As the New Year begins, so does the Clinical Lab Fee Schedule (CLFS). “The final CLFS rule implements section 216 of the Protecting Access to Medicare Act (PAMA) of 2014”1, and brings with it a new private payor rate-based payment system. CMS recently released the 2018 clinical lab fee schedule “under which the agency will reduce Medicare payments to clinical labs by an estimated $670 million this year”2. This drives a lot of the uncertainty we hear surrounding the industry as of late, as it will mean a dramatic decrease in top line revenue for our customers and for laboratories across the country. The final rule has been challenged in a lawsuit filed by the American Clinical Laboratory Association in the United States District Court for the District of Columbia3, which only adds to the uncertainty as medical laboratories wait to hear how the court will react.
The medical laboratory space is already very competitive, as labs in the industry have little differentiation between the testing and services that they provide. The situation is exacerbated by the fact that labs not only have to worry about local players, but also combat the acquisitive and ever-growing presence of the large national labs. This environment, coupled with the pricing pressure from the shrinking rate schedule that PAMA will bring, means that laboratories will need to employ new strategies to survive and prosper.
One successful strategy that labs are utilizing to compete and grow is taking a customer-focused approach, and making customer acquisition and retention a key strategic focus. Laboratories who focus on customer success can often outperform the large national labs from a customer service standpoint, for example with faster turnaround times, or domain experts who can be high-touch and at the ready for a consult. The most successful laboratories, however, extend this focus to both clinicians and patients, realizing that improving their customer service and the patient experience concurrently creates a virtuous cycle that will not only make their clients happy, but drive patient satisfaction and improved outcomes.
This focus on the patient is a critical component these days with the high-deductible health plans that are forcing patients to pay a higher percentage of their healthcare costs out of pocket than ever before. A 2016 Kaiser Family Foundation survey found that “The average deductible for workers has gone up $486, or 49%, since 2011.”4 Patients are expecting more from their healthcare providers and are choosing those facilities that provide them with an excellent experience and incremental services, like the ones that they have come to expect in other industries. We have all become accustomed to paying a bill, checking in for a flight or hailing a ride from our mobile devices, but healthcare has been slow to adopt this type of consumerism and embed it into its practices. Laboratories who focus on making the patient’s journey before, during and after their visit an enjoyable one will keep those patients coming back again and again.
Luminate Health had the honor of participating in a general session discussion at the recent G2 Lab Institute conference in Washington D.C. Shally Madan, our COO and Co-founder, joined laboratory leaders from Northwell Health and PCL Alverno on a panel entitled The Customer-Focused Laboratory. It was clear that these organizations had taken a customer-focused approach by implementing technologies that will greatly improve the patient experience within their labs. Both organizations had plans to launch mobile patient applications that would prioritize patient access and education around their lab results, as well as empower patients with services like text message reminders and on-demand mobile phlebotomy services. It was obvious from the discussion that these market-leading organizations understood that these types of services would drive value for the patient, and help them retain and grow their volumes. They also saw it as a way to acquire the tools necessary to more effectively partner with their physician clients around patient care. Finally, they highlighted how utilizing their lab data to drive the patient experience within their apps was a key way to close gaps in care.
At Luminate Health, we concurred with the sentiment of the others on the panel, and Shally shared how our solution combines patient engagement and data analytics from lab results to improve outcomes and lower the cost of care. She highlighted how we are helping labs drive customer success within their organizations by giving patients the consumer experience they have come to expect, and by empowering them with great access and understanding around their lab results. She also gave the example of how our analytics engine not only provides a dynamic and customized in-app experience for patients, but how it also allows labs to surface key insights to their physician clients to help stratify risk across patient populations and help better target care plans. “These insights are empowering our customers to move out of the figurative basement and have a seat at the table from a clinical care perspective. When the lab can help the clinician identify those patients in most need of care and then activate those patients as part of a care plan, the paradigm shifts from one of a clinical service provider to one of a value-added partner”, Madan explained. Labs who can make this shift and utilize technology and other services to become more customer-focused will have stickier relationships with providers and with patients, and can continue to drive growth in spite of this next wave of uncertainty that has hit the industry.
References:
- https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/PAMA-Regulations.html
- https://www.advisory.com/daily-briefing/2017/11/22/lab-test-payment
- http://www.acla.com/wp-content/uploads/2017/12/ACLA-PAMA-Complaint.pdf
- http://www.businessinsider.com/out-of-pocket-healthcare-payments-skyrocketing-2016-9
