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3 ways to deliver value-based impact in the lab


Duration: 4 min. read


Management & Operations

Health systems differ in size and vision, but one goal they have in common today is the journey to value-based care. Massive consolidation in the health system world is accelerating this trend, especially as systems become more vertically integrated.

As part of this value-based care journey, leaders in health systems are asking, How do I achieve systemness across multiple hospitals as quickly as possible? In other words, what can I do to provide a consistent experience for patients and employees wherever we provide care? Being paid based on patient outcomes demands a much higher level of consistent delivery than most hospitals have achieved to date. Which means all departments, from IT to cardiology, can do better.

One department with rich potential for insights and cost-efficiencies is the lab. Leaders often tell me they’re trying to understand the answers to questions like:

  • Does our core lab take a smart approach to testing efficiency, so we don’t order large panels when smaller ones deliver the results we need?
  • What are we doing to connect strategic testing choices to patient length of stay?
  • Have we optimized our lab to meet the turnaround, service, and clinical requirements of a consistent patient experience? 

3 lab levers for value-based care

These are all excellent questions because they each represent ways to accelerate value-based care, and invite closer scrutiny of the lab in 3 areas. 

1. Overutilization: Do all the tests you order on a daily basis need to be run? Let’s say that physicians are ordering broad panels of 15 tests when they only need the results of 5 or 6 of the tests.

2. Underutilization: At the other end of the spectrum, you may identify groups of tests that should have been ordered to help diagnose more quickly but weren’t. Health systems are a bit further ahead in looking at overutilization, but the downstream impact of under-testing on length of patient stay could be significant.

3. Care variation: Inconsistent testing protocols naturally lead to variations in care, and there’s no question that care variation costs health systems and patients money. The same cardiac disease patient presenting at one hospital versus another might be put through different protocols for treatment, have different labs ordered at different times, and have different lengths of stay. 

By taking action across all three areas holistically, a health system can realize savings, define better clinical pathways, and ensure that physician groups are practicing with a high degree of similarity across various diagnosis codes.

"In my experience, identifying and reducing unnecessary testing is the lowest-hanging fruit and yields the greatest short-term savings."
- Mike Lukas

Managing to real-world realities

Of course, we know the world is much messier than simply issuing directives and waiting for results. If you're leading a health system, you know that cultural issues are part of the air everyone breathes. You might acquire a great hospital, but they didn't grow up with the other system across town. You may have pathologists and physicians in both hospitals with strong opinions about their test menus and ordering preferences. You may have a ‘concrete middle’ in one facility, where the C-suite is aligned, but middle layers exercise veto power and slow progress. Strategic lab leadership may not be in place. And compared to other challenges like disparate IT systems and staffing shortages, the lab can sit pretty far down your priority list.

But take heart. Here are a few things you can do to move your system in the right direction as you look closer into the lab with an eye toward your value-based care journey. 

1. Go after easier wins first. Building credibility in a value-based care initiative is crucial, and early success always builds positive momentum. In my experience, identifying and reducing unnecessary testing is the lowest-hanging fruit and yields the greatest short-term savings.

2. Adopt collaboration as an SOP. If you’re looking to achieve greater systemness, it is logical to define and execute that vision with a center of excellence mentality, and that requires collaboration. Make it clear to your colleagues that collaboration is key to successfully standardizing work, test codes, and equipment footprints. These projects can be excellent opportunities to include the right lab and medical leaders in the process to help deliver shared wins.

3. Remind everyone: We’re in this together. Value-based care is no slam dunk. In fact, it’s not even a layup. Your hospitals are probably doing an amazing job treating patients, but driving change in a health system requires focus, project management, and collaboration across many departments. It’s just not what health systems may do naturally.

The good news is these lab optimizations will start moving the needle in the right direction toward value-based care. By standardizing the lab portion of the practice of medicine, you are taking a lot of the ambiguity out of downstream steps as well. You also start to use more predictive analytics to reach patients sooner if their lab results show early warning signs for diabetes, cardiac disease, or other disease states. 

Best of all, you’ll have taken an important step closer to improving the health of your patient population. 

Page Published: November 07, 2022

About the author

Mike Lukas

Health Systems Vice President and General Manager

Quest Diagnostics

In his current role, Mike oversees a team of professionals that design, contract, and execute lab services agreements across the country within the hospital segment.  He has led this business since Quest launched it in 2013. Mike joined Quest in 2007 as Vice President of Finance. Prior to coming to Quest, Mike was at General Motors for 17 years where he held a wide range of progressively expanding responsibilities including Assistant Treasurer, Treasurer of GM’s European Operations, Director of Business Development, and Manager of Investor Relations. Mike graduated from the University of Notre Dame with an MBA in Finance and Saint Meinrad College with a BA in history. 


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