Understanding the Value of Data in optimizing Laboratories

1. Understanding the Value of Data in optimizing Laboratories Paul H. Steger IT Division Chair – Laboratory Medicine & Pathology

2. Disclosures • Paul Steger is not a Laboratorian and cannot speak to the scientific validity of various examples used in the presentation • Mayo Clinic has receives royalties and holds significant financial interest from licensing of a device, product or technology identified in this presentation

3. “The goal is to turn data into information, and information into insight.” Carly FiorinaFormer Chief Executive Officer HP

4. Discussion Objectives • Discuss the role(s) of the clinical laboratory in hospitals today • Describe the market conditions currently impacting health care • Convey how data can be used to impact change, which: • Strengthens the current role of the laboratory in health care • Gives it an even more prominent role in the future

5. How Is your Laboratory Viewed? Cost Center? Inefficient workflows? Limited insights into financial data? Clinical departments and physicians choose which labs to use? • Revenue Center? • Optimized workflows? • Run like a business (P&L)? • Labs engaged in decisions about sendout tests?

6. Roles of the Clinical Laboratory in Today’s Health Care TRADITIONAL Clinical Role: Provide accurate test Financial Role: A major source of hospital revenue FUTURE STATE Clinical Role: Primary health care data engine Financial Role: Driving financial performance for the health care system THE FUTURE IS NOW

7. Health Care Market Conditions RISING COSTS AND DROPPING REIMBURSEMENT RAPID MOVE TO VALUE-BASED REIMBURSEMENT MODELS PRECEDENT OF BENEFIT MANAGEMENT IN OTHER HIGH-COST/HIGH-VARIABILITY AREAS PAYERS SEE LABORATORY AS PART OF THE PROBLEM • What should the laboratory do? • Optimize Fee-For-Service Financial Performance • Enable Future State Financial Performance HOW? ... DATA

8. Importance of Data Drive Lab Operations Quality & Efficiency Financial health Capacity planning Benchmarking Health Care Delivery Decision support Population health Care management

9. What Type of Data? Clean and Complete • Operations data • Cost data • Utilization data • Patient data (inside/outside EHR) • Client data • Population data • Claims data

10. How Data from the Laboratory Can Be Used

11. Cost Models • Actual Cost • How much does the test cost as it is performed today? • Standard Cost • How much should the test cost when performed in optimal conditions?

12. Actual CostActivity-BasedCosting

13. Actual Cost • Use a form of time-driven activity-based costing (ABC) • Document the workflows in the laboratory • Assign the expenses from the financial statement to the workflow • Run the billed volume through the workflow to calculate costs

14. Standard Cost • Uses most of the information loaded into the Actual Cost ABC model • Instead of using actual spend from the financial statement, it calculates the cost of each process step based on the component cost and infers what the expense could have been

15. Standard CostActivity-BasedCosting

16. Accurate Cost Data and Financial Decision-Making • Driving down variable costs • Purchasing reagents • Staffing • Optimizing fixed costs • Platform utilization and purchasing • Consolidation • Convey effect of indirect costs • Outcome: Optimize financial performance and reporting

17. Business Analytics and Laboratory Data: The Value Proposition To achieve the future state, responsible parties must be able to dynamically interact with operational data in a way that is meaningful and actionable for them.

18. Connection of Disparate Data Sources EHR LMR Claims Data Warehouse & Analytic Data Marts

19. Business Analytics and Laboratory Operations • Establish Actionable KPIs and lead indicators • Increase quality and timeliness of operational data reporting • Enable self-service reporting capabilities • Enable lab operations to make data-driven decisions • Staff to workload • Understand variability • Enhance agility and ability to respond to KPIs • Allow test utilization analysis and activate the lab’s ability to guide population health

20. Turnaround-Time Data: Aggregate View

21. Turnaround-Time Data: The Breakdown

22. Test Utilization Management Business Analytics Example Insights

23. WHY UTILIZATION ISSUES? PROVIDERS HEALTHSYSTEM • Realities of practice • Knowledge gap • Marketing • Litigation fear • $ incentives UTILIZATION • Fee for service • $ incentives • EMR / IT • Coding systems CLINICALLABS PATIENTS • Lab systems and processes • Ordering systems • Test names • Test bundles • $ incentives • Patents • “More” is better • Google • Dissatisfaction with health care • Marketing • Societal demands Estimated 20% to 40% of tests unnecessarily ordered

24. Appropriate Genetic Testing for Coagulation • Patients with blood clots should be tested to identify genetic predisposition to clotting. Patients who test positive would be considered for an anticoagulant. • Practitioners often immediately order a more expensive genetic test (Factor V Leiden, CPT 81241) when a less expensive enzyme test (APCR, CPT 85307) is a more effective and appropriate screen. Only when borderline or low APCR results are received, or in cases of family history, should a Factor V test be ordered. Studies show testing needs to reflex to genetics only19% of the time. CONTRIBUTORS Rajiv K. Pruthi, M.B.B.S Co-Director, Special Coagulation and Molecular Hematopathology Dong Chen, M.D., Ph.D. Chair, Hematopathology Lea Coon, LCGC Genetic Counselor Smrithi Srinivasan Risk Analyst

25. Laboratory Data and Utilization Management: The Next Level • Use the clinical and laboratory data to guide the creation of algorithms • Algorithms + utilization data can be used in a variety of ways • Identify outliers and monitor compliance (post-ordering) • Guide test ordering (prior to ordering) • Enables the laboratory to improve financial performance by • Fueling alternative approaches to test reimbursement • Provide information about disease prevalence and management in served population

26. Mayo Clinic Approach Challenge Opportunity Exact Cost, SoftTQC, and Mayo Unified Data Platform (UDP) UDP and Tableau OptumLabs* and UDP CareSelect Lab* and CareSelect Blood* • Run the Lab like a Business • Business Analytics • Utilization Management Rules Development • Utilization Management evaluation and enforcement * identifies business partnerships with Mayo Clinic and Mayo Clinic Laboratories

27. Summary • Position your laboratories as revenue generators not cost centers • Understand the cost models and revenue models • Use the data to optimize financial performance • Use the data to optimize purchasing and labor • Use the data to tell the story • Introduce data analytics into the laboratories • Use the data to optimize workflows and measure SLA’s • Use the data to manage sendouts and understand utilization • Strategically partner with key vendors to close gaps • Get the most from your LIS • Identify partners to assist with Analytics and Utilization Management

28. Questions? Paul H. Steger IT Division Chair – Laboratory Medicine and Pathology Rochester, MN steger.paul@mayo.edu