Under constant pressure to cut costs and perform more efficiently as reimbursements decline, laboratories are often promised that they can stay afloat and even thrive if only they would deploy some form of analytics. However, analytics is a catch-all term that might mean operational, clinical, or financial analytics using retrospective, real-time, or even predictive methodologies. Beyond a promise, are any of these supported with real-world ‘proof’ of what actually works?
While varied combinations of the above can all be helpful, this is the story of how real-time operational analytics, specifically, has been hugely beneficial for clinical reference laboratories in the United States.
Sam Kabbani is a clinical laboratory expert in southern California who successfully uses real-world analytics to predict business growth. Sam has been an owner/operator of clinical laboratories for over 30 years. Sam manages seven laboratories in his region and is the owner of four of them. His labs service more than 200 physician and nursing home clients. As a consultant, he has helped many other laboratory clients with his insight and expertise over the past few decades.
Finding growth in an unpredictable, constantly changing environment
For long-term success, Sam advises that lab professionals take a predictive view of the market to adapt quickly. Only then can they thrive. This has been a key lesson for him. In addition, growth cannot be maintained without making constant, informed changes to one’s business. Though Sam can access all his data in real time, he needed insights into this data to make sure his changes were truly informed. Without those insights, he said, “you are just experimenting.”
“I’ve looked at several solutions to address this. Nothing was able to help. They were either too expensive, had gaps in functionality, were difficult to use, or were a combination of all of those factors,” Sam said. “But, as soon as I saw this particular performance metrics software,1 I wanted to use it. It provides exactly what I need — the ability to change my business to directly impact growth on multiple levels. When I started using it, I realized it’s even more helpful than I thought it would be. Now, I could not manage my labs without it.”
Through his laboratory information system and performance metrics software,1,2 Sam has discovered five ways to improve the bottom line and grow a lab using real-time operational analytics.
1. Identifying profitable tests
Sam can more clearly determine which of his test offerings are most profitable. He currently has an operational view that shows his profit per panel, which rolls up his profits per test alongside volumes. “With a view into my revenues versus costs per test, I can see at a glance where my profits are. It’s uncovered where I can focus on performing more high-margin tests—not just high-volume tests. This can affect my bottom line directly by up to 15% where previously we were leaving that money on the table,” Sam said.
2. Identifying revenue loss or neutrality
“Prior to my current laboratory information system, I always wanted to know which of my clients would I be able to support steadily at a good profit for my business, versus which clients are too high cost to support. In some scenarios this is crucial, as both my lab and their practice are better served by an increase in volume or by them sending their samples to a different lab. This way, I avoid the opportunity cost of testing samples at a loss while I could have been testing different samples at a profit," Sam said.
One way to do this is with a monthly panel trends view, which enables Sam to identify two main areas of avoiding losses that can mount up:
- For example, Sam quickly identified one client that was requesting his mobile phlebotomy team to perform home collections for their patients. “However, based on the small number of patients they supported at their location and the cost to me of sending out my team to perform the collections, I could show them that it wasn’t worth it.”
- Sam was also able to quickly identify when volume from a specific client suddenly decreased. “This enabled me to go to my sales team and find out why, so that I can preemptively address any issues to prevent that work continuing to decrease.”
3. Improving client relationships
“With my performance metrics software, I have not only boosted my credibility but also been able provide insights into the business of my clients as a trusted partner. This creates additional loyalty to our services and ensures we continue to win business in the area. Do not underestimate the importance of this,” Sam said.
For example, the daily panel count view enables Sam to renegotiate contracts with some of his clients by helping answer questions such as:
- Which clients are ordering STATS (since, as with most labs, we charge a STAT fee)?
- Should I provide a service on Sundays? With my operational analytics tool, I can compare volume from that client over several Sundays. If it is consistently low volume, I can reset the contract to offer an on-call Sunday service instead of being available 24/7.
- Which clients should I make a top priority based on the revenue I am receiving?
Insight into turnaround times has also enabled Sam to quickly respond to client questions. For example, a physician client may inquire as to where an opiate result on a specific patient currently stands. With his performance metrics software, Sam can quickly view turnaround time by test by filtering to his opiates panels and then the specific test. “My turnaround time view might then show that the sample took three days to arrive. Even still, perhaps the receive-to-run time was still too long. I can then look into the sample tracking to determine why there was a bottleneck.”
4. Reducing staffing costs
Adjusting staffing to match a constantly changing throughput of samples is very difficult for any lab. A careful balance must be struck: if a lab is overstaffed, there may not be enough business to pay the team; whereas, if a lab is understaffed, the lab cannot provide high-quality service to its clients and risks losing their business. Either way, it is a financial loss.
“My performance metrics software has shown me the patterns in my changing levels of throughput and allows me to predictably balance my staffing to match that throughput. Now, my staffing costs are directly related to how much business I am generating. I am not under- or overstaffed at any given point; and therefore, I am never losing money and am optimally supporting my profitability,” Sam said.
The Lab Tech Productivity view has enabled Sam to see how he should predictively change staffing levels based on throughput volume needs. For example, for upcoming days, weeks, and months, Sam has been able to make changes such as:
- Reducing the cost of techs working specific benches at low-peak times (some days at 8 pm he may be running insufficient samples to justify a tech, such as in microbiology).
- Increasing staff based on high volumes at predictable patterns during certain days and times (hematology tends to be bombarded on Friday and Saturday evenings).
The Orders by User (Staff) view shows productivity. Sam can see, for example, how many samples are being collected by which courier phlebotomist and obtain a better understanding of the precise dollar value each phlebotomist is adding to the lab. Are they going out for six hours and returning with 100 samples or 10 samples? “When there are differences, I can review the routes and distances but also determine whether retraining is needed to redress the balance of performance across my team. I can also see who has been the most productive within a given time period,” Sam said.
5. Winning new business
With these analytics, Sam can demonstrate that he has a proactive handle on his operations. “I can demonstrate my lab’s performance over time, showing how I consistently hit turnaround time targets as advertised. With this information, I instill confidence in potential and existing clients, and I am able to win new business more effectively.”
REFERENCES
1. LAB IQ for CGM LABDAQ Laboratory Information System. CompuGroup Medical Healthcare Software & Services. Accessed June 1, 2023. https://www.cgm.com/usa_en/products/lab-management-software/cgm-labdaq.html.
2. CGM LABDAQ Laboratory Information System. CompuGroup Medical Healthcare Software & Services. Accessed June 1, 2023. https://www.cgm.com/usa_en/products/lab-management-software/cgm-labdaq.html.
