Northeast Six-Hospital Network

With LS Flynn & Associate’s help, IDN realigns lab services to save $2.3M and gain potential added revenue of nearly $12M

CHALLENGE

Laboratory services at a six-hospital network in the northeast faced a number of challenges. There was excessive duplication of services, especially equipment and personnel. Cost per test was significantly higher than that of peers. There was sizable leakage of tests from owned physician practices. In general, laboratory services need to be much more efficient and effective to be successful in value-based purchasing.

SOLUTION

IDN engaged LS Flynn & Associates to review laboratory operations and recommend changes to enhance quality and efficiency, and to grow services. Flynn developed a laboratory transformation plan and IDN’s senior leadership engaged her team to implement the plan in partnership with the network lab team.

The core lab was centralized at the flagship hospital. Labs at the other five hospitals became rapid response facilities. The core lab now provides certain specialized testing for all campuses, plus technical expertise such as compliance and network testing.

Lab outreach management and testing has been centralized at the core lab. A central call center has been developed with network customer service management, and software has been installed to enable processes and support outreach. It will ensure owned physician practices send lab work to the core lab.

An integrated organization structure has been implemented. Site lab managers now report directly to a system lab director. There are dotted lines to respective site medical directors and hospital leadership.

A new $2 million clinical lab analyzer system is being installed at the core lab. It will be more efficient and require fewer personnel because of automation and auto-verification of test results. The network is converting to the EPIC electronic medical record system. Lab functions will be integrated through EPIC’s Becker Lab IT platform.

RESULT

  • Identified annual operating cost savings of $2.3 million.
  • Realized savings of $854,000 in the first wave of implemented changes.
  • Second wave changes have expected savings of $1.4+ million.
  • The transformation plan will generate nearly $12 million in additional outreach revenue with a 40 percent margin contribution, or $4.8 million.

 

“We have done some fantastic work with LS Flynn & Associates working with our team. We’re really proud of it. We plan to continue to use their support for other areas of our laboratories. The next area of focus is in Anatomic Pathology.”

— Vice President, Network Operations, IDN