Adding up the Dollars in Day-to-Day Laboratory (Mis)Utilization

While downstream cost savings achieved through improved lab test utilization paint a dramatic picture of the benefits of a laboratory stewardship program, savings directly attributed to the lab from better daily testing decisions should not be underestimated.

“The lab may account for only a small percentage of overall health system expenses, but savings can still be significant,“ says Ben Chacon, ARUP senior healthcare consultant, whose team works with nearly 100 healthcare organizations a year.

Sometimes, the simplest solutions can have surprising impact. ARUP’s work with hospitals to refine their laboratory formularies is an example. While hospitals and physicians are familiar with pharmacy formularies, laboratory formularies are less common. A formulary helps guide physicians by narrowing the test choices down to those that will be most helpful in treating their patients.

Formularies are based on medical evidence and incorporate cost considerations with the aim of improving quality of care. Without a formulary, clinicians can order any test at any time, and they are unaware which tests are performed in-house and which are sent to a reference lab.

Lab formularies promote transparency by noting whether a test is a reference test, and by providing cost and turnaround time (TAT) information to help physicians make better-educated decisions.

Instead of just listing a test by name, such as “homocysteine,” for example, the test could be listed as “homocysteine (REF, $$, 5d),” to indicate referral status, cost, and TAT. If a patient is soon to be discharged, a physician may only order a test if the TAT information indicates results will be returned before the patient goes home.

Further refinement can involve eliminating outdated tests and providing information to reduce duplicate test orders. Tests can be renamed for clarity. Folate testing, for example, can be listed as “serum folate (screening)” and “RBC folate (not for screening)” to avoid misorders.

More commonly ordered tests also can be listed higher on the menu with additional information in parentheses to help prevent confusion. Vitamin D tests, for instance, can be listed as, “VIT D 1-25 (nephrology only),” and “VIT D 25 (screening test).” The screening test would be first on the menu because clinicians most often look for and order it.

Regular review of order sets (a collection of pre-established tests) can further identify unnecessary or inappropriate test use.

ARUP worked with Western Maryland Health System to establish its test utilization initiative. “We had easy access to a team that included physicians, healthcare consultants, and data analysts,” says Kim Smith, laboratory business manager at Western Maryland. “They helped us identify and reduce improper utilization, and then actively participated in implementing changes here.”

At Western Maryland, ARUP recognized an opportunity to save money by eliminating most of the point-of-care (POC) tests in the ER. Instead, the hospital system began sending these tests to its hospital lab. The POC test kits each cost $8 to $16, while it cost only $2 to run the tests in the on-site lab.

"The laboratory drives the results of everything else in healthcare. Fix your lab, and you can cut down on [a patient’s] length of stay in the hospital, as well as cut pharmacy and radiology costs.”
Andrew Fletcher, MD, Medical Director, Consultative Services

In addition, “a lot of doctors were habitually reordering the test through the lab because they questioned the accuracy of the POC test,” says Sandy Richman, ARUP director of Consultative Services. The change led to an estimated savings of $207,000 for Western Maryland for the 2018 fiscal year.

“We were very surprised that most changes were easily accepted by the providers,” says Smith, noting that medical staff, including emergency, inpatient providers, and specialists, participated in meetings or discussions at some point. “Their willingness to participate and support our initiatives played a huge role in our successes.”

Preventing Unnecessary Testing

To prevent unneeded testing, the University of Minnesota Medical Center, Fairview, implemented a “hard stop” in its test ordering system that alerts physicians if a test they attempt to order has been ordered in the past 24 hours. They must contact the lab for approval to reorder the test.

Fairview also now requires preauthorization by a genetic counselor for genetic tests to determine whether the test can be performed in-house, whether it is a duplicate order, and whether the patient is in an inpatient or outpatient setting.

“We worked with our medical executive committee to develop a policy that strongly discourages inpatient genetic testing,” says Fairview Genetic Counselor Matt Bower, who points out reimbursement is often limited when tests are performed in an inpatient setting.

Bower explains that genetic test results are typically returned within four to six weeks, and at that point, the patient may be in someone else’s care, outside the hospital. Critical genetic results can “fall through the cracks” if it is unclear whose responsibility it is to follow up. “Sometimes these tests are ordered and the next day, the patient is discharged.”

“The testing analysis provided by ARUP has helped us identify over $1 million in potential savings,” says Jo Norton, laboratory director at Fairview. “In this partnership, we are able to take advantage of ARUP’s internal expertise on utilization management.”

"We show our clients how to take action based on data"
Sandy Richman ,Director Consultative Service

Hospitals generate a plethora of patient data and for most, deciphering and making use of it is a herculean task. “Increasingly, hospitals are being told to make more of their big data,” says Chacon. “And they are asking, ‘How?’” Lab administrators and medical directors want to know how to use lab data to influence decision makers while continuously improving patient care and the patient experience.

“We show our clients how to take action based on the data,” says Richman. Internal innovation and collaboration with other companies allows ARUP to provide clients with the tools to identify and then “fix” gaps in care and save costs. Analyzed data also empowers the messenger (i.e., lab director, lead pathologist, a committee) to make its case to the powers-that-be to put change in motion.

ARUP recommends clients first form a governance committee that includes a variety of executive and medical leaders to help define opportunities, prioritize interventions, implement solutions, and ultimately, gain institutional buy-in.

“Once ARUP scrubbed our data and showed us high-level opportunities, they guided us in forming a committee and pointed out the key players we needed on it,” recalls pathologist Christie Elliott, MD, laboratory medical director at Renown Health in Reno. “They also showed us where test management solutions have worked well for other hospitals.”

“Once ARUP scrubbed our data and showed us high-level opportunities, they guided us in forming a committee and pointed out the key players we needed on it. They also showed us where test management solutions have worked well for other hospitals.”
Christie Elliott, MD, Laboratory Medical Director, Renown Health

Renown’s Lab Stewardship Committee reviews and approves new tests and technologies, and reviews older tests and technologies to make sure they are still the best options—some may have become obsolete. It also reviews whether more appropriate testing is needed for screening purposes before expensive therapies are used.

“As a committee, we discuss the pros and cons, and sometimes the benefits outweigh the costs,” says Elliott, referring to a new in-house heparin-induced thrombocytopenia (HIT) antibody test that could help prevent the need for a new multiplex polymerase chain reaction (PCR) analyzer for respiratory virus panel testing. The new test also may help prevent unnecessary prescriptions for an expensive medication.

“These committees are established to address a variety of clinical misapplications. In many cases, they are working on complex solutions for problems with systemic roots,” says Joe Miles, another ARUP senior healthcare consultant.

In today’s healthcare environment, the terrain can suddenly morph as repercussions from new policies or regulations play out. Healthcare organizations need to adjust quickly to these shifts. Knowing how the laboratory can help with or hinder financial goals while maintaining or improving patient care is an essential and smart business approach.

“The mind-set we bring to it is: How can we partner with providers and administrators best in order to give them actionable information and guidance on their lab utilization efforts?” says Chacon. “The overriding goal is always what’s best for the patient.”