Everyone wants to achieve more while spending less, and in the ever-shifting healthcare landscape, the C-suite’s eyes are never far from the bottom line. Smart financial management of a hospital — or any other business or non-profit, for that matter — includes finding ways to lower costs AND maximize value.
Today’s modern healthcare organizations are facing a multitude of financial challenges and issues — declining unit-specific revenue, changes in reimbursement, and the possible repeal and/or revision of the Affordable Care Act (ACA), to name just a few.
Over-utilization and under-utilization of hospital tests are also a significant problems for many organizations. Patients often receive too many, not enough or incorrect tests, wasting valuable time and money, and upping the very real possibility of diagnostic errors.
In 2015, the National Academy of Medicine endorsed Diagnostic Management Team (DMT) consultative services as a way to reduce medical errors within the U.S. healthcare industry. DMTs work by assembling subject-specific groups of experts on a regular basis to evaluate patient histories, interpret clinical data and make recommendations that become part of the patients’ files. These multidisciplinary expert-driven narratives then inform treatment decisions with the ultimate goals of improving patient care and achieving more efficient use of hospital resources.
While the DMT concept does offer the potential to generate revenue through reimbursements, Dr. Michael Laposata, Professor and Chairman of the Department of Pathology at the University of Texas Medical Branch in Galveston and a leading proponent of DMT use, says the greatest value lies in realizing cost-saving opportunities for a small investment.
“It’s clear that better management of clinical cases resulting in accurate, rapid diagnoses provides major savings,” he said. “The question at hand is whether it’s better to earn $30 in revenue, or save $3,000 from a more efficient diagnostic evaluation for a single case. Major savings contribute to the financial bottom line of a healthcare institution as powerfully as revenue generation.”
During his tenure as Chairman of the Department of Pathology and Medical Director of the Clinical Laboratories for ProMedica Health Systems in Toledo, OH, Dr. F. Michael Walsh (now Chief Medical Officer at Aurora Diagnostics) helped initiate a Comprehensive Integrated Laboratory Medicine Consults (CILMC) project that functions as a DMT. The CILMCs allow pathologists to integrate data from multiple sources, and to provide doctors with appropriate diagnostic support to make useful interpretations.
When the CILMCs began in the early 2000s before the standard use of electronic health records (EHRs) was widespread, nurses culled patients’ charts to gather relevant data for interpretation, and the subsequent reports were manually produced in what was a time-consuming process. These days, the workflow is conducted electronically in a much shorter time.
“The ePath Logic software we developed uses a pathology-oriented logic engine to look at electronic medical records and extract information using algorithms,” Dr. Walsh explained. “The data is distilled into a format to that quickly allows clinically relevant consults.”
Dr. Walsh says CILMCs were used by a small group of oncologists as the software was being developed, and included both anatomic pathology and clinical lab findings.
“The doctors would send us lists of patients; we would access all the materials in a data repository and put together a report for each one,” he recalled. “The oncologists were very much in support of the process, and concluded that it saved them anywhere from 5 to 10 minutes per patient encounter.”
The CILMC billing started in earnest about seven years ago. Providers place written or electronic orders for a CILMC using CPT codes 80500 or 80502. In order to qualify for a consult, the patient’s lab results must be complex or unexpected, and the medical experts must review the record and document their professional judgment accordingly. The pathologist-reviewed data is then added to the patient’s file, along with an assessment and relevant recommendations to guide treatment.
“We are providing a service by making diagnostic interpretations using reformatted information from the EHR, and then putting it back into the EHR as a consult,” Dr. Walsh said. “It’s no different than ordering a cardiology consult or a pulmonary consult.”
A The business models Dr. Walsh and his colleagues drafted when funding the ePath software development projected that approximately one-third of all hospital admissions would be eligible for a CILMC consult.
“Based on our main Toledo hospital’s 36,000 admissions each year, you could generate about $9 million in billable revenue using this model,” Dr. Walsh said. “Once you become effective and efficient in the processes, the margins are about 55 percent.”
Currently, 18 Medicare-approved CPT codes allow modest payment for the recommendations generated by a DMT. A work in progress, Dr. Laposata says efforts are ongoing to substantially increase the payment amount through delivering the DMT’s narrative paragraph to the lab director as a physician-requested consultation.
“This could help to generate revenue in laboratory medicine/clinical pathology for the MD pathologists who provide it,” Dr. Laposata said. “The insurers will not pay for narrative interpretations provided by PhD laboratory directors, but because the payment is so modest and the savings are so great, we’ve chosen to have expert PhD laboratory directors lead DMTs in our institution.”
Other measurable benefits DMTs may offer include reductions in preventative readmissions, length of stays, and morbidities due to delayed or incorrect diagnoses.
Because most relevant studies to date have been strictly empirical, Dr. Laposata, Dr. Walsh and other colleagues are presently working to set up a new study that includes both clinical and economic components (most likely focusing on either coagulation or diabetes) that will definitively demonstrate the positive effects of DMTs on clinical outcomes and economic impacts.
It can be difficult to prove a large, immediate return on DMT investment; Dr. Laposata says it’s much easier to show positive results when it comes to decreasing inappropriate test utilization.
“The underutilization of laboratory tests, especially, results in delays in diagnosis or missed diagnoses, and produces major expenditures and poor outcomes,” he explained.
Dr. Laposata offers the following example to illustrate the difficulty in measuring DMT cost analysis. Consider a patient with a deep vein thrombosis. This patient can encounter at least eight typical outcomes. For instance, the clot may dissolve on its own, or move to the lung without producing symptoms that bring the patient forward for additional care. Another possibility which is very costly — the patient who develops a clot in the leg suffers a stroke.
“Alternatively, and most commonly, the clot can extend within the vein, or become dislodged and produce a major pulmonary embolism,” Dr. Laposata said. “These are costly situations with a per-instance estimation of at least $100,000 per year in readmissions and further treatment.”
These common outcomes can occur when a patient with a swollen leg or shortness of breath isn’t tested for a clot with a D dimer assay, or isn’t evaluated with the appropriate imaging studies to identify a clot in the leg or the lung.
Dr. Laposata says if a clinical study is demanded to determine the cost (which can range from less than $1,000 to more than $1 million annually per patient), a hospital won’t be able to realize the savings from the minor investment of DMT implementation for years to come until that study is funded, completed and published.
“Individuals who make major decisions for hospitals often aren’t aware of information such as this, related to just one disorder, and therefore don’t know that using experts to diagnose for more rapid identification of an illness has financial merit,” Dr. Laposata concluded. “Papers to illustrate this problem will be published; in the meantime, hospitals that are quick to jump to an obvious improvement in services by listening to doctors showing major returns on modest DMT related expenses will be the early winners.”
Managing population health takes on a new look
By Anne Paxton
Within the big picture of population health, lab data is proving to be a key component of tailored improvements in patient care for large healthcare systems and diagnostics companies.
Does your clinical laboratory or pathology group need more revenue? Then it’s time to become patient-centric in ways that improve patient care.
Medical labs are taking steps to deliver patient-centric services to achieve improved patient/physician satisfaction levels and increase revenue.