hospital's population health management program in the era of quality over quantity of care. "The wave of the future is to focus less on illness and more on prevention and wellness," said Joan Phillips, vice president of Clinical Services at Beaumont Health...."Our community and our employees want and need a place to focus on both fitness and wellness. "Wellness centers attached to hospitals have evolved far beyond the local gym toward a medically integrated model. Most use exercise physiologists and other ancillary medical specialties offering a broader range of services. This also lets them set specific goals for their customers, holding them accountable for their own health."We provide many services that the $10 a month gym doesn't," said Scott Kashman, chief administrative officer for Cape Coral Hospital in Florida. "We can look at health risk factors and are well-trained to provide a program to help mitigate those risks. We also assess everyone annually to follow changes and provide accountability. "Most centers are designed to make money. Studies by the Medical Fitness Association suggest wellness center construction offers returns on investment between 6 and 10 percent with contribution margins around 30 percent. However, that can be contingent on operational decisions made by hospital administration.....Some larger hospitals are able to internally fund these centers. Others, especially the smaller regional and rural facilities, may have to find an equity or retail partner. Current resources also play a role, as it is cheaper to repurpose existing buildings and infrastructure than to build from scratch. If a new structure is needed, hospitals would look at buying versus leasing.

It makes sense that hospitals would try to diversify with wellness centers, blending fitness with wellness. The ROIs of about 6-8% and the contribution margin of 30% cited above seem attractive, particularly with the finances of hospitals getting squeezed by payers. The potential ability of hospitals to integrate a patient's health record into a fitness/wellness plan would also be appealing to many consumers. It's interesting that the reference price point cited above for hospital-affiliated wellness centers is the "$10 a month gym." Although such facilities certainly exist, a more realistic comparison would probably be the higher priced "fitness centers" that may be more skilled at satisfying consumer demands than many hospitals. At the very least, I think that the question of who/what will be the dominant players in the wellness/fitness center market is still up for grabs. I would also suggest that wellness centers could be an attractive site for point-of-care lab testing, particularly as direct access testing (DAT) without a physician order becomes the norm in most of states.