What should lab directors consider when evaluating LIS options?

April 20, 2015

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Upon completion of this article, the reader will be able to:

  1. Define terminology related to electronic measurement of health information.
  2. Describe basic considerations for the electronic health record.
  3. Describe current trends in laboratory informatics.

We are living and working in a time when new healthcare delivery models are being proposed and instituted. Accountable Care Organizations (ACOs), medical homes, clinically integrated private physician networks, and value-based payment models: all of these require healthcare systems to deliver improved coordination of care, better outcomes, and higher levels of patient satisfaction than ever before. At the same time, competition is raising the stakes when it comes to delivery of services. To survive and thrive, healthcare systems must excel at competitive elements while bending the cost curve to manage reduced reimbursements. They must deliver the best possible care, from diagnostics to treatment, and operate with increased efficiency.

The clinical lab faces the future

Trends in United States healthcare are increasing the strategic importance of laboratory medicine with regard to the overall effectiveness and success of the healthcare delivery system.

While the laboratory typically represents only about 5% of overall spending in a healthcare system, its product can comprise a majority of electronic medical record (EMR) data and be extremely influential in clinical decision-making. The benefit of a robust laboratory information system (LIS) is not limited to test cost and staff productivity, but extends to downstream episode-of-care efficiencies and clinical outcomes. If laboratory directors find themselves struggling to articulate the value of their own laboratory, they may need to shift their focus from performance metrics such as turnaround time to value metrics that speak to system impact, such as cost per test, cost per episode of care, and cost avoidance in discharge. For example, a lab test that directs treatment with an appropriate drug can be discussed in terms of pharmacy cost savings and the cost avoidance from length of stay. A strong and smart laboratory is the backbone to a stable, competitive, and high-quality healthcare system.

The laboratory services industry is facing challenges of its own. Lab reimbursements are a target in government initiatives to reduce national spending and healthcare expenditures. The 2014 approved Fee Schedules reduced lab reimbursement, amounting to a 26% estimated clinical testing reimbursement cut that same year. Further, some lab services that were once reimbursed separately are now included in bundled payments. Meanwhile, testing volumes will continue to increase due to market forces such as the aging of baby boomers and the expansion of molecular and genetic testing. Laboratories will need to manage this work with less technical staffing due to the reduced availability of skilled laboratory professionals. It is imperative that laboratories have the tools they need to succeed in this challenging environment.

LIS: basic considerations

The LIS is a critical infrastructure tool to support the laboratory in this challenging time. With the stakes so high, many facilities are evaluating their system. The options available today include enterprise-wide solutions as well as best-of-breed laboratory-focused solutions. Decision makers weigh the risks and benefits of a single database system, which appears to streamline some maintenance, but also creates far more downtime in the laboratory, against that of a best-of-breed, which passes information to and from the hospital system using interfaces, but is more robust in operations and uptime.

The cost of switching laboratory information systems can be quite high, given training and interfacing requirements, so it is critical for lab directors to select an LIS provider that will be effective at responding to the needs of the laboratory. Costs are compounded when additional vendors and products are required to complete the laboratory solution set. All departments, including Blood Bank, Clinical and Anatomic Pathology, Molecular, Genetics, and Outreach should be considered by hospital and laboratory administrators. These leaders also need to consider carefully how well each available LIS product and provider can support clinical and financial success through robust laboratory operations that address focus areas such as ambulatory care, outreach, molecular and genetics testing, and data analytics. 

This type of evaluation is common when lab leaders are considering system standardization after healthcare system consolidation. Consolidation is a major trend in healthcare. Through it, healthcare systems can improve economies of scale, improve quality, and lower costs.

The impact of new diagnostic platforms

Perhaps the most striking market dynamic impacting laboratory medicine is the rapid adoption of molecular and genetic testing. Clinical laboratories are investing heavily in molecular platforms that can detect and quantify infectious disease agents, evaluate the genetic basis of disease, and inform treatment. When evaluating an LIS, lab decision makers should consider the system’s ability to support molecular-based testing and genetics. 

Mass spectrometry (MS) can provide the ability to report an organism to a clinician in minutes. The shorter time reduces assumptions and allows for more effective treatment by getting the right drug the first time. At Laboratory Confab in 2014, Henry Ford Hospital presented that MALDI-TOF MS based Blood Culture reaped an annual lab savings of over $100,000.1 One could also calculate the savings to the health system in reduced length of stays related to faster negative results. At G2 Molecular conference, University of Arizona Medical Center presented a case study in which the seven-day turnaround time for a pertussis culture resulted in 94 exposures requiring prophylaxis, at a cost of $44,000.2 A molecular PCR-based assay can return results the same day and reduce the risk of an outbreak.

A 2013 College of American Pathologists (CAP) survey among United States hospitals, medical centers, regional hospitals and national labs suggested that they all conduct some genetic sequencing and many use next generation sequencing (NGS) or plan to within three years.3 United Healthcare projects that its spending on molecular and genetic testing will exceed $15 billion by 2021.4 Globally, the genetic testing market is forecast to grow at an approximate annual rate of 26% between 2010 and 2015,5 with the overall global molecular diagnostics market expected to grow at a compound annual growth rate (CAGR) of 8.7% from 2014 to 2020.6

Clinical labs that are seeking to establish or enhance their genetic test offerings require a genetic workflow management solution. This solution set will streamline the analysis, interpretation, and reporting of complex genetic test results and will facilitate the delivery of these results to treating clinicians. Ultimately, this solution set will reduce the cost and complexity of conducting and interpreting genetic sequencing tests. An effective and well-run pathology organization, which includes molecular and genetic testing, can be achieved through a best-of-breed pathology system with strong molecular infrastructure and vision for precision medicine.

Strategic outreach

Beyond novel diagnostics, successful laboratories make the right data available to the right people at the right time, across products and organizations, in a way that can be relied upon and meaningfully used. This is increasingly challenging as care moves outside the four walls of the hospital to lower cost, ambulatory, and retail settings. Managing ambulatory care has become critically important to financing and delivering comprehensive coordinated patient care.

In markets dominated by fee-for-service reimbursement, outpatient services provide the majority of operating margin for most health systems. In more advanced managed-care markets, successful ambulatory operations are essential to effective patient care and population health management. Inpatient admissions fell 7.8% per Medicare beneficiary from 2004 to 2011, while outpatient volume rose 33.6% during the same eight-year period, according to MedPAC. Total inpatient admissions for U.S. hospitals fell from 35.76 million in 2008 to 34.4 million in 2012, while total outpatient visits rose from 624 million to 675 million over the same period,  according to the American Hospital Association.7

Improving ambulatory performance has become a top strategic priority for health systems nationwide. Hospital inpatient labs don’t always make a profit from the inpatient work—and that work is declining. Rather, by securing more outpatient work from the community of providers in the area, more revenue is kept in the system. Market estimates indicate that more than 70% of healthcare is now delivered outside of a hospital.8 Additionally, more than 50% of a hospital’s revenue is also coming from outside those walls.9 It is critical to focus on outpatient, ambulatory, and outreach in order to cover and exceed the fixed costs required to support the shrinking, but critical, inpatient work. 

Hospital laboratories are now realizing how important outreach programs are and are starting to reevaluate their approaches to such programs. Reaching out to the community to gain more work must be executed strategically, both in terms of the quality of client service and efficiency within the laboratory. Integrated customer relationship management (CRM) systems and mobile courier tracking systems are quick and efficient ways to support such initiatives. It is imperative that hospitals and healthcare-associated reference laboratories reach into the community and capture more of the ambulatory testing work and execute that work with greater efficiency. The days of a small to medium-sized outreach program for a laboratory are declining as larger operations are being ramped up to offset the decline in laboratory utilization from the decrease of inpatient testing. Approximately 67% of large hospitals without an outreach lab expect to have one within three years.10 Hospital and lab leaders need a strategy to grow their outpatient, outreach, and in-reach business. The ability to support all aspects of outreach revenue-generating business is an important element when evaluating a laboratory information system.

EMRs, interoperability, and Meaningful Use

As delivery of care becomes more dispersed and coordination of that care demands electronic transfer of information, more and more lab-to-electronic medical record interfaces are required. By being able to leverage template-based interfaces from LIS vendors, laboratories are empowered to rapidly build, test, and deploy order and result interfaces to EMRs without the intervention of integration teams outside the laboratory. Connectivity of labs to EMRs will further support coordination of care as labs can manage order entry, special testing, and resulting in real time. As networks consolidate and testing procedures diffuse, the laboratory can play a critical role in controlling the chaos by adding logical structure, supporting efficient workflow, and promoting patient care and safety through the process.

Interoperability between disparate IT systems is critical. Eligible hospitals and providers continue to make efforts to implement Stage 2 of Meaningful Use (MU). Center for Medicare and Medicaid Services (CMS) guidelines in Stage 2 for MU require major certified technology changes to interfaces, to standardize HL7 v2.5.1, to include LOINC, SNOMED CT, and other reporting standardizations. The timelines to plan, develop, test, and implement have been challenging. The challenges can be related to a number of factors, including limited resource availability, immature standards, and vendor technology change requirements. While some vendors have been able to make the necessary changes, others still struggle to keep pace. 

Meanwhile, as the dust begins to settle on Stage 2 requirements, administrators are starting to prepare for what Stage 3 requirements might look like. Many speculate that some additional laboratory items will move from being menu items to being core measures, much as reportable results and incorporate results moved from a menu item in Stage 1 to a core measure in Stage 2. It is crucial for decision makers to understand a potential provider’s history and plans for supporting laboratory-based MU criteria.

Visibility and actionable information

Once clients have been connected for MU-compliant results delivery, ongoing care of a lab’s expanded business requires efficient workflows to be in place to protect service levels and profitability. To handle the required volumes with efficient workflow, and to manage specimens around the network, the LIS must manage routing and tracking of specimens. It is not sufficient to have pieces of middleware managing small portions of routing or tracking if labs and their service agents lack end-to-end visibility.

Visibility and actionable information are needed to maintain an effective operation. Industry analysts project that business intelligence and analytics will be an area in which a lot of money is spent this year; according to one study, the healthcare analytics market is estimated to be growing at a rate of 23.7% between 2012 and 2017, at which point it will reach $10.8 billion.11 Health systems are using analytics tools to help drive both strategic business decisions and daily operations. Having the capability to effectively and efficiently gain insight into all the data the laboratory provides is of huge value to healthcare institutions, providers, patients, and payers.

There are a number of areas in which the laboratory can demonstrate strategic benefit to the institution as a result of the available and actionable data that it can provide. One of the most significant is that of blood management. Blood utilization in the United States is 44% higher than in Canada, and transfusions were the most common procedure in U.S. hospitals in 2010. As a result, many facilities are in the process of implementing patient blood management programs both to cut costs and improve safety. [Editor’s note: Any readers who attended the AABB conference in Philadelphia last fall can certainly attest to the truth of this! It was much-discussed both in educational sessions and the exhibit hall.] Understanding root cause is facilitated through blood ordering and transfusion administration data, which is most commonly captured and presented by the laboratory.

Moving into 2015 and beyond, an effective lab’s LIS should help lab leaders be responsive to the key drivers discussed above. Lab leaders should ensure that they choose a laboratory information system that is contributing to the overall success of their healthcare organization. Pragmatic advice with LIS evaluations can be found through Association for Pathology Informatics. This organization’s LIS Functionality Assessment Toolkit provides methodology for assessing the functionality of, and enabling comparisons among, competing LIS systems. The toolkit provides information about how to search for a new LIS among the systems available in the market, how to develop a request for proposal (RFP), which is commonly used to manage system selection, and how to plan live vendor demonstrations. It also provides approximately 850 weighted functionality statements (FSs), some of which can be integrated into the RFP submitted to the competing LIS vendors as part of a system selection process. You can access this resource at http://www.pathologyinformatics.org/toolkit.

The old cliché is true: Labs, like any other business—can do well by doing good. The right laboratory information system can make healthcare smarter and patients safer—and, at the same time, support operations to help the lab function effectively and successfully in challenging economic times.


  1. Coordinating Clinical Laboratory and Anatomic Pathology Services in Today’s Integrated Clinical Care Continuum. Lab Quality Confab 2014. Richard J. Zarbo, MD, DMD, Guarav Sharma, MD. http://www.labqualityconfab.com/wp-content/uploads/ZARBO-SHARMA.tue_.9.30am.FINAL-V3.pdf
  2. An Ever-Changing Environment: Molecular. G2 MDX 2013. Natalie N. Whitfield, PhD.
    Clinical Genomics Software Short Course. Bio-IT World April 2013. Nazneen Aziz.
    United Healthcare Study, 2012. http://www.unitedhealthgroup.com/hrm/UNH_WorkingPaper7.pdf
  3. Global analyst RNCOS.“Global Genetic Testing Market Forecast to 2015,” October 2012.
  4. In-Vitro Diagnostics (IVD) Market Analysis and Segment Forecasts To 2020. Grand View Research. March 2014. ISBN Code: 978-1-68038-080-4
  5. Giuma J. Achieve success with your LIS. Advance/Laboratory. 2014;23(12):34 The author cites Vesely R, The great migration. http://www.hhnmag.com/display/HHN-news-article.dhtml?dcrPath=/templatedata/HF_Common/NewsArticle/data/HHN/Magazine/2014/Mar/cover-story-great-migration
  6. Brown  B and Burton D, presenters. The top trends that matter in 2014 (webinar). http://www.healthcatalyst.com/webinar/the-top-trends-that-matter-in-2014.
  7. The Acute-Care Continuum: The Future of Hospital-Based Care. June 2013. Lindsey Dunn. http://www.beckershospitalreview.com/white-papers/the-acute-care-continuum-the-future-of-hospital-based-care.html
  8. Marwood research commissioned by Sunquest Information Systems, Inc. 2014.
  9. Northover JD.Big Data or Big Promises? Executive Insights May 2014 article citing Healthcare Analytics & Medical Analytics Market (Predictive Modeling, Clinical Analytics, Financial Analytics & Others) – Trends & Global Forecasts to 2017; Markets and Markets, Nov. 2012.

Collaborative data sharing and robust laboratory informatics solutions

By Kim Futrell

Healthcare’s transformation is in full swing, and laboratories are certainly feeling the winds of change. Fortunately, labs have a lot to offer to the overall improvements being made in the delivery of healthcare. Laboratory testing is healthcare’s highest volume activity, with labs performing up to 10 billion tests per year. Accordingly, labs produce a tremendous amount of valuable data that, when presented in a structured format and combined with other healthcare data, can have a broad impact on improving patient care and healthcare savings. Here is a thumbnail view of some current considerations for forward-facing labs.

Data analytics provide valuable insights

As the volume and complexity of healthcare data continue to increase, it is evident that clinical data can provide a trove of valuable insights if properly captured and analyzed. In addition to internally monitoring lab productivity, laboratory analytics must expand outward and combine with data sets from other departments to have a greater impact on patient care and cost savings.

Healthcare organizations need to carefully consider what combination of software they can rely on to harness this tremendous potential. Part of this includes having a robust laboratory information system (LIS) that meets the intricate and complex needs of the laboratory, now and into the future. Laboratory data and its integration into the patient’s clinical picture is a vital component of the new model, so it is important for lab leaders to ensure that they have the best IT systems in place to deliver coordinated patient care.

Consolidation and interoperability

A significant industry trend is hospital consolidation; creating larger networks with broader service reach and economies of scale that can withstand the myriad of economic and regulatory pressures that challenge the industry today. In order for the vast amount of clinical data in the laboratory to be successfully incorporated into healthcare analytics, an LIS must be integrated into the facility’s IS network. The future requires advanced interoperability; getting laboratory data in the correct form and system quickly and accurately is paramount to a laboratory’s success.

A significant industry trend is hospital consolidation; creating larger networks with broader service reach and economies of scale that can withstand the myriad of economic and regulatory pressures that challenge the industry today. In order for the vast amount of clinical data in the laboratory to be successfully incorporated into healthcare analytics, an LIS must be integrated into the facility’s IS network. The future requires advanced interoperability; getting laboratory data in the correct form and system quickly and accurately is paramount to a laboratory’s success.

The patient-centered paradigm

Looking forward, laboratory management’s view must extend beyond the lab’s inner circle and encompass the entire patient episode with an awareness of how the timeliness, accuracy, and cost of a patient’s lab work impacts his or her episode of care and final outcome. Patients need lab work all the way from delivery of diagnosis and treatment plan to follow-up and disease monitoring. This new healthcare paradigm puts the patient at the center of its focus.

At the same time, patients are expected to become more involved and diligent about their own healthcare decisions. The lab must be forward-thinking and realize how this may influence its testing menu, volumes, and testing locations. Lab leaders should also consider the role that patient self-monitoring apps play. How will this new technology play into the lab’s future? Is their LIS technology advanced and versatile enough to accommodate this new paradigm of patient involvement?

POCT and data integration

As healthcare reform encourages a more proactive and patient-interactive stance, point-of-care testing (POCT) offers substantial benefits because of its ready availability and quicker turnaround time, potentially reducing ER visits and hospital admissions. As accountable care organizations and integrated delivery networks continue to develop, more testing will be performed outside of the core lab, in ambulatory settings and POC locations. It will become extremely important to coordinate this testing and ensure that all healthcare workers on the care team throughout the network have access to the data in order to make timely, optimal care decisions. It is also important that these results are captured in electronic health records for quicker diagnosis and treatment, billing, and to include data from POCT in analytics needed for risk stratification and population health statistics.

Expanding outreach

Declining inpatient visits are compelling laboratories to expand outreach services, creating connections with physician EHRs, nursing homes, clinics, and pharmacies. This creates a demand for full outreach operability that includes courier management, customer relationship management, supply and inventory tracking, and services marketing.

True costs and cost-effectiveness

With renewed focus on cost savings, laboratories can no longer afford inefficiencies or be unaware of “hidden” costs. Any IS solution requires support, upgrades, interfaces, and modifications to stay up-to-date and maximize efficiency. Beyond the initial cost of an LIS, lab directors need to consider the amount of money spent on annual support and upgrades. Laboratories cannot afford to spend $250,000 to millions of dollars for support year after year, and hundreds of thousands of dollars for each software upgrade. If the cost of upgrading a system is comparable to the cost of buying a new one, and that cost will be repeated every few years, an opportunity arises for lab leaders to recommend a system that better supports their workflow needs and meets their budgetary requirements. A lab’s LIS must be a cost-effective integration system, but upgrades cannot be so cost-prohibitive that they are avoided.

Effective lab managers understand the true cost of LIS ownership. They evaluate the long-term costs and return on investment (ROI) of their LIS. As new payment models, such as bundled payments, replace fee-for-service models, we can no longer be unaware of the full costs involved in operating the systems we have in place.

The lab’s expanding role

As diagnostics move toward the use of genomics and personalized medicine, laboratories will need agile informatics partners that are able to adapt as testing patterns shift and workflow enhancements occur. The future will require laboratorians and pathologists to find ways to use diagnostic testing to impact the total patient episode of care. Focus will not only be on performing accurate tests, but on finding better test methodologies and opportunities to improve the overall health of patients and the population in general. The lab will be required to expand its reach and will need the necessary IT tools to support this shift in culture.