Fine-Tuning Lab Test Utilization

May-June 2015 - Vol.4 No. 3 - Page #10

Laboratory testing is the nation’s highest-volume medical activity, with approximately 7 billion diagnostic tests performed annually.1 Considering all the prescriptions, imaging studies, surgeries, and hospital admissions driven by diagnostic test results, it becomes clear that laboratory testing is perhaps the single most prominent influence on clinical decision-making.2 As such, discipline is required when determining appropriate test utilization. 

At community hospitals, such as the Valley Hospital in Ridgewood, New Jersey, the financial bottom line suffers when insurance providers reject claims for tests administered during a patient’s hospital stay as inappropriate or providing no benefit. Taking into account the rapid rise of health care costs, all hospital managers and lab directors are, or should be, scrutinizing laboratory test utilization. 

Getting Started
The Valley Hospital is a 451-bed, fully accredited, not-for-profit, acute-care hospital serving 32 towns in northern New Jersey. It is recognized as a leader in cardiology and cardiac surgery; comprehensive cancer care; and maternity services, including neonatal intensive care and a fertility center affiliated with New York University School of Medicine. 

Prompted by ever-shrinking reimbursement, the lab formed a committee in 2013 to review and gain better control of laboratory test utilization. We knew from the outset that our task would be daunting, but it was clear that change was necessary; the goal was to develop measurable lab practices that promote high-quality, cost-effective, patient-centered care. 

Immediate Success
Initially, the committee included a pathologist and several physicians who brainstormed the issue. In 2014, the facility’s new medical president recommended expanding the committee to comprise a pathologist, the medical director of hospital utilization, the chief medical information officer, a pediatrician, an endocrinologist, an internal medicine physician, an anesthesiologist, a hospitalist, the assistant vice president of ancillary service, the administrative director of lab services, the core lab manager, and a representative from nursing. The committee now reports to the medical board.

The laboratory utilization committee decided first to examine tests ordered for inpatients and sent out to reference labs. Most of these send-outs are tests that are rarely ordered or that require expensive instrumentation, the purchase of which cannot be justified by test volume. Upon reviewing all inpatient send-out data for 2013 to determine every test’s turnaround time (TAT), order frequency, and cost, the committee identified three categories for scrutiny:

  • Tests with >5 days’ TAT (most inpatients are discharged within 5 days)
  • Tests that cost >$150 ($150 was established as a reasonable economic threshold by the committee after reviewing all test pricing) 
  • Tests ordered <5 times per year (rarely ordered tests may become obsolete or provide little clinical value)

Now, physicians wanting to send out tests that have a greater than 5 days’ TAT or cost more than $150 must discuss their reasons with the clinical pathologist. The pathologist will not reject a test order outright, but will determine with the ordering physician whether the test is warranted and clinically appropriate. The pathologist might ask, for example, if the physician requires the test for a diagnosis, or if the test could be performed later, on an outpatient basis. Physicians requesting a test that is ordered fewer than 5 times per year must call the lab first for approval.

From these efforts, the laboratory reduced inpatient send-outs by 20% in 2014, and realized a savings of $24,000. Based on the success of these measures, the committee will continue to oversee ongoing test utilization reviews. 

Year 1: Inpatient Testing
In 2015, the committee is working with consultants to establish a 2-year plan to perpetuate the test utilization review project. This year, the lab plans to assess and analyze inpatient data; reduce obsolete, redundant, and inappropriate testing; encourage outpatient testing where applicable; evaluate physician order sets; emphasize evidence-based medical practices; and engage physicians and nursing staff in education and awareness training. 

Analyze inpatient data. Using the lab’s information system, the committee is compiling inpatient data from the last quarter of 2013 and all of 2014 to establish a baseline for laboratory test utilization. By collecting the following data: order number, test mnemonic, lab test ordered, collection date, ordering doctor, patient account number, medical record number, discharge date, DRG number, principle diagnosis, principle procedure, and length of stay, the committee can set goals based on cost or number of laboratory tests performed and, going forward, re-examine inpatient data quarterly to assess progress against the baseline.

Data analysis can help identify overutilization and underutilization, both of which are economic and safety issues. Some physicians may order substantially more tests, compared with colleagues in the same department treating patients with similar diagnoses. The data help ascertain whether medical staff members are ordering the most appropriate and necessary tests for patients while bypassing tests that provide no added value or benefit. 

Reduce inappropriate testing. In 2009, approximately $750 billion were wasted on unnecessary health care services, administrative costs, fraud, and other problems.3 On the local level, one strategy to reduce waste is to eliminate duplicative or unnecessary laboratory tests that do not provide additional diagnostic information or alter patient management.

Some tests are deemed unnecessary because they are obsolete. In the past, every patient scheduled for surgery at Valley Hospital underwent a routine battery of preoperative tests. Now, the facility follows evidence-based criteria updated in 2012 by the American Society of Anesthesiologists (ASA) to triage patients based on surgical risk.4 According to the ASA practice parameter, preoperative tests should not be ordered routinely, but rather on a selective basis. Factors to consider include the invasiveness of the procedure, along with the patient’s history and physical exam. Healthy outpatients often require little testing, whereas individuals with chronic illness and complicated histories may require more.

Another area to monitor is orders for genetic testing, which may be the fastest growth area for many laboratories. Because genetic testing is expensive, the lab’s staff geneticist now reviews these orders to verify that the test is the most appropriate and to determine which reference lab will provide the most reliable analysis for a given test.

Encourage outpatient testing. In the past, a patient with an unknown condition might have remained in the hospital longer than necessary to enable convenient sampling and testing. With insurance providers denying coverage for hospitalized days deemed unnecessary, facilities can no longer afford to practice medicine this way. It is vital to instill a sense of utilization management throughout the entire staff. The goal is to stabilize patients and render them well enough to be transitioned to home, rehab, or another care facility. At that point, the patient’s physician can order follow-up testing and treatment, as appropriate.

Evaluate physician order sets. This spring, physician volunteers from each department are updating and rebuilding the hospital’s physician order sets. Previously, the facility had thousands of order sets on file that physicians created to save time during patient examinations. Instead of ordering each test individually, physicians could check one set of bundled tests on a lab test requisition form. Although this may have been convenient for physicians, many of the long-standing sets contained tests that are not evidence-based or have become obsolete.

Consider a patient admitted for 5 days for whom the doctor checks off a lab order set for a complete blood count, Q4 for 6 days. It is safe to assume that, in most cases, no one is reviewing the results four times a day, every day. Thus, the goal is to encourage physicians to review the results of every lab test ordered to establish whether additional testing is necessary. 

Eliminating physician order sets that are not evidence-based is an excellent way to achieve appropriate lab test utilization. At Valley Hospital, all of the old order sets are being reviewed for relevancy, and the lab utilization committee will vet the evidence supporting newly proposed order sets. 

Emphasize evidence-based medicine. It is not uncommon for physicians to over-order lab tests out of fear of repercussions. One unfortunate side effect is that unnecessary testing increases the likelihood of abnormal findings. This leads to further testing in order to rule out the abnormal results. Finding the perfect balance between over- and under-utilization can be difficult, but applying evidence-based methods to test selection is an effective measure in this pursuit.

Engage in awareness training. In order to effectively integrate utilization discipline, the laboratory will work with physicians and nurses in each department to identify the most commonly ordered tests and determine the most cost-effective options. The goal is to educate staff about the optimal ways to order tests by disease entities. When questions arise, laboratory staff members are available to assist. 

It is important that health care practitioners understand the impact and benefit of evidence-based laboratory test utilization. To that end, all nurses in the hospital will receive a week’s worth of half-hour training sessions on this subject. For physicians, ongoing lab utilization training will be incorporated into grand rounds and department meetings, newsletters, and monthly and quarterly updates. Our goal is to encourage practitioners to think in terms of testing toward a clinical outcome, as opposed to ordering a test simply to ascertain information that is nice to know.

Year 2: ED and Outpatient Testing
Next year, the lab plans to examine tests ordered in the ED and outpatient clinics. In the ED, the goal is to analyze data on test ordering and develop a rationale for appropriate utilization. As with this year’s inpatient analysis, we expect to identify both under- and over-utilization of lab testing by ED practitioners, as compared with standard evidence-based patterns that are appropriate for patients’ presenting symptoms. 

The lab’s plan for outpatient test utilization is to provide our hospital-acquired physician office practices with ongoing education that focuses on eliminating obsolete testing. Training will concentrate on ordering evidence-based tests by updating physicians and nurses on the lab tests that are most valuable for treating and preventing chronic illnesses. Likewise, technical sales representatives will be equipped with educational and training materials that speak to these issues.

Future Plans
The lab plans to continue to monitor test utilization data for abnormal trends. Consultants will be collecting information regularly and providing quarterly reports to all invested parties. Weekly or bi-weekly phone conferences help us stay on track with each of the lab’s utilization projects, and it is our hope that by continuing this work, we can further hone test utilization, thereby doing our part to contain rising health care costs and optimize care for our patients.


  1. AdvaMedDx. A Policy Primer on Diagnostics. June 2011. Accessed April 30, 2015.
  2. Zhi M, Ding EL, Theisen-Toupal J, et al. The Landscape of Inappropriate Laboratory Testing: A 15-Year Meta-Analysis. PLOS/One. November 15, 2013. Accessed March 16, 2015.
  3. National Institute of Medicine. Best Care at Lower Cost: The Path to Continuously Learning Health Care in America. September 6, 2012. Accessed March 16, 2015.
  4. Committee on Standards and Practice Parameters, Apfelbaum JL, Connis RT, Nickinovich DG, et al. Practice Advisory for Preanesthesia Evaluation: An Updated Report by the American Society of Anesthesiologists Task Force on Preanesthesia Evaluation. Anesthesiology. 2012:116(3):522-538. Accessed March 29, 2015.

Lawrence J. Bologna, MBA, MS, MT(ASCP), FACHE, is director of laboratory services at the Valley Hospital in Ridgewood, New Jersey. He has over 35 years of clinical lab experience, including multi-site management, integration of lab services, and technical consulting for physician offices.


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