Back in August, Stanley Schofield, president of NorDx, was featured in CAP Today discussing “Where Smart Labs Go When the Money is Gone.” A large portion of his recommendation was founded in what seems like common sense advice:
- Add clients
- Keep clients
- Create revenue opportunities
- Get paid
- Reduce expenses
Sure, it’s straight forward enough but we all know in today’s cut throat healthcare environment those five things are anything but easy. Budgets have worn thin, resources have been rationalized, and reimbursements are dwindling. So what do you do?
Given you can’t trim your way to new revenue, and you can’t add clients fast enough to fully compensate for the looming reimbursements rate reduction, you’ve got to go to the roots of the organization and re-evaluate even the most fundamental roles and processes. You must shift from focusing on hard line costs to identifying hidden opportunity tradeoffs that when re-evaluated, can be leveraged to drive value back into your organization.
Admittedly, it’s a seemingly straight forward exercise – should you take on this initiative I think you’ll quickly find your program is ripe with unrealized opportunity.
Allow me to provide an example:
Lab A stores glass slides and paraffin wax blocks onsite. The majority of specimens are stored in a single room at ambient room temperature; however, due to space limitations some are stored in additional rooms throughout the building. Despite this, Lab A believes storing specimens onsite is the only effective means of storage as it ensures they are easily accessible and is rooted in the perception that onsite storage is “free”.
“Free”, however, is founded on the fact that the lab does not receive a bill specific to storage. In reality, onsite storage is riddled with complexity, cost and risk. Keep in mind, there can be numerous slides in a single accession (or case group) making them difficult to store and track. And, the weight and fragility of slides in itself limits how and where they can be stored. Likewise, storage of paraffin blocks comes with its own unique set of challenges. To ensure the wax does not begin to soften, or worse melt, paraffin blocks must be stored in a temperature-controlled environment. Due to these complexities, onsite storage imparts a heavy burden on internal full time employee (FTE) resources and premium space that could otherwise be allocated to revenue driving functions.
Furthermore, while the lab may believe it’s onsite storage model equates to better control and access, the reality is, in today’s laboratory environment, onsite resources are spread far too thin. This makes it difficult to apply the full scope of resources required to effectively and continually scale space to meet demand, maintain inventory integrity, and sustain compliance. As a result, many onsite storage programs become riddled with inefficiencies, bogged down by outdated tracking systems, equipped with sub-par storage environments and plagued by long queues of projects to be completed when bandwidth of existing resources frees up.
As you can see, while the lab may not be receiving a monthly storage bill, it is making plenty of tradeoffs. For example, the lab is:
- Choosing to focus a portion of their FTEs’ bandwidth on storage rather than higher priority or newly emerging mission critical initiatives.
- Foregoing the incremental revenue that could be realized by reallocating existing storage space to accelerate patient throughput or support new tests.
- Allocating additional resources routinely to update space, workflows and systems to accommodate growing storage volumes; or assuming increasing inefficiencies and risk by not doing so.
So the question becomes: Is there a better way?
- Might the lab be able to alleviate FTE bandwidth constraints and more strategically allocate onsite resources by outsourcing the storage of specimens?
- Could leveraging the dedicated expertise, budget, and facilities of an expert storage vendor better enable the labs to administer, enforce, and maintain an up-to-date best practice approach to storage that improves efficiency and reduces risk?
- Should labs keep only the most recent and active specimens onsite, moving less active (or archival) inventory offsite?
- Would doing so free up premium onsite space or prevent inventory from overflowing into less than ideal storage environments?
Keep in mind, this is just one example. The questions asked (and answers identified) may be different for each lab. The key is asking them. In order to survive in these competitive, cost conscious times, labs must be willing to pro-actively peel away the layers and logic surrounding legacy processes and programs and, where necessary, restructure and reallocate resources within their organization. Those that do this successfully, in conjunction with or as a part of Stanley Schofield’s recommendations above [add clients, keep clients, create revenue opportunities, get paid, and reduce expenses] will continue to advance their competitive position in today’s increasingly difficult healthcare environment. Those that don’t may just realize the harsh reality behind the W. Edwards Deming’s quote, “It is not necessary to change. Survival is not mandatory.”