Getting Started with a Demand Management Assessment of Your Hospital Laboratory: Three Areas to Strengthen Operations and Reduce Costs

by Mark Tiemeyer, MBA, MT(ASCP), Vizient Consulting Director

Walter Vallière, ScD, Vizient Consulting Director

Laboratory testing is the largest medical activity in terms of volume and has a significant impact on care outcomes and costs. In our last blog, we shared how hospital leaders that shift cost savings efforts to demand management (identifying and curbing inappropriate testing) can strengthen laboratory capabilities, reduce time to results, and diminish the adverse impact on production due to a nationwide shortage of qualified bioanalysts and reduce costs. 

Though there are many reasons why inappropriate testing can occur, conducting a thorough demand management assessment can help identify and address them. The first step in conducting an assessment is evaluating the laboratory tests performed during a specific window of time and comparing the results to recent scientific methods and clinical practice guidelines to help identify tests that may be archaic or underused.

Here’s one example of such an evaluation along with common trends to help you determine immediate areas you can focus on.  

How analysis reveals obsolete tests, identifies savings 

A 350-bed hospital laboratory undertook a demand management assessment to identify opportunities to strengthen laboratory services and reduce operating costs. The working group of laboratory scientists, physicians and financial personnel set out to review laboratory data to evaluate which laboratory tests were being used and compare the findings with current scientific, medical and healthcare finance and operations literature. 

During a review of 12 months of data, the group found that along with the Troponin cardiac biomarker, a Creatine Phosphokinase-MB test (CK-MB) was also routinely performed 6,377 times to assess cardiac distress. The literature review revealed numerous articles noting that CK-MB was no longer considered the best indication of cardiac distress. The findings were shared with the hospital’s medical staff and the CK-MB test was removed from the test menu, re-assigned staff to other assignments and reduced operating costs by $70,721 annually. 

Three common areas to strengthen operations and reduce costs 

Unnecessary tests can be identified through analysis of laboratory information system orders, reference lab usage, HIS reports or Vizient tools. Based upon our experience working with hospitals to conduct demand management assessments, we’ve identified three additional examples in several categories of demand management projects we find can strengthen operations and reduce costs: 

Duplicate Orders—Five CBCs (Complete Blood Counts) with Differentials were ordered on one day for a general medical unit patient. Clinical practice guidelines note that without an active hemorrhage, there is little clinical usefulness in subsequent hematologic measurements. Additionally, differentials are usually only useful once per day. The replication was due to an attending physician and resident combining for multiple orders. To identify and address this in your organization:  

• Define test-specific overutilization thresholds 
• Review the data (Vizient members can utilize our Clinical Data Base) Examine order details for multiple tests ordered per day 
• Determine physician order entry (POE) capabilities 
• Refine data with additional clinical information and analyze patterns 
• Determine appropriate strategy with physician, administration and quality leaders 

Test algorithms—Current ordering practices for evaluating thyroid abnormalities call for ordering a thyroid panel instead of following the recommended thyroid algorithm’s primary test first, which is Thyroid Stimulating Hormone (TSH). The algorithm will automatically cascade into the appropriate testing for euthyroid, hypothyroid or hyperthyroid conditions. To address this in your organization: 

• Research the latest diagnostic recommendations in scientific and clinical literature 
• Examine order details for trends indicating widespread usage of a thyroid panel 
• Research currently available order sets 
• Work with the laboratory to establish test algorithms following scientific and professional organization recommendations 
• Communicate changes and educate physicians 

Obsolete tests—We often see hospital Emergency Departments order Amylase and Lipase for acute pancreatitis. Many studies have determined that Lipase is an earlier, stronger and longer-lasting indicator of pancreatic damage, yet the two tests continue to be ordered in combination. To address this in your organization: 

• Examine order details for trends indicating widespread usage of combination orders or panels 
• Engage pathologists and scientists to update physicians on developments in laboratory practice 
• Monitor usage data to identify outliers and follow up 
• Report success and cost savings to physicians, administration and quality leaders 

Process navigation and experienced data analysis yield dividends and clinical improvements. Several excellent resources are available which can assist in the identification and development of opportunities, enumeration of clinical and financial impact, strategic direction, and initiative management.  

Following completion of an analysis and identification of inappropriate testing like in the examples above, addressing them is highly dependent on effective communication, administrative support, and IT capabilities. Following the entire demand management assessment process—including analysis, governance, formulary and/or CPOE, policy, implementation, and maintenance—is critical to an effective demand management assessment strategy. 

Adopting a demand management strategy brings the hospital laboratory into the clinical process, engages better clinical coordination and communication across the healthcare system. An effective demand management strategy demonstrates the modern hospital’s commitment to delivering value-based care to its patients and payors. 

If you need assistance developing a demand management strategy for your hospital or conducting a demand management assistance, feel free to reach out to us for assistance.