Thursday, October 02, 2008

Lab pathology?

I received this note many months ago from a member of our Pathology Department, expressing some opinions and concerns based on a lecture he heard at an annual meeting. I had meant to post it back in March, when I received it, but the delay does not affect its relevance. I do not have the expertise to offer an opinion on this matter, and so I present it for your consideration and comments.

Dear Paul,

I just returned from our Academy of Pathology meeting in Denver. Chris Fletcher from Brigham and Women's Hospital delivered a pessimistic keynote lecture on the "future of academic pathology."

He cited commercial labs as one of the major threats. These labs claim to offer a faster, cheaper service, and often hire prominent pathologists to enhance their letterhead. Due to their sample volume and available capital, these labs can offer expensive specialized clinical tests before university hospitals.

Dr. Fletcher argued that these labs siphon off low complexity cases (small biopsies and chemistry tests) from the market and leave the low profit margin cases to us. With the resulting strain on salaries and budgets it will become increasingly difficult for academics to maintain the staff and resources needed to train new residents and maintain research programs. In the worst case scenario (my extrapolation, not Fletcher’s), we are currently training residents to work for those private labs–academic salaries will not be able to keep them. In future, the companies could start their own resident training programs away from university affiliations and clinical colleagues, and all research requiring human tissues would depend on commercial for profit tissue banks.

There is no doubt that these labs provide a good service. Probably 90%+ of the lab samples and biopsies are routine (I could train any ‘top 10% of his class’ college graduate to report a diagnosis). The letterhead experts act as consultants for that last 10%. The labs are faster since they do not have the delays and expenses intrinsic to a residency-training program. They have good marketing people and customer service (i.e. you will get a glossy colorful report with a well worded, yet automated, interpretation).

However, academic labs do offer added value. Lab data is not a printout from a machine. It has to be interpreted, and interpretation without clinical context leads to poor patient management and wasteful test utilization. A doctor’s office-manager does not think twice about splitting up a panel of blood-tests between labs to save a buck; never thinking that that those labs use different reference values or testing methods. Clinicians may not understand the limitations of the particular testing methods and are forced to rely on marketing menus rather than the confidence of a pathologist colleague.

Hospital based labs facilitate communication and consultation. Most patients who have never visited a Tumor Board Conference or Multidisciplinary Conference would be shocked to learn that their surgeon or obstetrician does not run their lab tests like on television (House or CSI). They have no idea that two women with a pathology report for stage 2 uterine cancers might be treated differently because of pathologist input.

How can we compete when our own doctors are using these labs?

Inform the public. Patients shop around for oncologists and surgeons: Why not pathologists? Tell patients to ask where their samples are being sent. The answer, "a reputable lab that has been certified by the College of American Pathologists" is not good enough. Does your doc know his pathology colleague?

Commercial lab reports tend to be simple and easy to read, using templates. Template based reporting can clarify communication (and perhaps we should take their lead), but template are also a way of covering up for cheap inexperienced staff. Our own BIDMC oncologists insist on internal pathology review prior to therapy to identify such frequently missing information. Biology does not conform to multiple-choice answers-and I don’t choose my doc based on how they did on their board exam.

As for being cheaper, we know that the listed cost of a hospital-based test has very little to do with the negotiated charge billed to an insurer or the government. As for speedy results, the turn-around-time for blood test is probably similar in commercial and academic labs; for small biopsy where academics is slower, the rush is not driven by patient care since the results will not get to the patient until the follow-up visit a week later.

Of course, academic labs such as ours could and should offer better service, but we already offer better care. This message should be broadcast before it is too late.


Anonymous said...

This argues for serious process improvement in hospital pathology labs, to more efficiently utilize human resources and more effectively influence patient care. Information system developments should be oriented towards streamlining rather than 'add to' solutions for interdepartmental communication. Templates would help, but demand for evidence-based care throughout medicine would greatly aid improvements in the lab. If physicians follow the science, they would be ordering the same tests and labs would be interpreting similar values for similar cases. The two women with stage 2 uterine cancer probably have come to this point in their care in very different ways - independent of their biology and behavior. Pathology demands standardization in ways that few disciplines do. We can all learn something from minimizing wasteful variation in practice.

Wacko said...

there aint a perfect healthcare system.

Anonymous said...

Commercial labs generally will accept capitated contracts for less PMPM than hospital labs. For primary care to be viable in urban markets with large HMO populations, the cost to the physician groups for each segment for healthcare that falls under the prepaid arrangement needs to be manageable. But, it is also true that the results need to be accurate, because mistakes make for more costly medical care.

Whencutdeep said...

I'd say that most academic institutions face a similar problem. Here, in Bangalore, India, academic institutions mainly have a government hospital / charitable hospital attached which offer treatment and investigations at a highly subsidized cost. If I were to compare the cost of management of a condition in a teaching hospital to a corporate hospital, the teaching hospital would charge 1/3rd the cost. As much as the costs are subsidized I have on numerous occasions seen patients who are apprehensive about being treated in a teaching institution citing that they were being given sub standard care, which certainly wasnt the case.
Coming to diagnostic centers, there are numerous instances where the refering physician gets a small cut from any patient refered to the center for an investigation.
While it doesn't necessarily indicate a lower level of care, it certainly jeopardizes the ability to operate large academic institutions which will be left to dal with a small number of cases with a lesser profit margin.

Anonymous said...

Bravo Jonathan! I completely agree with your comment.

Of course, the problem I've noticed in teaching hospitals is that there is a cost-cutting mentality that prevents pathologists from implementing systems that would improve efficiencies in the lab, for instance, computer systems and programs that will help keep track of cases, etc. Also, some private labs have efficiencies because they are adequately staffed. If a difficult case comes in that needs more time, there are other staff to handle the other cases so turn around time is not compromised. Teaching hospitals often work on the batch, rather than a continuous flow, method. It's a problem.


Really, this is just a wonderful place for discussion! Wonderful blog.

Kris said...

My comment is from the consumer's perspective and is meant to address "As for being cheaper, we know that the listed cost of a hospital-based test has very little to do with the negotiated charge billed to an insurer or the government."

The list price does, however, have everything to do with what is paid by the self pay patient (not to be confused with "no pay"). And you would be surprised what that list price is sometimes. One hospital charged $476 for a CMP--a test Medicare pays less than $20 for. (Oops! My bad--I forgot the 15% cash pay discount. Make that $404.60.)

I represent and regularly give input to a cash paying segment of our population; and I do everything I can to keep our patients out of hospitals for pathology and diagnostic testing. But I often wish for competitive pricing from hospitals--pricing that forgets about "the list price," which means nothing to anyone except self pay patients.

Incidentally, the self pay patient can get the same test at Labcorp for $46--where do you think he should/will go?

Anonymous said...

I've been out of town but as a retired private practice pathologist couldn't pass up a comment.
I'm not sure what point your letter writer was trying to make to you, but I see this letter as partly accurate and partly a whine. (with apologies to the writer). If anything, I think community hospitals have been harder hit by these trends than academic hospitals. The writer also jumps back and forth between clinical pathology (blood tests run on a machine or by laboratory technologists) and anatomic pathology (interpretation of removed tissue on a microscopic slide, OR, lately, molecular testing.)
I think clinical pathology is regarded by practically everyone outside of pathology as a commodity, and it is treated accordingly. The big national labs are dominating because of one reason - price. No one, including the clinicians who order the tests, gives any "points" for interpreting these tests. Unfortunately I don't see this changing. Some regional hospital labs, or regional labs owned by a consortium of hospitals, have been able to differentiate themselves by providing better and more personal service, but i think this will eventually fall to the pressure of the almighty dollar.
As for anatomic pathology, it is at a crossroads. It used to be a holy rule that a specimen removed in a hospital (like a colon resection) was grossly and microscopically examined in that hospital, thus guaranteeing the hospital pathologists an amount of business proportional to the amount of surgery done there. However, the pressures of price and advances in transport technology are now beginning to violate even that rule, once again with larger labs able to gain leverage. Pathologists have responded by developing their own offsite labs and soliciting business from other hospitals or dr's offices.
Where does this leave the academic pathology dept? I think you have an opportunity to differentiate yourself in a way that community pathologists don't - by selling your expertise in subspecialty pathology, and by investing in research that will cause your doctors to look to you for the latest in molecular testing, rather than the big labs. Joint ventures and patent protection of discoveries are necessary. Hire your own nationally known experts - many pathologists are still willing to exchange $$ for prestige and a lack of "assembly-line" work schedules.
But above all, and i say this gently - academic labs are known to sometimes be slower to develop the work process efficiencies in the histology and clinical labs both, which can save money. Don't just ask for more money, use Lean principles and other methods to achieve efficiency. Laboratory and histology procedures resemble manufacturing processes and are especially amenable to these techniques.
Sorry for the sermon, but one has to jump out there and be proactive if our specialty is to survive at all.


Anonymous said...

nonlocal - your suggestions are all germane, and I largely agree, but I still think there are problems with the model you espouse. Many academic departments do subspecialize and market that subspecialty along with special testing, but, if the physician is not supported by the administration they cannot offer the services that are likely to generate revenue. Some hospital administrators (of both the MD and non-MD variety) think only of meeting their yearly budget and they may not think that buying equipment, software or hiring more techs will help bring in more revenue. A private lab understands how smooth work flow produces income and allows more work to be done on a daily basis. Somehow, that part of the business culture is missing in teaching hospitals (okay, some, they are not all awful, of course!). Also, pathology departments may be used to subsidize other areas of the hospital; the lab provides good revenue that may be used to support the academic mission so that the lab infrastructure suffers as money is siphoned off to use for other purposes. I can tell you, it's a very unhappy physician who is told there is no money for x, y or z, who then goes home and watches a flashy advertising campaign on television that cost the hospital a pretty penny.....

In the teaching hospitals I've worked, I've had a greater percentage of high-risk cases and high-risk patients whose biopsies I've looked at when compared to some of the local labs and yet I can't charge more because charges are related to procedure, not complexity, at least with biopsies. This kind of pricing is not a good way to run a market, in, well, anything.

The cases I saw took, on average, more levels and more slides per case to review! The inhouse cases took on average four times what the private practice groups out of the hospital were sending me. How can I compete when that is the nature of the specimen?

I was required to re-review outside pathology for which I received no 'credit', and in a teaching hospital, were incredibly complicated. I know private hospitals do this, but, believe me, it gets complicated with all the internal and external regulations. Some of the reports I review from private labs don't provide some of the information I do in my reports.

My consult service took an enormous amount of time and yet it was essentially revenue neutral.

The other thing that is difficult to discuss because it sounds like you have a grudge or are bitter is how little power pathologists who do primarily clinical work have in teaching hospitals. The power heirachy in teaching hospitals is such that those that do primarily clinical may not be a part of the decision making process outside of internal, departmental meetings. Their unique needs as clinicians who may be able to introduce efficiencies or unique services into the clinical lab are sometimes ignored. This, of course, means you have to fight a little harder for your point of view, but I can to tell you, it's not easy, and when you challenge the local dogma you are viewed as a trouble maker. It's too bad. I think it's the trouble makers who'll save us! :)

Okay, I may be wrong, but, hey, at least I'm trying to think outside the box!


Anonymous said...


Thanks for the response; I actually agree with virtually all of your comments! There is no question that teaching hospitals in general have more complicated cases, although I thought the 88309 code would allow you to reflect at least some of that complexity. And the re-review of slides that are sent with a referred patient to a teaching hospital is as onerous as you describe, but again, I bet places like Johns Hopkins have figured out ways to charge for that. I have been out 5 years so I am not up on the latest in charge codes.

As far as unsympathetic administrators, mine were so unsympathetic that they sold the entire clinical lab to Quest! Quest now makes a pretty penny charging them for every test and charging them for all the hours spent on the computer system, which is still owned by the hospital and not Quest. They also wouldn't have anything to do with the blood bank - so you can tell who was the smarter party in that "partnership." If there is anything I am bitter about, it is that!

I am not sure about your last paragraph. I never did like clinical pathology myself and was happy reading slides. So I'm not sure if we are on the same page there or not.

Anyhow, nice talking to a fellow pathologist anytime! Do you work at BIDMC?


Anonymous said...

Nope, I don't work at BIDMC nonlocal, although I am familiar with the institution. Pretty cool that their CEO blogs, though, isn't it? I wish more did, and more importantly, I wish more junior faculty would be unafraid of speaking out about the weakness of their own profession. Nothing changes if you stay quiet....

Anonymous said...

I hate to hijack Paul's excellent blog for another conversation, but perhaps, Paul, our dialogue has given you some insight into whatever situation you need to address. I do agree with Madhu that junior medical faculty in any dept should not be muzzled, but I suspect you wouldn't encourage that anyway as CEO.


Anonymous said...

Right! We have a tradition of open discussion, criticism, and suggestions here. Junior faculty members are especially encouraged to bring up new approaches and ideas.

Anonymous said...

who said if a specimen is sent to a hospital vs a private lab you will get accuracy and perfection.

hospital labs like a comment in this blog have to capture their market. and hospital boards have to capture the minds and $ pockets of their surgeons in keeping the work in the hospital and the consequences to them and the hospital if sent out. but up to date,fast TAT and accurate.