The structure is the foundation upon which a business is built. It determines scale, operating cost, and profitability. Ideally, laboratory outreach is set up as a separate company or a distinct accounting entity within a hospital or health system to track business performance. In addition to structure, outreach requires:
- Updated systems (information technology).
- Three- to five-year business plan.
- Capital budget.
- Operating budget.
- P&L developed by Finance.
- Management reports.
The ideal structure for laboratory outreach requires “out of the box” thinking. No doubt many of you have seen the familiar nine-dot puzzle. Try to connect the nine dots with four lines and without raising your pen from the paper:
We are all familiar with the concept of a “normal,” bell-shaped curve. By definition, normal curves are frequency curves where most occurrences take place in the middle of the distribution and taper off on either side. A comparison of a normal curve and sales performance in hospital-based outreach programs is shown below:
The sales curve is anything but “normal.” Continue reading
With Medicare spending for clinical laboratory services totaling $9.7 billion and $7.0 billion in 2013 and 2014, respectively, it is not surprising that the federal government has identified this area as a prime cost reduction target. The Protecting Access to Medicare Act of 2014 (PAMA) represents the most disruptive change to laboratory payments in decades because the current laboratory payment rates, which are based on 1984 cost data (updated sometimes for inflation), will be replaced with market-based rates, defined as the calculated weighted median private payer rate for each test. The new rates will begin on Jan. 1, 2017, with large rate reductions phased in over several years. These reductions have the potential to substantially affect hospital operating revenue. Continue reading