As ACOs evolve, the clinical lab’s role grows

Nov. 21, 2016

There is now general agreement that a value-based model (quality of health outcomes per dollar expended), measured at the patient level, is the only way to achieve true healthcare savings over time and bring about real system transformation. Previous attempts to contain healthcare costs utilizing payment models that relied on controlling unit costs or restricting coverage failed to optimize the use of available funds, restrain costs, or address the healthcare needs of the underserved. These models failed because they did not incorporate improvements in the quality of care delivered, while simultaneously restricting access to that care.1

With the enactment of the Affordable Care Act, Congress encouraged experimentation with new coordinated care and accountable delivery systems under the Medicare Shared Savings program (MSSP). The Accountable Care Organization (ACO) is one model that was developed to achieve this. The Centers for Medicare and Medicaid Services (CMS) defines ACOs as groups of doctors, hospitals, and other healthcare providers who come together voluntarily to give coordinated high-quality care to their Medicare patients. In this healthcare model, incentives are tied to organizations that demonstrate their commitment to the prevention of disease while offering quality and efficient services as patients are placed into a continuum of care. When an ACO succeeds both in delivering high-quality care and spending healthcare dollars more wisely, it will share in the savings it achieves for the Medicare program.2

According to Jennifer Hansen, partner at Hooper, Lundy and Bookman, a law firm that represents healthcare providers and suppliers, the benefits of an ACO include “improving patient outcomes, cost efficiency, decreased ER waits, allowing patients better access, and achieving better satisfaction. There are also market advantages that take place which allow providers to keep some individual autonomy while still obtaining the opportunity to work with other providers and have a referral source.”3

The lab as information integrator

The ACO model requires a robust information technology infrastructure across the continuum of “cradle to grave” healthcare, including Health Information Exchanges (HIEs), Electronic Health Records (EHRs), Hospital Information Systems, Laboratory Information Systems (LISs), e-Prescribing, Medical Device, and Diagnostic Imaging systems. It also requires multi-disciplinary, multi-organizational, team-based care models to actively manage newer care plans, modes of care delivery, and compliance with evidence-based care practices across a variety of providers and care settings. In order to accomplish this, organizations need to collect and analyze performance and outcomes measures.4 This need has led to the higher profile and redefinition of the central role of the clinical laboratory as a prime integrator of information and data exchange.

The ACO opportunity

Indeed, the laboratory’s clinical expertise, in combination with its network of physician and patient touch points, make it a central component of an integrated provider organization such as an ACO. By hosting the vast majority of centralized information, laboratories reaffirm the importance of highly functioning physician/laboratory relationships. Through the deployment of a robust connectivity system, laboratories have the ability to streamline physician office work flow, receive test orders and return results to a variety of EMR systems in real time, and play an essential role in building physician relationships. Downstream benefits can include enhanced lab order accuracy, more complete patient and billing information, improved revenue collections, and better patient outcomes—all critical differentiators in an era of quality improvement and cost-reduction mandates.

At the same time, pathologists and laboratory professionals are increasingly being considered as uniquely equipped to assist in the development of clinical pathways and clinical decision support software to guide physicians in test selection. The effective use of such resources to perform the right test at the right time and as close to the patient as possible is essential to the achievement of quality patient outcomes.

Strategic Initiatives1

Clinical laboratories must recognize the opportunities ACOs create and respond with strategies that position the lab to reach its full potential within the ACO model. The following strategies are recommended for laboratories to meet the clinical information needs of physicians practicing within ACO organizations, and to demonstrate their value by facilitating decision support and coordinated care:

Outreach. Extend laboratory services to all available physician offices, nursing facilities, clinics, and service centers. Create a network of integrated and coordinated services across the continuum of care. Develop the infrastructure and logistics required to serve chronically ill patients, who need to access care periodically in different venues from a variety of providers, in an ambulatory environment. Going forward, a laboratory’s association with physician offices, combined with electronic connectivity, may be the best long-term strategy in the era following healthcare reform.

Connectivity. Build electronic connectivity to providers in a way that integrates data in and out of physician practice EMRs. Laboratories have the opportunity to be instrumental in assisting physicians and demonstrating value to their physician clients by streamlining order and result processes within their offices.

Lean internal laboratory processes. One of the most important steps a laboratory can take to position its services for inclusion in an ACO or coordinated-care model is to improve (Lean) every process to eliminate waste, minimize variation, and reduce costs. The best investment a lab can make in its future is to maximize the efficiency of its internal operations. Labs should focus on the accessibility and convenience of their services and information communications.

Test utilization-management. Clinical utilization management has the potential to reduce or eliminate unnecessary expenditures. Test-utilization review within a hospital organization can be performed by a multispecialty medical committee, such as a laboratory formulary committee. This committee can have the scope and authority to recommend the appropriate use or availability of lab tests as well as review the process for referred test orders and protocols for lab workup for specific disease states.

Laboratory professionals are also uniquely qualified to be involved in the development of computerized physician order entry (CPOE) with clinical decision support (CDS), test algorithms, and clinical pathways. Pathologists have the medical training necessary to analyze aggregate clinical data for outcomes and quality. As medical doctors, pathologists are trained to understand the clinical and medical relationships embedded in the data and can use outcomes data to improve diagnostic pathways.

Understanding the big picture. The director of laboratories operating within hospitals or health systems should have a clear understanding of the health system’s clinical and financial objectives, including any plans for an ACO. Successful laboratories will align the laboratory’s strategic objectives with those of the larger organization in areas such as community marketing, physician-alignment, and information technologies. Well-informed laboratories will also be cognizant of efforts from competing laboratories to replace them in an ACO.

It is critical that laboratory directors articulate the value of their laboratory services and the pivotal role of the lab in ensuring that an accurate diagnosis is established early in the continuum of care, and that clinical information is available to coordinate the course and cost of care. Health system executives, managed-care directors, physicians, and administrators of health plans sometimes take for granted the crucial contributions labs make to medical decisions. Successful laboratories, meeting the new challenges of healthcare reform, will leverage outreach relationships, actively participate in the formative stages of ACO development, and prepare for upcoming reimbursement changes. The paradigm shift in healthcare from episodic care to chronic-care management represents a once-in-a-generation opportunity for proactive laboratories to redefine their value in a new, much larger role as integrators of critical clinical information and decision support.1


  1. Miles J, Weiss RL. The role of laboratory medicine in accountable care organizations. ARUP laboratories white paper. Aug 2013.
  2. Accountable Care Organizations. What’s an ACO?
  3. Romero R. Dissecting the current ACO model: where it is now, and where it is going. The Ambulatory M&A Advisor. May 23, 2016.
  4. Gilbert A. Movement from “fee for service” to “fee for value.” Healthcare Information and Management Systems Society (HIMSS) News. July 9, 2012.

Irwin Z. Rothenberg, MBA, MS, MT(ASCP), is a Technical Writer/Quality Advisor for COLA’s Educational subsidiary, COLA Resources, Inc. (CRI), provider of continuing education for physicians, laboratory personnel, and allied health professionals. CRI offers continuing education through online courses, informational products in both electronic and hard copy form, webinars on technology and regulatory issues, and CRI on-site Symposia for Clinical Laboratories.

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