HOW HOSPITAL EXECUTIVES VIEW THE LABORATORY
(FALL 2004)

Hospital administrators have a full plate of issues to contend with on a daily basis. Quality of patient services, fiscal imperatives, labor shortages, and a myriad of other concerns constantly beg for attention. Since laboratory and pathology services represent the single, largest source of diagnostic information in hospitals, we surveyed hospital and healthcare system executives to better understand how they viewed their laboratories. The survey also asked that they identify the key laboratory issues for which they had most concern. The survey was organized to learn their views regarding proposed federal regulations, laboratory services delivery models, measuring performance, managed care "carve out" contracts, outreach program profitability, and important challenges facing hospital laboratories.

SUMMARY OF FINDINGS
Responses were received from Chief Executive Officers, Chief Operating Officers, and Vice Presidents in 156 different hospitals ranging in bed size from 88 beds to over 600 beds. We found that medical staff satisfaction survey results and test result turn-around-time ranked high as tools to measure laboratory performance. Respondent comments indicated that annual satisfaction surveys of medical staff do not always provide adequate feedback, and they want more quantitative information. Several respondents commented that finding the right balance between service levels and cost efficient operations was an on-going exercise.

We learned that almost two-thirds of respondents who have validated the profitability of the laboratory outreach programs found the programs were profitable before application of indirect expenses. The majority of respondents indicated that profitability ranged from barely breakeven to 20% profitability. Only 4% of respondents who validated laboratory outreach program profitability found their programs were not profitable. Interestingly, one-third of respondents have not validated outreach program’s profitability, but believe that their programs are profitable. No explanations were provided for their perspectives.

Issues concerning managed care plan contracting drew much criticism. Based on survey responses, it seems that interest in strongly negotiating with managed care plans on behalf of hospital-based outpatient and outreach laboratory services is substantially higher with CEOs and COOs than with VPs. This may represent an opportunity for VPs with lab administrative responsibility to take a more active role during the negotiating process with representatives of managed care plans. Many respondents commented on their frustration in not being able to effectively compete for that element of the laboratory outreach market.

Diffusion of testing sites in hospital settings seems to be a continuing trend. When bedside glucose testing is removed from the equation, more than two-thirds of respondents indicated they have or are considering decentralized testing for their institutions. The ER, OR, and ICU were the most commonly listed sites for decentralized testing. The menu of decentralized tests seems to be growing as a result of new instrumentation defined by CLIA as either waived or moderately complex. Under federal CLIA regulations, that technology does not require a Medical Technologist to perform tests in those categories, even though all quality control for decentralized testing is usually the responsibility of the laboratory.

Survey respondents indicated that labor shortages and managing blood costs were their greatest challenges.

While much focus is placed on nursing personnel shortages, survey respondents indicated that they were aware that shortages of Medical Technologists and Medical Laboratory Technicians will seriously impair laboratory operations if not resolved. Several respondents commented that they were considering joint sponsorship of educational programs with community colleges and universities to augment the supply of qualified workers.

The majority of respondent comments reflect significant frustration regarding the rising cost of blood and blood products. While few alternatives seem to be available, some respondents indicated that multiple hospital blood bank services that include shared donor programs, testing, and administration seem to be successful in reducing the rate of increase in rising blood and blood product costs.

SUMMARY
We hope you find the attached report interesting and informative. If you would like to discuss the survey results, please contact Mr. Barry Portugal, President of Health Care Development Services, Inc. at 847-498-1122.