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Full speed ahead through tight corners

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Anne Paxton

December 2014—Like sailing ships, laboratories hope for fair winds as they chart their business plans. But smooth sailing is never a sure bet; rough sea conditions are an ever-present possibility that can make ships hard to steer. Perhaps the tide is with the vessel but the winds are against it. That’s a situation that could aptly describe a health care system facing a growing patient population at the same time that hospital admissions and reimbursement are in decline.

John Waugh forecasts constrained instrument spending for Henry Ford’s laboratories but is planning to make targeted investments. “We just have to keep demonstrating our value for the organizations we support,” he says.

John Waugh forecasts constrained instrument spending for Henry Ford’s laboratories but is planning to make targeted investments. “We just have to keep demonstrating our value for the organizations we support,” he says.
Dwight Cendrowski Photography

For those at the laboratory helm, forecasting test volume and instrument needs under such conditions can be tricky—especially when an entirely new adverse weather pattern could suddenly come out of nowhere. Should the laboratory forge ahead with instrument purchases, pare back purchasing, or wait for conditions to improve? During interviews with CAP TODAY, leading U.S. laboratory executives in four different time zones describe what’s on their instrument wish lists and the mix of forces in 2015 that will be driving their decisions about purchasing.
Some laboratories looking ahead to 2015 say that expansion tops their agenda and it’s just a question of which instruments to go after first. At Pathology Associates Medical Laboratory in Spokane, Wash., for example, the game plan is to expand its National Esoteric Testing Laboratory, says PAML vice president Gregory Clark, PhD.

Hired three years ago, Dr. Clark recently took on the task of managing PAML’s esoteric testing program and enlarging its national footprint. The laboratory’s volume has been steadily increasing and took a jump in the last year. “We’ve seen some sizable test volume gains throughout the last six to 18 months,” he says.

Building a national reference lab has always been a key part of PAML’s strategy. “We want to offer truly state-of-the-art reference testing to our clients—both the joint ventures around the country with which PAML is allied and local physicians and hospitals,” Dr. Clark says.

Dr. Clark

Dr. Clark

A recent reconfiguration has given the laboratory room to make its move: The information technology department relocated from the laboratory’s building to a general administrative office, freeing up about 15,000 square feet. “We intend to use that space to expand our test menu and to decrease the work we’re sending out to our reference laboratories. If we can do the testing without that additional hop to another lab, it decreases our cost and improves the service we provide.”

Included in the enlarged space will be a new department called “separation science,” which will cover tests like atomic absorption and liquid chromatography, as well as the clinical toxicology work done using the tandem mass spectrometer and HPLC (high-performance liquid chromatography) and GC-MS (gas chromatography-mass spectrometry). The expansion will increase the laboratory’s testing by between 12 and 20 percent, he estimates.

Keeping like instruments near each other is one of the goals because it allows more efficient use of staff. “If you have two instruments, each with a capacity of 40 percent, and they’re distant from each other,” that’s one thing, Dr. Clark points out. “When you have the two instruments together, you can take pretty good advantage of those 40 percent chunks.”

He expects that the Affordable Care Act, with more people entering health plans, will lead to increased testing volume (though not more revenue per test), and that was one of the drivers for PAML to reorganize. “Having systems ‘leaned out’ definitely helps facilitate expansion,” he says, and it’s also happening in the laboratory’s special chemistry area. “We’re moving our random-access, multi-channel instruments from special immunology down to immunohistochemistry, and we’re attempting to ‘lean out’ those processes.”

They evaluate their existing testing platforms to continually improve them. Automation is where they often turn as a means to improve testing performance. They just bought two DiaSorin Liaison XLs, for example, to advance to the next generation of DiaSorin’s immunoassay testing.

Overall, Dr. Clark is optimistic about future growth. “We have a very high value proposition that our customers appreciate, and I think just our organic growth will continue to be strong. If the ACA stays as it is, we will continue to see additional test growth from that, and that’s why we are trying very hard to get the laboratory ready for it.” The competition will always be out there, he says, so it’s critical for laboratories to create synergies within their testing areas to maximize their expertise and resources.

Optimizing testing while leveraging the power of data analytics is the order of the day at TriCore Reference Laboratories in Albuquerque, says Bill Remillard, TriCore chief technical officer. The largest medical laboratory in New Mexico, TriCore was created in 1998 as a reference lab to support the University of New Mexico Hospital Center and Presbyterian Hospital system, which together have 10 hospitals. The UNM and Presbyterian coverage along with branch labs, patient collection centers, and phlebotomists throughout New Mexico provide TriCore with a “unique presence as a sort of Switzerland of lab services within New Mexico,” Remillard says. “This allows clinicians practicing within the state access to longitudinal lab information reaching back to 1998.”

TriCore maintained a good growth rate of five to eight percent even through the 2008–2011 recession, but it is planning conservatively for a rate more in the three percent range, corresponding to the hospitals’ projected growth rate in admissions. “Rather than business as usual, our strategy is really appropriate utilization, so we have a big initiative to optimize testing as part of our TriCore Diagnostic Optimization Initiative.” TriCore is uniquely positioned, he says, to have a significant positive impact on health care costs in a state where savings are desperately needed. “University of New Mexico, Presbyterian hospitals, and our pathologists and physicians are all on board with the optimization goals,” Remillard says.

Remillard

Remillard

Admissions have been fairly flat, though they are not showing a decline, and Remillard says the laboratory is more in a replacement mode than an expansion mode when it comes to instrumentation. “We have all 10 of our hospitals standardized in chemistry, hematology, coagulation, and blood banking. But since some contracts are expiring, we’re planning an RFP for our coagulation and blood banking instruments.”

Neither outreach testing (about 30 percent of current testing volume) nor anatomic pathology is likely to increase in the short term, he predicts. However, his lab plans to do more next-generation sequencing. “We did purchase our first next-generation sequencing instrument last year, and we’ve developed enough assays on that to buy a second instrument. That additional sequencer will let us develop more testing where it makes sense and also meet the requirement for redundancy”—which gets more urgent as a first instrument approaches a certain percentage of capacity. Many other molecular labs are making the same move, he says. “The price point is reasonable. You can get a good next-generation instrument for less than $100,000, and I think the technology and the effort required to get it up and running is becoming more mainstream than it was just a couple of years ago.”

TriCore has a comprehensive molecular diagnostics area covering oncology, genetics, and infectious disease. In addition, TriCore benefits from an active clinical and device trials relationship with the majority of laboratory vendors, Remillard says, “providing this clinical lab with a first look at many new instruments destined for availability in the U.S.”

He sees a potential obstacle in the FDA’s impending regulation of laboratory-developed tests. “We have more than 150 LDTs throughout our laboratory, probably 60 percent of them in molecular. It’s also clear that LDT oversight by the FDA will add significant effort and expense, especially with the clinical validation piece.”

That’s a cost that has to be factored in when laboratories are deciding whether to make or buy, Remillard says. “Many esoteric reference laboratories have developed spreadsheets assisting with make-versus-buy decisions, and FDA regulation of LDTs just adds a new level of complexity to that. It could be it ends up taking some labs out of the market for certain tests.”

“There’s a lot of great technology out there, but all of us in the esoteric space need to go in with our eyes wide open with respect to the regulatory challenges we will be facing if it is not an FDA-approved system,” he warns. “There could be a lot of surprised people out there who may have to either invest a lot of money to get approval or stop using a particular system.”

TriCore is planning to acquire additional instruments in a lot of areas such as toxicology, where more tandem mass spectrometers will be purchased to handle growth. “That’s been an excellent tool for pain management testing,” Remillard says. Because of the high street value of prescription pain drugs like Oxycontin, pain management testing is often recommended—and in some states, mandated—to ensure the patient is taking the drug as prescribed and not self-medicating with other drugs. “The tandem mass spectrometers are also tremendous tools for hormone, vitamin, and steroid analysis,” Remillard says.

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