Clinical Labs Cut Costs but Face Future Challenges

Taking a play from many healthcare payer playbooks, hospital labs have instituted cost cutting and proactive screening programs that yield substantial bottom line benefits. Copying third party payer pre-certification programs for high-cost tests, a Florida healthcare system initiated an esoteric test approval program for any request in excess of $1,000. The result of this program was an annual savings of $220,000. The lab then went on to introduce and monitor test formularies designed to reduce the volume of send out tests to commercial labs. This saved $74,000 and utilizing “best practices” for blood products added another $412,000 in savings.

[protected]But less is not always more. A 248 bed New York Hospital implemented rapid molecular diagnostic testing for hospital acquired infections (HAIs) that reduced the annual rate of C. difficile by 63%, which translated in a cost avoidance of $1.5 million dollars. A great return on a relatively small investment of $86,000 dollars. Mather Memorial Hospital, also in New York followed the same path for a different HAI, Methicillin-resistant Staph aureus (MRSA). Mather’s lab spent $440,000 in new rapid molecular testing to yield a $2 million dollar overall and $1.5 million dollar net savings.

But the need to decrease costs in the face of rising volumes, payer reimbursement reductions and a serious shortage of qualified medical technologists will continue for the foreseeable future. Considering that over 70% of all clinical decisions are made based on a laboratory test result, the value of laboratory services in the healthcare delivery continuum is essential to overall cost-effective medicine.

For more information on the $52 billion dollar global clinical diagnostics market segments, opportunities and companies, please contact your Atheneum Partners representative and schedule an individual consult today.[/protected]

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Ken Powell

About Ken Powell

Ken Powell is the President of Genesis Business Development, a global health care consultancy. Mr. Powell has experience in the identification, acquisition, and commercialization of intellectual property, new businesses, and products in the clinical diagnostics, life sciences and medical device market segments. He has knowledge about emerging technologies, industry consolidation, personalized medicine, molecular diagnostics, hospital, commercial reference and physician labs, clinical lab systems, point-of-care, genomics, proteomics, life sciences, lab distributors and medical devices. He has provided Expert Witness testimony in an international lawsuit at the Royal Court of High Justice, London, England. Mr. Powell is also knowledgeable about evolving clinical diagnostic regulatory (FDA, CLIA, Congressional) and reimbursement issues. He has held senior management positions with Becton Dickinson, Roche Diagnostics, Technicon (Revlon Healthcare), Armour Pharmaceuticals, and Upjohn Clinical Laboratory Procedures. Mr. Powell is conversant in all aspects of clinical diagnostics, life sciences segments, current and emerging companies and select medical device segments. He has provided Expert Witness testimony in an international lawsuit involving infectious disease diagnostic technologies at the Royal Court of Justice in London, England.