Adopted the Patient Centered Medical Home model to provide highest-quality, lowest-cost services to our patients

Physician Owned Laboratory (POL) integral to delivery of our health care

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Miramont Family Medicine

General Chemistry CMP, BMP, Lipid Profile, CPK, Phosphorus, Magnesium, Lipase, Iron Panel, Uric Acid, A1C, Urine Microalbumin

Hematology CBC, PT/INR, D-dimer, ESR

Immunochemistry TSH, free T4, PSA, Testosterone, Vitamin D, Troponin, Myoglobin, BNP, RPR, HIV, Hep-C, Urine Drug Screen

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Miramont Family Medicine

POL Test Menu:

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Miramont Family Medicine

Increased Efficiencies

Immediate Answers and Treatment Decisions

Convenience

Marketplace Differentiation

Competitive Advantage

Improved Quality of Care

Improved Practice Sustainability 7

Why a Physician Owned Lab?

POL testing streamlines result reporting processes

Diagnostic information available when the patient and physician are together

Teachable moment

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Increased Efficiencies

Physician Orders Test

Lab request is prepared

Sample is drawn from patient

Sample is spun through centrifuge

Sample is put in drop-box for reference laboratory

Sample is transported to reference lab

Sample is analyzed

Results are sent back to office

Doctor interprets results

Office staff calls patient with results, leaves

message if unavailable

Wait for patient to call the office back

Doctor provides results to patient 9

Centralized Testing: Next Day Results

Physician Orders Test

Sample is drawn from patient

Sample is spun through centrifuge

Physician receives and interprets results

Discuss results with patient on-site

Sample is analyzed

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POL Testing: 15-40 Minute Turn-Around Time

Centralized Testing: Next Day Results

POL Testing: Results in 15-40

Minutes

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POL Testing has Half the Steps of Send-Outs

Efficient result reporting saves ~10 minutes of staff time per patient

Non-revenue generating time

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Time Savings

Standing Orders:

Routine Physical Exams draw labs for a patient’s physical no more than 1 week prior to their appointment

If any of these labs have been run within 3 months, draw the blood but do not run unless ordered by provider

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Optimizing Patient Workflow for POL Testing

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Optimizing Patient Workflow for POL Testing

If not performed within the past 3 months, run or send out the following tests (according to the patient’s insurance): CBC CMP Lipid panel TSH UA with micro if indicated Hemoccult (over 40 years of age) A1C (if diabetic and has not been run in the past 91 days, or

glucose is above 110 on today’s testing) Urine microalbumin (if diabetic and not done in the past year) PSA (if male over 45 and not done within one year) Free T4 (if hypothyroid diagnosis in chart or TSH is abnormal on

today’s testing)

Standing Orders (cont’d)

Minimize return visits for medical decision-making

Provide attending physician the just-in-time data needed to make important clinical decisions during the same office visit

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Just-In-Time Lab Results

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Impact of Just-In-Time Results

Real-life Examples:

Diagnosing Vitamin D Deficiencies

Managing Thyroid Disorders

Monitoring Prostate Cancer

Conduct a ‘SWOT’ Analysis

Strengths

Weaknesses

Opportunities

Threats

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Is a POL Right for You?

Strengths & Weaknesses:

Does my office have the resolve to start and maintain a lab?

Do we have the room for a lab?

Do we order enough tests to warrant the investment?

Can we get the financing for new equipment if cash is not on hand?

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SWOT Analysis

Opportunities & Threats:

Do we have favorable contracts that will pay for a POL?

Who is the competition?

What are the opportunity costs?

Who’s watching?

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SWOT Analysis

“The equipment is complicated and requires a laboratory medical technologist on staff to get good results.”

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Myth # 1

Newer computer technologies have largely automated modern laboratory equipment to the point that much less technical skill is required to run equipment.

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Fact

Tabletop Immuno Analyzer

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“The equipment is too expensive I won’t be able to afford it.”

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Myth # 2

Tabletop equipment prices are generally cost effective for Physician Owned Labs.

Good evaluation tools such as Cost Benefit Analyses can limit risk by estimating profitability beforehand.

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Fact

1. Sort the various costs in the process into fixed costs and variable costs

2.Calculate the unit contribution margin

3.Calculate the break even point

4.Use your clinic’s actual volume data to see if running the test in house is viable.

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Steps for Cost Benefit Analyses

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Federal Trade Commission

The dollar amounts represented on slides in this presentation are fictitious and are provided for sample calculation purposes and illustration only.

In no way do they represent actual pricing by the author or an attempt to illegally convey pricing information to marketplace competitors.

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FTC Disclaimer

Fixed Costs: Costs that don’t change with volume

Equipment Lease $15,000

Annual credentialing 2,000

Total Fixed Costs $17,000

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Steps for Cost Benefit Analyses

Variable Costs: Costs incurred with each test run

Reagents/Cassettes (+controls) $10.00

Billing 2.50

Phlebotomy Supplies 2.00

Total Variable Costs $ 14.50

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Steps for Cost Benefit Analyses

Labor:

May be viewed as a fixed or variable cost

If lab work replaces other duties (filling out forms, ordering online) that are no longer being performed, labor costs do not need to be factored in as they are decision neutral

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Steps for Cost Benefit Analyses

Unit Contribution Margin:

The Gross Margin on each test run

Revenue $23.00

Total Variable Costs -14.50

Unit Contribution Margin $8.50

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Steps for Cost Benefit Analyses

Break Even Point:

The volume needed to incur no loss

BE = Fixed Costs / UCM

BE = $17,000 / $8.50 = 2,000

Daily Volume ≈ 6 tests per day

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Steps for Cost Benefit Analyses

Once equipment is paid for, if still in service, the BE point improves:

BE = Fixed Costs / UCM / Daily Volume

BE = $17,000 / $8.50 / 6 = 333 days of testing to break even

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Steps for Cost Benefit Analyses

I recommend…

#1. Go to COLA website (www.cola.org), sign up and attend annual conference with your medical assistant or lab manager.

You enroll in lab director courses for credit; they enroll in lab manager courses.

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Step-by-Step Guide to Lab Set Up

COLA is a certifying body that credentials Physician Owned Labs (POL’s) including moderate and high complexity labs.

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But what is COLA?

I recommend…

#2. Price out the equipment you want, meet with vendors. Make a low offer, and let them call you back (“he/she who calls first, loses”).

Use a 3-5 year “lease to own” program with $1 buyout.

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Step-by-Step Guide to Lab Set Up

I recommend…

#3. Enroll in AAFP’s proficiency testing program (http://www.aafp.org/practice-management/labs/about.html).

Run proficiency testing three times per year (COLA will teach you more about this).

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Step-by-Step Guide to Lab Set Up

I recommend…

#4. Write your Lab Policy Manual, and have monthly lab meetings with your lab manager (COLA will teach you more about this).

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Step-by-Step Guide to Lab Set Up

I recommend…

#5. Prepare for and pass your biennial lab inspection with the COLA inspector.

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Step-by-Step Guide to Lab Set Up

I recommend…

#6. Market in-house lab to your own patients.

#7. Track production metrics, including payments, testing volume, labor time.

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Step-by-Step Guide to Lab Set Up

Miramont’s POL has helped to improve patient outcomes while reducing practice costs. Key elements of our success are:

Optimizing patient workflow to enable reporting of test results while the physician and patient are together

Cost savings achieved through process efficiencies

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In Summary

Conduct SWOT and Cost/Benefit analyses to see if your office can support the lab.

Spend 4 days in Las Vegas at the COLA Resources symposium this April.

Plan on significant non-recurring start up time and costs, followed by reasonable maintenance commitments.

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Next Steps