The healthcare landscape is undergoing dramatic changes: hospitals are consolidating into regional networks with highly specialized medical care performed in core facilities, generalized medical care provided in satellite hospitals, and ambulatory services offered at point-of-care (POC) locations.

Diagnostic laboratory testing is undergoing a similar transformation. Complex, non-urgent tests are performed in core facility laboratories or in reference sites; routine, acute diagnostic tests are performed in core laboratories or in satellite hospital facilities; and point-of-care testing is performed in outpatient clinics, physician office laboratories, retail clinics, and in-home testing. With an increased effort to provide cost-effective, timely medical care for ambulatory patients, patients are seeking treatment at local physician offices and retail clinics at a rate higher than ever before. It is estimated that 70% or more of medical decisions are based on laboratory test results.

Today, it is no longer sufficient for laboratories to provide efficient quality testing. Increasingly, payers demand to know the value of the tests, with value equaling quality per unit of cost.   Along with expenditures for imaging studies, laboratory testing accounts for a significant percentage of health care expenses, despite efforts by Medicare and commercial insurers to limit payments for laboratory testing.  A savvy, health-conscious aging population wants access to the emerging technologies at an earlier stage. Payers, including Medicare, commercial insurers, and employers, want more accountability for both safety and quality.They want laboratories to prove that tests are cost-effective. The demand for proving the value of medical interventions, including laboratory testing grows stronger with each passing day.

In the past, laboratorians and pathologists believed that striving for maximum sensitivity, specificity, accuracy, and reliability was sufficient and that clinicians would not want anything more from the laboratory. Cost-effectiveness was viewed in terms of dealing with direct and indirect costs in the laboratory; with the terms “Cost-Effective” and “Cost-Containment” used interchangeably; applied to controlling expenses with the goal of quality service within a balanced budget.

New Challenges

Today, with steadily increasing use of robotics, and computerized testing, the services offered by clinical laboratories are increasingly perceived as homogeneous.  Many tests are performed on well-known automated instruments using commercially available reagents, thus the analysis of patient specimens is becoming commoditized; and the questions are no longer whether testing can be performed, but rather, is the testing justified?  Is there value to this test?

In their report “Laboratory Medicine: Challenges and Opportunities” Bossuyit, Verweir, and Blanckaert described two proactive responses to anticipate commoditization: a value-added strategy (increasing augmented services) and a price compression/product innovation strategy. They called for clinical pathologists to be prepared for future threats and opportunities by enhancing efficiency and providing value-added services. Enhanced efficiency, and as a consequence improved cost and quality, can be realized through increased “operational excellence”. More importantly, laboratory professionals should provide value-added knowledge services by providing comprehensive consultative support to clinicians and fostering evidence-based laboratory medicine. The enhanced interaction, “customer intimacy” with the physicians who order the laboratory tests should create additional value.

Laboratory Cost Containment

Perform a cost/benefit analysis of your laboratory operation:

  • Instruments in use: right –sized for your test volume and level of staffing?
  • Reagent cost , expiration life, storage requirements
  • Tests run singly or in batch mode?
  • Comparison of in-house testing with reference laboratory charges and turn-around time
  • Staffing requirements: number, training expenses; qualifications and experience beyond present staffing; continuing education.
  • Facility space, ventilation, electrical needs; hazardous disposal requirements
  • Document storage requirements / LIS capacity

In addition:

  • Differentiate betwee
    • Billable vs. non-billable tests & activities
    • Reimbursable vs. non- reimbursable tests & activities
  • Understand the impact of “hidden” costs
  • Measure and Rank Demand from all clinical users services by test volume/type
    • Identify Low Value/High Cost tests using Activity Based Costing
    • Identify High Value Tests & Services using clinical user input; find their cost per test
  • Modify the lab’s technology footprint to use more efficient, Low Cost analyzers
  • Identify & Remove Low Value, Obsolete, Duplicative & Wasteful Tests

Adding Value to Laboratory Services

The Definition of Value is:  “Worth in usefulness or importance to the possessor of the information”.

Clinical Consultations with Physicians

To enhance the cost-effectiveness of the clinical laboratory, improve test utilization, improve trust with other healthcare professionals, and to differentiate itself from competitors, laboratory professionals should optimize their professional relationships with the clinicians who order laboratory tests, serving as clinical consultants for appropriate test ordering and interpretation and for point-of-care testing.  The laboratory test menu has expanded rapidly. Primary care physicians find it difficult to become familiar with the indications and result interpretation for the many tests available, as do specialized physicians for tests that are not specifically useful to their specialty. This need will increase as even more complex testing becomes available (e.g., genomic and proteomic testing). Clinical consultancy may be practiced in several ways: providing patient-specific narrative interpretation of complex testing, providing statistical data related to laboratory results, organizing clinical audits, participating in grand rounds in hospitals, eliminating obsolete tests, achieving consensus with clinicians on guidelines and standardization, and optimizing clinical pathways.

Laboratory Leadership and Team Building for Cost-Effective Test Utilization

1. Establishing The Laboratory Role in Disease Management

Disease and patient care process management means tapping the underutilized potential of Laboratory Medicine’s proven expertise in diagnostics to directly provide:

    • Interpretive reporting for busy clinicians
    • Pattern recognition & patient data integration capability
    • Connectivity and messaging experience
    • Measurement and analytic capability
    • Trending and data mining capability

2.  Actions needed to Initiate The Laboratory’s Participation in Patient Care Teams

    • Actively solicit the support of the organization’s top management
    • Participate in organization wide committees and focused teams for quality improvement; delegate lab department and section leaders to serve on hospitals quality improvement committees
    • Gain the support of clinical department chiefs to use interdisciplinary lab expert teams on daily rounds and regular consultation to prevent medical errors before they happen
    • Coordinate the agreement of mutually acceptable standards for reducing errors that meet the needs of clinical department/section chiefs with laboratory department/section chiefs

3. The Value-Added to Clinical Care Teams by Participation of the Laboratory

    • Reducing uncertainty for clinical care decision-makers
    • Managing risk when caregivers have limited time
    • Promoting interconnectivity between the laboratory, clinical decision-makers and therapeutic services
    • Enabling disease management at the time of therapy
    • Providing evidence-based support data about the patient’s disease, condition or therapeutic progress
    • Providing trending and analysis of the patient’s current and past lab data
    • Recommending preventive medicine test protocols for at risk patients


The clinical laboratory has an increasingly important role in ensuring appropriate test utilization in clinical practice. Laboratory professionals can add value to their work by positioning themselves as clinical consultants for physicians who are trying to deal with the increasingly complex world of laboratory testing, including genetic-driven diagnostics and therapeutics.. There are literally thousands of laboratory tests that clinicians might request as they evaluate a particular patient, but it is difficult, if not impossible, for any one individual to be proficient in all areas of medicine. In addition to providing guidance to clinicians, test utilization efforts may also be driven by financial realities as laboratories try to rein in laboratory costs or in response to payer programs and policies that reduce payments to providers. Laboratories need to design their own strategies for test utilization based on the particular structure and culture of its institution.