I have written computer software for the past 25 years for the clinical laboratory, both for OEM (original equipment manufacturer) application as well as direct sales. The changes I see today in the healthcare marketplace only point to the rapid evolution of physician’s offices toward doing more anatomical pathology work at their own location.
Hospitals continue the struggle to increase their in-house testing volume, and to enhance their outreach programs in order to retain and attract community physicians. Historically, larger hospitals with the financial resources have provided outreach software to their member physicians. This facilitates the physician’s ability to order patient testing and review results. In some cases, hospitals have provided interconnectivity between a physician’s local information systems and the hospital’s. This allows the physician’s office to run and bill for general testing while providing a vehicle for processing more complex testing that is not typically performed at the physician’s facility.
Anatomic pathology testing has long been the realm of the pathology reference lab (either independent or within the hospital), where both the technical and professional components are accomplished. With physician’s reimbursements shrinking, physicians are looking for opportunities to replace that revenue. In many cases, physicians have successfully established in-house general laboratory testing (Hematology, Chemistry, and Immunoassay) facilities that help replace or enhance their revenue.
There is a trend today, specifically for Urology, Dermatology, and Gastroenterology physician offices, to evaluate the feasibility of bringing at least some pathology testing in-house. This is similar to what has been historically accomplished for general lab testing. Typically, physician offices are not prepared to establish a histology/cytology lab in-house to facilitate the generation of the technical component. However, with a relatively small investment, the physician can and will be prepared to process the professional component and reap the revenue generated from it.
This trend is analogous to years past when all laboratory testing was the domain of the reference laboratory and large hospital labs. When the provisions of the Stark Law, which governs physician self-referral for Medicare and Medicaid patients, went into effect, healthcare equipment vendors and distributors sought to provide physician offices with solutions to bring patient testing into their offices. This allowed them to replace lost revenue. Part of the “package” offered included not only the requisite equipment (analyzers, laboratory information systems, consumables) but also the support to establish the applicable CLIA/COLA licensure and certification.
The same scenario is occurring today with anatomic pathology, including the equipment (microscopes, digital cameras, and consumables), the applicable highly complex licensure and certification, and the pathologist to perform the professional component. The pathologist may well serve as laboratory director where applicable. Several industry distributors are now focusing on this approach and are successfully setting up physician office anatomic pathology labs. It seems logical that hospitals should partner with vendors to help grow this physician office outreach themselves.
Workflow: putting the puzzle together
Generically stated, from the hospital perspective, outreach is a service provided by the hospital to community physicians, facilitating the ordering of testing and managing patient information. The process is simple from the physician’s perspective, regardless of the actual testing required. It consists of collecting one or more specimens, transporting the specimens to the testing facility, receiving the patient results for the requested testing, and integrating the patient results into the physicians’ record-keeping system.
Specifically for anatomic pathology outreach, the process is slightly more complex, with a few added steps. After the specimen has been transported to the facility performing the technical component, the physicians’ office will receive the prepared slides or slide images in-house. It will then do the professional evaluation, produce the completed patient report, bill for the professional component, and finally integrate the patient results into its record-keeping system.
For an AP outreach to be successful, based upon the assumption that the target physician practice is not already equipped to perform the professional component, there are several moving parts that must be connected:
- The practice must, in most states, be licensed and certified as Highly Complex.
- The practice needs the requisite equipment (microscope suitable for evaluating slides) as well as a supply source for disposable items (specimen containers, biopsy needles, etc.).
- There must be a pathologist who can, as a contractor, visit the practice on a regular basis to perform the slide/image evaluation.
- Finally there should be AP software capable of tracking specimens, facilitating pathologist input, producing patient reports, and, where applicable, providing connectivity with the technical facility and the practice’s billing/EMR system.
How each of these moving parts is accomplished by the hospital will depend upon the degree of involvement the hospital wishes to have. From a practical standpoint, few if any hospitals are or want to be involved in selling equipment or assisting a practice in becoming certified as Highly Complex. While there is profit to be had in this endeavor, without a large enough base to spread the operational costs over, it is not a feasible one for the hospital to undertake. That being said, one optimal approach for the hospital is to develop a partnership/alliance with vendor/distributors that desire to supply the “parts” that the hospital does not wish to become involved with. Many industry distributors provide several of the parts as a normal business practice: consultants that can guide and aid the practice in becoming Highly Complex licensed; equipment such as microscopes and digital cameras; and disposables like specimen containers and biopsy needles.
Current industry trends indicate that this is already being done outside of the hospital’s influence. By developing such alliances, however, the hospital regains some control and may even share in some of the profitability. The “parts” the hospital should be involved with include providing the processing of the technical component, providing the contract pathologist to perform the professional component at the practice site, and supplying anatomical pathology software.
Connectivity: moving the data
Connectivity aspects of anatomical pathology outreach can be as simple or as complex as the hospital desires. The difference is really about the degree of service provided. Two scenarios are discussed here—the simplest approach and the ultimate implementation. Of course, there are many “in-between” scenarios as well.
The simple solution we will call the manual process. The hospital receives and tracks specimens generated by the practice AP software; then the hospital histology department performs the technical component (prepares the slides) and generates a report. This report is then faxed or delivered back to the practice along with the specimens (slides). At this point the scheduling of the pathologist visit occurs. The pathologist at the practice performs the professional component and creates a patient report in the practice AP software. Finally, the practice AP software generates a billing report for the practice and sends the results to the practice EMR. While perhaps not elegant, the manual process works and is extremely cost-effective.
The complex solution is simply related to the IT infrastructure available to the hospital. The assumption here is that the hospital has, or will obtain, the IT infrastructure and software required to handle receiving and sending data via the Internet. First, the specimen orders and manifest are received electronically via HL-7 protocol over the Internet by the hospital software. Then the histology department receives the specimens and acknowledges receipt within the hospital software. Histology performs the technical component and prepares the slides for delivery to the practice. Hospital software provides a report of slides ready for shipment and upon recording the shipment sends a report to the practice via HL-7 and the Internet. The practice acknowledges receipt of the slides in the practice AP software. The pathology department is notified via hospital software of slide shipments and schedules the pathologist visit. A pathologist arrives at the practice, performs the professional component, and creates the report via the practice AP software. The practice AP software sends the charges to the practice billing system. Finally the practice AP software sends the results to the practice EMR system. Given the proper software on both sides, this scenario is completely paperless.
Basics to look for in an AP software package
AP management software costs range from $2,500 to more than $100,000. Your search should focus on the most cost-effective solution for the specialties you are trying to attract. The specialty-specific software package should be designed to facilitate the processing of both the technical and professional components. It then must produce a complete report for the physician, including electronic pathologist signatures and capture of digital images.
The software design should provide features that manage complete workflow and ensure all ordered patient samples are collected, tracked, processed, reported, and billed. It also must have the ability to generate a shipping manifest for sending along with the specimens.
It is paramount that the software be connectivity-ready. This means that it can easily communicate with EMR, Billing, and Practice Management systems through the industry standard HL-7 protocol. It likewise needs to be totally customizable to accommodate almost any vendor’s system that could include pathology lab and hospital information systems.
The software should come preconfigured with specialty-specific procedures, CPT codes, and ICD-9 codes and a standard specialty-specific library of gross description codes, observation and diagnosis codes, site images, and synoptic drop-down codes.
The best scenario is to be able to download your software directly from a website. It will likely include an auto-update feature to keep the software current. With specialty specific pre-configuration and downloading from the website, a practice should be up and running in its PC within a few hours. Compatibility with Microsoft Windows XP and later versions is a must as well.
Economic and business benefits
On the surface, the economics of providing an anatomical pathology outreach that transfers some of the revenue to the physician practice that may normally be achieved by the hospital seems counterintuitive. But the trends in the industry and the marketing of some industry-leading distributors are encouraging specialty practices like Urology to bring at least the professional component in-house, which, by definition, removes that revenue opportunity from the hospital. This paradigm shift is based upon simple economics. If it is left ignored, it might further erode hospital AP revenues.
It can be shown that a moderate-sized Urology Practice (performing approximately 100 biopsies and urine cytos a month) can increase its gross revenue to more than $120,000 and its net profit in excess of $40,000 annually by bringing anatomical pathology in house, with a recovery of the initial investment of under $10,000 in less than three months. With this kind of ROI, it is no wonder the trend is increasing.
The business perspective for the practice is clear: increase net profit by more than $40,000 annually, and recoup initial investment in less than three months. This can be done with a modest investment, providing a small amount of space, and continuing to do what the practice has been doing without a change in current procedures. The incentive is clear.
The business perspective for the hospital is perhaps a bit less clear and will depend upon the legalities of what can be provided to the practice and under what conditions. However, the trend is clear: the economic incentive for the practice to bring anatomical pathology in-house is great. The real question as it pertains to anatomic pathology is, who will gain the revenue from the technical component, the pathologist fees? Hospital physician outreach in general has been about retaining and attracting physician members. Adding the anatomical pathology outreach not only will assist in achieving the general goals of outreach but, in addition, afford additional revenue opportunity that would otherwise either not exist or be reduced by the current industry trends.
In conclusion: the paradigm is shifting
Improving hospital AP outreach is as simple as observing the business models of the past in clinical chemistry outreach. Identifying and acknowledging these will work equally well for improving the hospital anatomical pathology outreach.
Coordinating the assembly of the various parts—hardware, software, licensure, certification, pathologist scheduling, and connectivity—can be a significant task. As most paradigm shifts in market acceptance are at first slow to take hold, the acceptance of the concept by the outreach community (physician practices) is paramount to creating success. This acceptance will be greatly enhanced by the hospital providing a total solution through the collection of sources for the requisite “parts.”
The real benefit for the hospitals is increasing revenue opportunity. For the physician’s office, the potential for increased revenue with a modest investment is quite attractive. Coupled with software that provides an interface to the practice’s billing system, it ensures timely and efficient billing and eliminates lost charges for work performed. For the patient, a closer relationship between the physician and the sample evaluation can enhance his or her healthcare.
This has been a blueprint of the existing process, the recipe or “pieces” for a paradigm shift in hospital AP outreach and the logic for its implementation.
