Identifying Characteristics of Leading Hospital Lab … · Identifying Characteristics of Leading...
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Identifying Characteristics of Leading Hospital Lab Outreach Programs:
A Template for SuccessApril 7, 2006
1GRAPHICS/WASH G-2/APR2006/040706_62OUTREACH_JR_LEADINGOUTREACHPROGRAMS2.PPT
Outreach Iceberg
Simple View
Reality
Get Specimen
Bill and Collect
Send ResultDo Test
Administrative
Legal StructureManagement TeamManagement StructureBilling and CollectionsCompliance
Other
Capital FundingCulture ChangeGaining Support from Senior Administration
Sales and Marketing
Sales ProgramPricingWinning Insurance ContractsMarket SegmentsID OpportunityDifferentiation
Operational
PSCs and IOPsLIS CapabilityConnectivity
– OE/RR– Interfacing
CouriersClient ServiceProduction
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OutlineParticipant Overview
Success Factor ExperienceSales and Marketing
Organizational/Strategic Initiatives
Operational
Administrative
Financial
Biggest Competitive Problems
Key Advice to Others In Outreach
Summary - Critical Success Factors
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Study Participants - Total
• $777 Million Total Outreach
• $29 Million per Lab
• 27 Labs Interviewed
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Study Participants - Group 1
Alverno Clinical LaboratoriesHammond, Illinois
Sentara Reference LaboratoryNorfolk, Virginia
Providence Everett Medical Center - PacLabEverett, Washington
Piedmont Medical LaboratoryWinchester, Virginia
Sioux Valley Clinical LaboratoriesSioux Falls, South Dakota
Affiliated Medical Services LaboratoryWichita, Kansas
Life LaboratoriesSpringfield, Massachusetts
Midwest Clinical LaboratoriesMilwaukee, Wisconsin
Hospital Consolidated LaboratoriesSouthfield, Michigan
$237 Million Total Outreach; $17 Million Per Lab
BayCare Laboratory ServicesTampa, Florida
Legacy Laboratory ServicesPortland, Oregon
St. John HealthDetroit, Michigan
Centrex Clinical LaboratoriesNew Harford, New York
Elliott Hospital LaboratoryManchester, New Hampshire
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Study Participants - Group 2
Tri-Core Reference LaboratoriesAlbuquerque, New Mexico
DSI LaboratoriesFort Myers, Florida
Oregon Medical LaboratoriesEugene, Oregon
Carilion Consolidated LaboratoriesRoanoke, Virginia
Muir Lab (John Muir Health)Walnut Creek, California
Intermountain HealthcareSalt Lake City, Utah
Diagnostic Laboratory ServicesHonolulu, Hawaii
ACL LaboratoriesChicago, Illinois
Pathologists AssociatedMuncie, Indiana
ACL LaboratoriesMilwaukee, Wisconsin
$540 Million Total Outreach; $42 Million Per Lab
North Shore - Long Island Jewish Health System LaboratoriesLake Success, New York
Baystate Reference LaboratorySpringfield, Massachusetts
MCLAnn Arbor, Michigan
Beaumont Reference LaboratoriesRoyal Oak, Michigan
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Type of Laboratory
7%--14%Free-Standing Independent Laboratory Only
15%15%14%Both a Single Hospital Lab Based and an Independent Laboratory
22%14%29%Single Hospital Lab Based
41%46%36%Both a Multi-facility Core Lab Based and an Independent Laboratory
59%62%57%Independent Lab, Owned by Hospital or Health System(s)
70%77%64%Multi-facility Core Lab Based
Total(27)
Group 2(13)
Group 1(14)
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Ownership
100%100%100%Total3%--7%Multiple Hospitals11%15%7%Pathology Group15%--29%Hospital19%23%14%Two Health Systems52%62%43%One Health System
Total(27)
Group 2(13)
Group 1(14)Ownership Interests
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Legal Entity Employed
100%100%100%Total4%8%--Co-Tenancy (cost sharing)7%15%--501c3 (taxable not-for-profit)11%8%14%LLC (taxable not-for-profit)15%15%14%LLC (for-profit)30%23%36%C Corp (for-profit)33%31%36%Department or Division of a Hospital
Total(27)
Group 2(13)
Group 1(14)Legal Entity
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Level of Profitability
100%100%100%Total15%15%14%Low (1-4%)44%39%50%Medium (5-9%)41%46%36%High (10% +)
Total(27)
Group 2(13)
Group 1(14)
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Other Characteristics
0 - 601
0 - 600
0 - 61
- Ambulatory- Range- Median
0 - 70
0 - 70
0 - 30
- IRL- Range- Median
0 - 212
1 - 213
0 - 182
- Hospital Labs:- Range- Median
0 - 8417
0 - 8422
3 - 2812
Patient Service Centers:- Range- Median
111Lab Facilities:
- Independent or Free-standing Labs
85 - 2,100430
115 - 2,100512
85 - 1,000251
Entity FTEs:- Range- Median
Total(27)
Group 2(13)
Group 1(14)Factors
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Sales and Marketing - Top 10 First Impressions on Key Factors for Program’s Success
Ambulatory services package - imaging, home health, scheduling patient admissions from the physician’s office, etc.
10Physician access to hospital EMR and office lab data9Interfacing to practice management systems8Pathologists’ reputation and support7Hospital/system brand name and physician loyalty6Internet connectivity offering (order entry/results reporting)5Health system urges physicians to use the system lab4Dedicated sales personnel3
Winning insurance contracts; exploiting hospital or health system leverage2Commitment to great service, including significant investment in client services1
Key Factors for SuccessRank
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Sales and Marketing - Sales Program
67%15%
100%--
36%29%
Sales Manager:- Full-Time- Part-Time1
56%0 - 23
2
54%0 - 23
2
57%0 - 11
2
In-office Phlebotomists:- Range- Median
0 - 123
0 - 123
0 - 51
Number of Field Service Reps:- Range- Median
0 - 112
0 - 113
0 - 32
Number of Dedicated Sales Reps:- Range- Median
Total(27)
Group 2(13)
Group 1(14)Factors
1Part-time sales managers include lab network assigned sales manager and administrators experienced in lab outreach, although they have other duties.
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Sales and Marketing - Managed Care ObservationsLab was excluded from United Healthcare contract; it is depending on lab network to win back in 2007.
Lab was excluded from large health plan owned by a competitor; the state’s attorney general advised a non-exclusive lab arrangement; the lab is now participating.
Another lab states that a United Healthcare participation loss could mean a loss of 33% of its business.
JVHL is now $40 million in lab network revenues from 14 exclusive contracts.
One lab’s market has shifted from exclusive contracts to a PPO/EPO driven market.
Another lab states they’ve not been successful winning large, national contracts.
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Sales and Marketing - Managed Care Observations (cont.)
A lab makes price concessions on contracts as part of a 10-year horizon for developing geographical coverage.
One lab wins contracts by writing interfaces to healthcare plans, providing the data they need.
Another lab recommends working closely with the hospital managedcare representative to ensure being included as an outpatient provider on contracts.
One lab makes a real effort to establish awareness among its hospital owners as to how it subsidizes the health system–this is necessary to get proper support in contract negotiation.
A co-tenancy lab doesn’t worry about managed care–they are a “wholesaler by design” (cost sharing with co-tenants).
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Sales and Marketing - Market Segments Served
4%--7%Veterinarians4%8%--Clinical Research Trials4%8%--Home Health Agencies4%--7%Commercial Labs4%--7%Direct Access Testing4%--7%University Student Health
52%62%43%Hospital15%15%14%Drug Screening
78%
0 - 3159
62%
0 - 3155
93%
0 - 5515
Nursing Home# Homes Serviced
- Range- Median
96%92%100%Physician
Total(27)
Group 2(13)
Group 1(14)Market Segment
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Sales and Marketing - Identifying Growth Markets
First Focus on System’s
Physicians
Examine Physician Concentrations, Courier Routes, and PSC Locations
Consider Competitor Weaknesses to Exploit
Have Sales Rep(s) Probe Target Market With Office Visits
Strategy Brainstorming Meetings
Consider Parameters of System’s Strategic Plan
Use Consultants, Marketing Team, or
Both
Conduct a Formal Market Study
Implementation Plan With Financial Pro Forma
Formal Proposal and Approval Before Action
Identifying Growth Markets
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Sales and Marketing - Differentiation StrategiesFocus on and deliver…
Great serviceTAT (some same-day)STAT TATExperienced client service staff24/7 supportEasy request formsEasy to read reports2-3x/day courier serviceFast access to appropriate staff
Pathologist involvementReputationAccessIncentives
Convenient PSCsPAP TAT of 3-4 daysContinuity of care
Same reference rangesAccess hospital EMR
Internet ConnectivityOE/RRInterfacing to PMSs; download patient demographicsBi-directional interface to EMRs
Sales TeamIncentives to performMTs as Consulting Med Techs (serve as paid Technical Supervisors of client POLs)
Assign to operate from system hospitals–physician relationship building
Win profitable insurance contracts Good PR program (radio and other media)Co-marketing with vendor repsConduct client satisfaction surveys every year–tout elements of highest ratings
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Organizational/Strategic Initiatives -Alliances/Networks
26%
10 - 13016
8%
130130
43%
10 - 12512
Lab Network Member:- Number of hospitals:
- Range- Median
15%11%7%4%4%
8%0%
15%0%0%
21%21%0%7%7%
Alliances:Co-marketing of liquid PAPSJoint marketing of Allergy TestingMolecular Pathology Center of ExcellenceCo-branded literature with reference labPathology service competitor sends DAT1
41%16%64%Total15%8%21%Lab Network Member “Want to Be”
Total(27)
Group 2(13)
Group 1(14)
1Direct Access Testing.
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Organizational/Strategic Initiatives - Acquisitions
4%0%7%Given System POLs22%23%21%Planning acquisitions2
30%46%14%Made acquisitions1
Total(27)
Group 2(13)
Group 1(14)Initiative
1$4 million lab; 3 labs–$1-2 million each; 150 nursing homes; NIDA lab; Coagulation lab; 40% of business came from five acquisitions; small local lab with large PAP volume.
2Small microbiology lab; small cytogenetics lab; looking for small labs.
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Organizational/Strategic Initiatives - Multi-entity Merger/JV
11%0%21%System has merged with another system19%15%21%System has purchased physician practices44%54%36%System has purchased other hospitals19%15%21%Lab the result of a Joint Venture
Total(27)
Group 2(13)
Group 1(14)Initiative
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Operational - Key Initiatives
19%30%30%7%7%7%
8%46%31%8%0%
15%
29%14%29%7%
14%0%
Production:Front-end automationTLALeanISO certificationIslands of productionNew lab facility
33%63%52%44%4%
15%15%
31%85%69%69%0%0%8%
36%43%36%21%7%
29%21%
Connectivity:Resulting onlyOE/RRInterfaces to PMSInterfaces to EMRNegotiating for a systemInterfaces to PMS/EMR plannedPlanning on OE/RR
Total(27)
Group 2(13)
Group 1(14)Initiative
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Operational - Key Initiatives (cont.)
4%15%
0%15%
7%14%
Couriers:Route mapping softwareCourier management software
26%11%15%11%11%
31%8%
23%0%
23%
21%14%7%
21%0%
Molecular Diagnostics:<15 tests performed>15 tests performedNot setting up; still low paymentMolecular Center of Excellence
Total(27)
Group 2(13)
Group 1(14)Initiative
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Administrative - Management Structure
41%26%11%7%7%7%4%4%4%4%
46%31%15%8%8%
15%0%0%0%8%
36%21%7%7%7%0%7%7%7%0%
Top Administrative Manager Reports To:1. Board2. System VP/EVP3. System CFO, SVP/EVP4. System CEO5. System COO6. System Medical Executive7. Hospital President/CEO8. Hospital VP, Operations9. Hospital Assistant Administrator10. Administrative Committee of Co-tenancy
41%22%11%11%7%7%4% 4%
54%23%0%0%8%8%8%0%
29%21%21%21%7%7%0%7%
Title of Top Administrative Manager:1. CEO2. VP, Lab Services3. President4. Administrative Director5. General Manager6. Executive Director7. Administrative Associate8. Laboratory Manager
Total(27)
Group 2(13)
Group 1(14)Element
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Administrative - Management Structure (cont.)
100%100%100%Total
48%26%22%4%0%
54%38%8%0%0%
43%14%36%7%0%
Senior Administration Support:Very HighHighAverageLowVery Low
41%41%26%19%15%4%
38%38%8%15%8%0%
43%43%43%21%21%7%
Functions Outside Direct Management:1. Billing2. Collections3. LIS4. HR5. Sales and Marketing6. Couriers
Total(27)
Group 2(13)
Group 1(14)Factor
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Financial - Access to Capital Experience
100%100%100%Total
33%7%
15%11%30%4%
31%0%
15%0%
54%0%
36%14%14%22%7%7%
Very GoodFairDifficultUse leasing/reagent rental financingSelf-fundingDon’t know, new entity
Total(27)
Group 2(13)
Group 1(14)Experience
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Biggest Competitive Problems
37%37%19%15%7%7%7%7%
46%23%23%8%8%8%8%8%
29%50%14%21%7%7%7%7%
Winning Managed Care ContractsInadequate ConnectivityBig Lab CompetitionPredatory Pricing by CompetitorsAccess to CapitalClinics Starting Own LabsFacility LimitationsOther Outreach Program Competitors
Total(27)
Group 2(13)
Group 1(14)Biggest Problems
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Key Advice to Others In Outreach
26%22%19%19%19%15%15%11%11%11%11%11%11%7%7%7%7%4%4%4%4%
1. Focus on Great Service2. Know How Much You Are Collecting3. Have Experienced Sales and Marketing4. Have a Good Management Reporting System5. Know Whether You Are Profitable6. Have a Good Connectivity Offering7. Join or Form a Lab Network8. Need Solid Endorsement from Administration9. Have a Reference Lab Billing Capability10. Have a Good Business Plan11. Staff With the Right People12. Critical to Change Culture13. Need a Freestanding Independent Lab14. Need Competitive TAT Schedules15. Be Sure Well Funded16. Do a Careful Market Assessment17. Bundle Lab and Other Ambulatory Services18. Track Patient Satisfaction19. Be Sure to Remain in Compliance20. Get Pathologists Involved21. Provide the Leadership to Win
Total(27)Advice (in order of mention)
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Summary - Critical Success Factors
Commit to a Great Service*
Achieve High Senior Admin Support
Achieve Efficient Lab Production (Automation, Lean, etc.)
Pathologist Involvement
Full Internet Connectivity Offering
Leverage Hospital Status for Insurance Contracts
Join or Form a Lab Network if in a Managed Care AreaHave a FT or PT Sales Manager
Have Productive Sales and Service Representatives
Operate Many Patient Service Centers
Critical Factors for Outreach Success
Establish a Good Financial Management System
11
Make Acquisitions if Available in the Market
12
*Great Service is defined in Differentiation Strategies Section.