It is becoming increasingly clear that the release this month of the new Clinical Laboratory Fee Schedule (CLFS) reimbursement rates marks a new chapter for a wide range of clinical laboratories. After years of raising concerns about increasing cost pressures, shrinking workforce, and higher service level demands, laboratory leaders are faced with the need for a radical reassessment of their business and operating models. Such a reassessment often requires a level of long-term vision, out-of-the box thinking, and organizational savvy that has not traditionally been associated with laboratory management, who often come up through the ranks by virtue of their technical and clinical expertise.
In order to develop the business planning skills that they now need, laboratory leaders can greatly benefit from thoughtful study and adaptation of techniques and methodologies developed outside of the laboratory, paying particular attention to employee engagement and retention issues. In that context, the purpose of this article is to describe the journey and the experience of Regional Health Laboratories, a 24-laboratory system headquartered in Rapid City, South Dakota.
Meet Regional Health Laboratories
Regional Health is an integrated healthcare delivery network that provides community-based healthcare to more than 20 communities in South Dakota and Wyoming. It serves a population of more than 400,000 people through a network of five acute care hospitals and 25 clinics and specialty and urgent care facilities. Regional Health has been recognized by Healthgrades as a 2017 Distinguished Hospital Award winner, placing it among the top five percent nationally for clinical excellence.
With the vision of becoming “the best healthcare system in America,” Regional Health implemented an ambitious program of retooling and expanding its service lines in 2015 and 2016. The first service line to undergo strategic transformation was Laboratory Services. The network of five hospital- and 23 clinic-based laboratories, with a combined volume of 1.75 million billable tests per year, was standardized to a single vendor’s analyzers and reagents. A top-of-the-line automation line was deployed in the system laboratory in Rapid City. After a thorough reassessment of the organizational structure and talent pool, the management of the service line was integrated under one leader with broad healthcare and leadership experience, along with other personnel changes. With the basic infrastructure and leadership in place, expectations were set for a significant growth through the expansion of laboratory outreach.
Strategic planning at Regional Health
The purpose of strategic planning is to align an enterprise’s resources and processes, from end to end, with its stated objectives. The complexity and interconnectivity of laboratory services and the fact that few laboratorians are trained or have experience with rigorous strategic planning make the task appear daunting—yet broad participation in the planning process is essential to ensure organizational buy-in and ownership of the subsequent tactical implementation. A partnership with a leading vendor allowed Regional Health to tap into the expertise of consultants who helped apply superior strategic planning processes and tools to Regional Health’s goals and circumstances. Tools such as SWOT (Strengths, Weaknesses, Opportunities, Threats), vision definition, and gap and impact analysis helped Regional Health to identify and prioritize specific breakthrough and annual objectives and to develop quantitative metrics of success.
The statement “culture eats strategy for breakfast,” often attributed to the well-known management consultant and educator Peter Drucker (1909-2005), rings particularly true in the context of the clinical laboratory. Creating the culture of service, innovation, and Lean continuous improvement that is crucial to the success of the modern laboratory enterprise can be particularly challenging in a profession that values quality and consistency over agility—yet suffers from high turnover rates and, sometimes, an exodus of experienced personnel. It thus comes as no surprise that as a result of its in-depth analysis, the leadership of Regional Health focused on the development of a unifying vision statement and two annual objectives. The two objectives were chosen from 36 options, based on their potential impact on the entire enterprise: 1) implementation of Lean processes in all laboratories within the system; and 2) improvement in the development opportunities and career-path options for laboratory personnel.
The newly developed vision of “being a trusted leader in service excellence and innovative quality solutions” provided the common framework for all strategic and tactical decisions in laboratory operations. Implementation of Lean processes and training was deemed crucial to engage all associates in service and operational improvement activities necessary to support aggressive growth objectives outlined by healthcare system administration. However, neither would be effective without a stable and engaged workforce, individuals who had chosen Regional Health for their career progression and caregiver mission.
Implementing Lean processes
Implementation of the Lean processes was built on a three-pronged approach of staff training, implementation of process improvement tools, and standardization, with the goal of having 100 percent of staff trained and 10 Lean initiatives implemented within a year. With the help of consultants, a core team of “Lean champions” was formed and trained, and engaged in spreading their newly acquired expertise to the entire laboratory staff. Key Lean process improvement activities, such as value stream mapping and waste walks, were performed to identify “low-hanging fruit”—opportunities for impactful process changes. Standardization of laboratory processes around single-vendor chemistry and hematology analyzers, clinical information management tools, and automation line was successfully implemented. As a result, all quantitative metrics for first-year Lean process implementation were successfully met.
Improvement in development of career opportunities
Given the importance of the development of career opportunities and career-path options for laboratory personnel to performance, Regional Health took a multifaceted approach to the task. Lab leaders chose retention rate, employee engagement scores, and patient experience scores as quantitative performance indicators. This included creating different types of laboratory roles—leadership roles, system roles, and technology-driven roles. Also, a tiered system was developed for laboratory assistants (laboratory assistants 1 and 2, and senior laboratory assistant), offering three levels of pay and responsibility, and requiring varying degrees of experience and certification.
To further improve engagement, a mentorship program was put in place to ensure that employees had the support and training to match their career aspirations. In addition, partnerships were established with local universities that enabled laboratory staff to obtain medical laboratory technician (MLT) certification and advanced medical science degrees. Tuition reimbursement and flexible schedules were offered to further assist those wanting to continue their education. In addition, the hiring and onboarding processes were refined and standardized, using behavior-based interviews and job shadowing prior to the extension of an offer.
Improved communication was also a focus. Department meetings and one-on-one sessions aligned both leadership and caregivers with the vision and helped to secure employee buy-in by giving employees more of a voice in the process. Team members began providing input when identifying and setting Lean goals, which greatly improved morale and facilitated engagement. Laboratory management worked to foster good relationships not only with laboratory personnel, but also with the organization’s executive team and other department members. The ability to present measurable successes and clearly communicate goals helped to demonstrate the value of the laboratory to the organization.
As a result of these efforts, Regional Health laboratories saw a reduction in its turnover rate from 41 percent to 24 percent in FY17. Employee engagement scores were positive, and patient experience scores went from the 58th percentile to the 92nd percentile.
A rigorous strategic planning process provided Regional Health Laboratories with a solid framework and structured tactical approach to implementing a cultural shift in laboratory operations required to meet financial goals established by the healthcare system leadership. The experience in developing a coherent vision, creating a Lean enterprise, and investing in staff development and retention is highly pertinent and generalizable to different types of clinical laboratory operations. It can serve as a blueprint for what laboratories may choose to do to offset the impact of the changes in reimbursement and other challenging trends in the industry. Many of the steps taken by Regional Health Laboratories are not what laboratory leaders have been traditionally trained to do, so thoughtful leadership and building strong relationships with strategic industry partners are becoming essential to surviving and thriving in today’s environment.
Michelle Barthel, BS, MS, has worked in healthcare for over 24 years, including 17 years in leadership roles. She has worked for many different healthcare organizations and is currently the senior director of laboratory services at Regional Health in Rapid City, SD.