The prognosis for the hospital-based pathologist--Part 1

Both the security and the financial well-being of the hospital-based pathologist have been shaken by ten major developments in the last five years. In this first installment of a two-part article, the authors review these events and the symptoms they have produced. Following their diagnosis, they present a comprehensive plan of treatment.

Determining productivity and unit costs in a bacteriology laboratory

This paper describes in detail the process of identification of the "products" of a department of clinical microbiology, the determination of resource requirements, the identification of total resource costs and the calculation of unit costs in order to identify the items which can be regarded as profitable in relation to the OHIP fee scale, as well as those services whose true cost is not met by that scale. The process permits an assessment of the overall profitability of the entire division and provides data for judging the probable gains from contracting out services.

Microcomputer use in an oral biopsy service

The need for rapid and accurate retrieval of the data generated by an oral biopsy service and the adjacent medical center was met with the purchase and programming of a microcomputer and hard disk drive. The planning phase involved an assessment of the needs of the department, creation of an ideal form to be displayed on the video screen that can be easily used to enter the information, selection of coding systems, and selection of compatible hardware and software. Customized in-house programming using a commercially available database management system has created an entry form and menu-driven information retrieval system tailored to the needs of the department.

Impact of organ transplant program on the Clinical Chemistry Laboratory at the University of Pittsburgh

The success of cyclosporine in immunosuppressive therapy in organ transplantation suggests that such existing programs may expand in scope, and new programs may be initiated at institutions that currently do not have them. Significant clinical laboratory support and the allocation of laboratory resources are necessary to sustain an organ transplant program. At the University of Pittsburgh, the number of transplant-related clinical chemistry procedures (primarily cyclosporine and liver and renal function tests) increased from 1.4% of the total chemistry tests in 1979-1980 to 21% of the total in 1983-1984. There was a concomitant increase in cost for transplant chemistry tests as follows: $47,000 in the fiscal year 1979-1980 to $1,250,000 in the fiscal year 1983-1984. Measurement of blood cyclosporine levels alone can consume a large fraction of a total laboratory budget; from being a negligible expense at the end of March 1983, it escalated to almost $300,000 by October 1984. Our experience in this regard indicates that it is difficult to gauge the magnitude of necessary laboratory resource commitment to such a program a priori with any degree of certainty. In this context, the capacity to be flexible in assigning laboratory resources appears critical.

Cost-containment and the use of reference laboratories

Hospital laboratories and hospital-independent reference laboratories will need to change in order to provide comprehensive, medically appropriate, and reasonably priced laboratory services in the cost-containment age we are entering. The change must be economically and technologically innovative and relevant to society's next generation of health care needs. Hospital laboratories and commercial laboratories may become weaker or stronger relative to one another, but our guess is that they will ultimately become more like one another or even may join forces to provide optimal patient care in the future. Until that time comes, hospital laboratories must decide whether to employ reference laboratory services more or less, enter a joint venture with a reference laboratory, or become a reference laboratory. Some of the items that could be considered in arriving at this decision are listed in Table 2. Some items favor hospital laboratories; some favor reference laboratories; some are a toss-up; and some suggest there are advantages in a team approach. For the present, we believe there are many arguments favoring a continuation and possibly even an expansion of hospital laboratory services, but this will likely be most feasible in financially sound and progressive hospitals having forward-looking administrators and imaginative but fiscally minded laboratory directors and managers. If decisions are made to send more tests to reference laboratories, each hospital or user laboratory must seek the best and most cost-effective services available. Various financial, technical, and medical considerations are described that should aid in the evaluation of where to have tests performed. We have provided suggestions on how agreements with reference laboratories can be established in either a formal (contractual) or an informal (verbal) way. Additionally, we have described methods for evaluating (or monitoring) the quality and quantity of services received from a reference laboratory. In general, for any significant agreement with a reputable reference laboratory, little more may be necessary for monitoring purposes than periodic financial and quality assurance audits and follow-up on any clinical complaints regarding test results. With a large contract, the user laboratory is advised to spot check results on submitted blind duplicates of patient samples (to test provider lab precision) and occasionally to split samples between the provider and one or more other reference laboratories (as a first look at possible inaccuracy).(ABSTRACT TRUNCATED AT 400 WORDS)

Quantitative analysis of cost-savings strategies in the clinical laboratory

Various strategies for cutting costs in the hospital clinical laboratory are noted, including straight cost cutting, modifications of internal operations, degradation of functions and services, reduced utilization, shared hospital services, and reorganization. Dr Winkleman defines quantitatively, where data exist, the actual cost savings that the different options have been claimed to produce.

Zero base approach to fiscal management of the laboratory

Lab administrators who face the challenge of providing quality care while cutting costs need a way to periodically re-evaluate all lab functions and services. The guidelines presented here, based on the Zero Base Budget approach, formulate a management strategy for the lab that could lead to better fiscal planning.

The flexible budget process--a tool for cost containment

This past year the authors have been using a new tool to examine and monitor their laboratory's expenditures. Called "flexible budgeting," this process has been used to analyze the cost behavior of all operating expenses, establish budget levels for different levels of activity, and monitor activity based on relative cost rather than simply the number of tests performed. The authors' experience has shown that this tool provides much more information than previous procedures. However, better methods need to be developed for monitoring expenditures so that this information can be used effectively.

Instituting change to cut lab costs

If for years you have wanted to make changes in your laboratory operation, let DRGs be the impetus to experiment, the author urges. He looks at three areas--capital equipment, supplies and services, and staff--where scrutiny can save money. This article is adapted from Mr. Pelton's presentation at the Bridgeport Symposium entitled "Performance Requirements for Clinical Laboratories Under Prospective Reimbursement and DRGs." The Nov. 15-16, 1984 symposium was sponsored by Bridgeport Hospital, Bridgeport, Conn.

The unordered test: cost of the benefit vs. benefit of the cost

As DRG pressures mount, the clinical laboratory needs to find ways to maintain the quality of its service while operating more profitably. Many laboratories have decided to focus on reducing the volume of testing. How effective and medically appropriate is this approach, and what are the alternatives? This article is adapted from Dr. Winkelman's presentation at the Bridgeport Symposium entitled "Performance Requirements for Clinical laboratories Under Prospective Reimbursement and DRGs." The Nov. 15-16, 1984 symposium was sponsored by Bridgeport Hospital, Bridgeport, Conn.

Fulfilling Medicare's criteria for consultative services

Consultative clinical pathology services must fulfill certain conditions to be reimbursed by Medicare. This article explores how pathologists can best comply with the requirements. This article is adapted from Dr. Pastuszak's presentation at the Bridgeport Symposium entitled "Performance Requirements for Clinical Laboratories Under Prospective Reimbursement and DRGs." The Nov. 15-16, 1984 symposium was sponsored by Bridgeport Hospital, Bridgeport, Conn., and supported by contributions from 20 companies (listed on page 29).

Hierarchical information system for the cost analysis of clinical laboratory tests

A microcomputer-based information system that integrates the concepts of text processing, data base processing, and data base analysis has been designed for cost evaluation in our laboratories. This forms a flexible package that is directed by the needs of the user. The package, which has been used to calculate various cost parameters and productivity on the basis of comprehensive data and user-defined rules, serves as a tool for good financial management at various organizational levels in the clinical laboratory.

Decision making in pathology: what is the impact of economic and technologic change?

Diagnostic anatomic pathologists have to resolve a number of conflicts. They have been thrust into medical marketplace competition with which they have little experience. New technology and CPT-4 codes have given them an economic base at the same time that DRGs are limiting expenditures. Computerized surgical pathology reports are possible, but do they communicate useful information? So as not to be replaced by the very tools they use, the author explains why diagnostic anatomic pathologists must report useful information and select only the most cost-effective techniques.

Surviving prospective reimbursement: how computers can help contain lab costs

Fixed rates per case spell tighter budgets and a greater need for appropriate test use. Lab computers are your lifeblood, the author says, as they will help increase revenues from outpatient testing, reduce costs, and provide information on test use. This article is published in the proceedings of the January 1984 Hawaii International Conference on Systems Sciences.

Directing the post-TEFRA laboratory

Strategies of the past are inappropriate for the future. But pathologists and hospitals who know the options and take the necessary steps can survive prospective payment.

CAP v. Heckler and HCFA's modification of TEFRA regulations

Although the Court of Appeals did not invalidate the Health Care Financing Administration's TEFRA regulations, HCFA did make favorable changes in the regulations in response to the College's lawsuit. Here, the authors detail the important areas in which HCFA reversed its position during the course of the litigation, and describe other aspects of the suit.

Negotiating your contract: points to consider

The CAP offers two publications that contain basic contractual information. One was distributed in March 1983, and the other is being revised at this time to reflect recent developments. This article reviews some of the changes in contract concerns and opportunities, and serves as an interim source of information that may assist pathologists in their negotiations.