Assuming a facility has gone through the proper outreach program development process, including creating a realistic strategic plan, gauging departmental, staff, and information technology (IT) infrastructure and capabilities, and has gained the requisite support from administration, the next step is to actually execute the plan and begin the outreach journey. (See the Summer 2012 issue of MedicalLab Management for more information on these processes.) When starting out, keep in mind that the overall goal of any outreach program should be to contribute to the organization—in terms of staff and resources maximization, expanding the laboratory’s role as a revenue generator, providing integration of patient results across the continuum of care, increasing physician satisfaction, and above all, improving patient care.
Many facilities with laboratory outreach programs are non-profit, so generating extra revenue with a contribution margin in the range of 30 to 40 percent moves the laboratory from a cost center to a revenue center due to this external activity. Likewise, this shift should directly feed the mission of the organization, which is usually some combination of the pillars of quality, service, employee satisfaction, financial viability, growth, and community involvement. As medical laboratory directors know, the lab is one of the few clinical departments that runs the gamut of these foundational and operational pillars.
Think Big, Start Small, Move Fast
Laboratory operations have become a big business in modern health care with diagnostic laboratory testing costing approximately $65 billion in 2010. Furthermore, this number is increasing with growth projected at 8% from year-to-year and 18% growth in esoteric testing alone.1 With this level of expenditure, it is more important than ever for hospital laboratories to capitalize on opportunities to secure a portion of this market, which also aids in managing inpatient costs through integration of information and elimination of redundant and duplicate testing.
In this respect, real support from administration or the C-Suite is vital, because not only do they need to see the large-scale picture of what outreach can contribute, but also they must be willing to nurture the program as it grows. This includes a willingness to add FTEs, automation, and information technology, as necessary. After addressing these internal concerns, the laboratory must focus its energies on the patient and customer view. Paramount to the success of laboratory outreach is fostering a culture that wants to provide service; if the lab is insular and does not want to interact with the outside world, it will be very difficult to create an effective outreach program. As outreach invariably involves interacting with clinics, physician group practices, independent physician offices, skilled nursing facilities, etc, customer service in the traditional business sense becomes essential to program success. The quality of infrastructure elements such as telephone- and web-based customer interaction, patient service centers for specimen collection, and courier services for delivering samples is going to establish a facility’s initial reputation. A positive first impression of the efficient and comprehensive provision of services is invaluable. Within the Department of Laboratory Medicine and Pathology at the Mayo Clinic, we take customer service seriously and place emphasis on engendering an attitude of service among all our staff. For example, we engage our Mayo Laboratory Inquiry customer service representatives in a three-month training course before they are allowed to field calls from our own Mayo Clinic providers or our reference laboratory customers.
Another aspect of traditional customer service is the sales component—the services provided by the outreach laboratory must be effectively marketed. Engaging in active sales and ongoing marketing of outreach services, including onsite customer support activities, is as important as the quality of the testing provided. Unfortunately, gaining buy-in from other departments in your own facility, such as IT or marketing, may be among the challenges of nurturing outreach. Management of client relationships—including those with both providers and patients—is the lifeblood of an outreach program. It is necessary to develop materials such as promotional brochures, a directory of services, and a list of available patient draw sites (with locations, hours of operation, and contact information). Many clinical laboratory staff do not have the expertise to develop marketing materials that clearly convey what specific services the facility is offering, nor do they have the sales skills necessary to secure new business relationships. Furthermore, the hospital’s marketing team may not be able to readily help and the facility may not place emphasis on them doing so. However, developing a rapport with these internal groups is advantageous and will ultimately be necessary.
Create an Accessible Web Presence
Many times, the laboratory is invisible on a hospital’s external website. However, as patients and providers become more technologically savvy, if they cannot locate your services online, this can put your outreach program at a competitive disadvantage. Keeping this in mind, the outreach program needs to offer provider-oriented material, including general promotional materials, a directory of services, and a user guide. It is equally important to offer patient-oriented resources such as laboratory locations and details regarding specimen collection and patient preparation. Some laboratories provide a link to a secure patient portal for online registration, phlebotomy scheduling, or bill payment. These functions are largely confidential and protected by HIPAA, so it is necessary to provide secure access to these functions.
Never Forget the Patients’ Perspective
The patients’ expectation is that there will be no change in service level should their provider choose to partner with a hospital as opposed to a commercial laboratory operation. Patients often expect that a hospital-based laboratory is going to offer a higher level of service than a commercial laboratory regardless of merit, and if this turns out not to be the case, the patient is going to notice and may complain to their provider.
All patients moving through a health care system want to move quickly. Therefore, it is the responsibility of the hospital laboratory to create processes that can support the levels of customer service, accuracy, and turnaround time demanded by providers and their patients. Patient-centric activities must be taken into account throughout the process, so, for example, if patients are going to have blood drawn at the main hospital location, do they have to pay to park? Is there a lengthy wait involved in what is potentially a stressful activity? Working in a health care environment every day, these issues can be easy to overlook, but as a service provider, you cannot simply accept these kinds of challenges as the status quo.
Supporting Client Structure
An agreement made between a hospital or health system and, for example, a community physicians’ practice to handle laboratory services is just the tip of the iceberg. Part of that negotiation process should include investigating and resolving any compatibility issues between the two entities before services are initiated, and this often requires management of differing technology infrastructures. As the solicitor for business, the onus will likely be on the hospital to support integration with whatever type of electronic health or medical record systems are in use by the physicians’ practice. Many hospitals provide access to these outside entities via their own EHR or EMR systems in order to enable access to hospital-based data.
From a business standpoint, the essence of what the hospital is providing is information in the form of accurate, secure, and robust diagnostic testing results, so a priority for success is ensuring open communication between systems. However, billing and revenue capture is a clear crux of laboratory outreach, and part of that capture is offering competitive pricing commensurate with the market. Furthermore, the hospital will need access to all potential insurance plans that patients in the surrounding community are members of. As mentioned in my previous article on outreach development, if the hospital laboratory outreach infrastructure does not fully support the needs of the clients, those clients will find another lab that does. Some providers may be open to working with multiple laboratories—splitting their business between the hospital and commercial laboratories—but others may not. Therefore, the hospital’s laboratory infrastructure must be able to support existing customers and also be able to manage the growing outreach activity. This is why senior level buy-in is so important, as they are far more likely to exert their influence in support of necessary resources such as billing, IT, and marketing to support you, particularly if you are tapping into a multi-million dollar outreach market opportunity.
Overcoming Obstacles to Expansion
The provision of laboratory and diagnostic health care services is a very competitive market, so having ownership or influence over business processes is key. Challenges to this include ineffective billing practices, pricing restrictions, and lack of access to patient insurance plans, among others. For example, most hospitals have a write-off policy for charges less than a set amount. Depending on the threshold, this practice can be anathema to the outreach laboratory, which is defined by low-cost, high-volume testing. Even though a $17 test may not seem significant taken individually, if the hospital has a write-off threshold of $20, and is not issuing bills for the thousands of tests that the laboratory performs, the amount of lost revenue will be significant. Therefore, one of the main financial goals of any outreach program should be to follow every dollar and maintain a high level of fiscal responsibility. Many hospital billing departments are set up for high cost activities, such as surgeries or imaging, so the idea that a $17 test should be equally important may be a concept that needs to be ingrained.
In growing laboratory outreach, the actual patients should never be considered an obstacle—the patients are out there and if you provide a superior service, they will come to you. Of the most commonly reported challenges to outreach growth, approximately half are external. Perhaps the laboratory was not able to provide a specific aspect of a required service, IT interfaces could not be developed, or an insurance plan prohibits patient access to the laboratory’s services. The other half of these challenges are often related to internal factors, such as a lack of leadership or administration support. Interestingly, many facilities must repeatedly justify the laboratory outreach program, either annually as part of the budgeting cycle, or with every leadership or ownership change. Such constant undermining of the program can be highly detrimental, as it takes significant energy to continually justify the program unnecessarily.
Further complicating this picture is the fact that the laboratory outreach program remains a relatively unknown entity within the hospital. Laboratory practitioners tend to be introverted by nature and trumpeting their services is not natural. More importantly, the systems in the hospital organization are not designed to routinely determine the financial contribution of the laboratory. A hospital laboratory might record that they receive 2000 requisitions each day, but without appropriate financial systems in place, they may not know exactly how profitable the laboratory is. By way of example, the outreach financial pro forma for a small community hospital demonstrated a contribution margin of $1.2 million annually from the laboratory outreach program alone. Although the data was validated by the CFO, the CEO had been under the impression that the outreach program was actually losing money. To overcome the prevailing perception that the laboratory does not contribute to the bottom line, it is key to communicate metrics that demonstrate the current financial contribution as well as the financial boon possible if outreach growth is supported.
Ideal Areas for Growth
Currently, the bulk of laboratory outreach opportunity lies within the physicians’ practice market. Additional opportunities include community health fairs, long-term care and residential facilities, and testing for industry (eg, employee health screening). Many facilities begin this process with what is called in-reach, or serving physicians and providers currently under the health system’s umbrella. Non-affiliated providers would be the next priority. Looking forward, a laboratory liaison (ie, sales person) should be designated to monitor any shifts in the provider market, and anytime a new physician or group begins practice in the community, the liaison can attempt to recruit that entity as a laboratory services client.
Depending on the size and scope of the patient services a hospital provides, along with the size and patient population of the community, outreach growth may require expansion into other communities. Again, this type of growth should be in line with the facility’s overall mission, under the assumption that the facility is always looking for new patient catchment areas. Efforts would then be directed toward marketing laboratory activities in those outside communities.
Gaining access to other communities is becoming more prevalent, particularly as more hospitals merge and create new and larger health systems. Hospitals that may have been in competition before are now working together. As more of these entities are buying physician practices, it is estimated that by the end of 2013, only a third of physicians nationwide will be in private practice while the remaining two-thirds will be owned or affiliated with hospitals and medical centers.2 However, this reality does not automatically mean that after joining, that provider will automatically use the hospital’s lab services. Some may determine, even after a merger, that they will continue to choose their own lab services provider until the health system can provide a competitive service.
Focus on Provider Needs
The medical provider’s primary need from the laboratory is accurate test results delivered in a timely manner. We know that the hospital laboratory can do this very well, but the logistical and service aspects may vary from practice to practice. Therefore, when engaging potential outreach clients, you must physically visit that practice to discuss their specific laboratory service needs. This visit should address logistical areas of physical and IT infrastructure compatibility, customer service, sample transportation, etc. In my experience, providers identify turnaround time and quality as their top two priorities, and while the third priority is more variable, it typically involves the quality of customer service as defined by how they and their patients will be treated in the relationship. In basic terms, the most important provider needs are expedited turnaround times, quality test results, access to help, and satisfied patients.
Although the above mentioned concepts will invariably be the primary concerns, if a practice already has an established relationship with a lab, it is best to leave no stone unturned. For example, when meeting with a practice manager—and keep in mind, it may not be a doctor making the decisions about lab services—ask about their prior experiences and look at the details of their practice. What services are they focusing on? What is the nature of their relationship with their current lab and are they happy with that service? Do not assume that because the incumbent laboratory provides a service, that service is valued by the customer and is a critical element to moving forward in a business relationship. In some markets, laboratories may provide physicians’ practices with a phlebotomist staffed directly in their office. Although it may be a competitive factor in gaining the business, maintaining this service requires further investigation. In one instance, a practice manager did not actually want the laboratory-provided phlebotomist, but the lab insisted on it. When the phlebotomist was not busy, she would sit in the waiting room and knit, and then try to sell the knitting to patients as they waited. Look at the relationship from a fresh perspective, ask questions, work to alleviate any concerns, and align your services for success. While focus groups and surveys can be helpful, face-to-face interviews are best, as these also serve to establish initial communication pathways. This will help establish the relationship on a solid foundation.
Monitor Program Growth and Success
Financial reporting is essential, as without it, you cannot monitor the health of the laboratory outreach business. Likewise, closely monitor your testing volumes, because as that volume increases, your staff will see the impact of their extra work and begin to take ownership of the program. Another element to monitor is customer service department (call center) activity, including call volume and response times, which will demonstrate how well you are able to address your customers’ needs. The College of American Pathologists (CAP) requires their accredited labs to perform customer satisfaction surveys every two years. Sharing relevant outreach metrics with hospital administration further establishes credibility and demonstrates the value that the outreach program provides for the entire organization.
The main driver for outreach programs will always be the ability to extend the laboratory’s testing into the community, while delivering high quality and excellent service. Key to the program’s success is giving providers and patients not only what they need, but also what they want. The goal should be to establish a long-lasting and strong relationship between the laboratory and its outreach customers. Thus, do not just talk to them once; new customers may require weekly attention, then monthly, quarterly, or visits every six months to review the quality of your service. A successful outreach program should be able to align itself with its customers; as fellow health care providers, the laboratory does not have to rely on something outside itself in order to provide quality test results. Those that are able to develop a business- and service-oriented infrastructure will certainly rise to the top. With the proper elements in place, your hospital laboratory will provide an exemplary level of service and outreach will become self-sustainable, self-beneficial, and hopefully, quite profitable.
Jane Hermansen, MBA, MT(ASCP), is the outreach program coordinator for Mayo Medical Laboratories in Rochester, Minnesota. She has over 25 years of clinical laboratory experience in both community hospital and academic medical center settings. Jane received a BA in medical technology from Concordia College in Moorhead, Minnesota, and an MBA from the New York Institute of Technology. Her experience includes clinical research, process engineering, project management, and laboratory outreach consulting, training, and facilitation.
For more information on Mayo Medical Laboratory Outreach and Education, visit:
www.mayomedicallaboratories.com/outreach and www.mayomedicallaboratories.com/education
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