Unlocking the financial potential of the hospital laboratory

The laboratory often lies at the beginning of a patient’s diagnostic journey, providing important information needed for physicians to make accurate clinical decisions. These insights put patients on the right pathway and guide care along their entire treatment journey.

The hospital lab is more than a specimen handler and provider of answers — it drives the financial health of the institution it serves. With more patient touchpoints than any other hospital service line, the lab is one of the top three contributors to a hospital’s gross outpatient charges, according to outpatient billing data from Definitive Healthcare. And for labs with robust outreach programs, 15%–20% of total gross outpatient charges are generated from the lab, according to Definitive Healthcare’s Medicare Cost Report.

Even still, hospitals are under mounting pressure to balance quality care with bottom-line performance. It may be tempting for hospital leaders and supply chain managers to look at lab services through a lens that stresses cost over financial return and patient value. Responding to immediate pressures, hospitals may move to outsource laboratory services to a provider with the lowest per-test price, or even sell the lab’s outreach business altogether.

But a hospital lab shouldn’t be viewed as a cost center. It is critical to look beyond immediate financial needs to the long-term impact a lab can provide for the entire hospital or health system. When supported, cultivated, and given the resources to thrive, the lab can be the tip of the spear for downstream revenue and bolster the financial stability of the hospital. In realizing its economic potential, a lab can be transformed into a powerful engine for patient impact, revenue generation and value creation.

A healthy lab with a robust outreach program can be a leader in driving positive healthcare changes. It can educate providers on best practices, eliminate wasteful testing, lower the cost per diagnosis, grow revenue, and ensure the highest standards of laboratory care in the communities it serves.

A lab’s primary value is in the benefits it delivers to patients and providers. By keeping tests local, patients receive more timely results — results needed to make treatment and care decisions. It’s those answers that provide healthcare professionals with the tools and knowledge they need to do their jobs and provide patients with efficient, high-quality care.

As healthcare transforms in the digital age, it is also increasingly important for labs to control their data. Laboratory data is essential for research and development, identifying trends, understanding medical complexities and advancing scientific knowledge. There are endless possibilities to where new technologies will take us in healthcare, but these technologies are only as good as the accuracy of the data used to build them. Retaining ownership of the outreach lab allows the hospital to keep full control of its data.

The fundamental ability to diagnose a condition and develop a treatment plan hinges on timely and trustworthy lab results. The laboratory is the partner that makes this progress possible, and it deserves strategic support from hospital or health system leadership to realize its — and the health system’s — full financial potential.

For more information: visit Mayo Clinic Labs.
 

Dr. Bill Morice is the president and CEO of Mayo Clinic Laboratories.

Mayo Clinic Laboratories is a global leader in diagnostics dedicated to collaborative discoveries and patient breakthroughs. Together with Mayo Clinic, the authority in medicine, we relentlessly innovate, building the diagnostics ecosystem of the future to help physicians save lives.