LIS technology generates a strong ROI

Medical Laboratory Observer, Sept, 2006 by Kerry Foster

For laboratory managers lobbying for a new or replacement laboratory information system (LIS), convincing management there is a return on investment (ROI) can be a challenge. Forced to stretch beyond their areas of expertise because of technology and financial pressures, many may wish they also had an IT or a business degree.

Applications specialist Ginger Wooster, MT(ASCP), says her MBA has come in handy over the years. Since 1974, she has worked in the lab environment, 10 years as director of lab operations. "I spent much of my time dealing with business-management issues: productivity, costs, errors, and revenue," says Wooster, "for a facility that processed up to 800 patients daily for a physician group practice with 30 locations. I could not have been successful without a fully integrated LIS." She now helps lab managers and their administrators calculate the potential ROI from an LIS.

The EMR and system integration

The increase in electronic medical records (EMR) system installations is making it easier to justify the need for and the installation of an LIS. "If, in fact, your organization has implemented an EMR or plans to do so in the future," Wooster says, "it is important to be aware of the relationship between the LIS and the EMR. Without a lab system, there is no way to electronically populate the EMR with lab results."

With a fully integrated LIS, lab results and patient data flow bidirectionally, eliminating manual entry into the EMR. EMR interfaces also allow order entry from remote locations, and providers can view results without contacting the lab. This ensures that the testing lab electronically receives the necessary billing and clinical information; and, in many cases, samples will be delivered already bar coded and ready to run.

Says Wooster, "Error reduction is a huge return on your investment."

Brenda Seely, lab director for 46-bed rural DeKalb Memorial Hospital in Auburn, IN, does about 300,000 tests yearly. "We do a considerable amount of outreach. About 60% to 65% of our testing is outpatient," Seely says. "One of the biggest reasons for installing an LIS was the medical-necessity screening and the rules-based technology that could identify and track problem orders. The LIS result browsers we set up caught problem orders before we sent them to billing and reduced our errors for write-offs by 30%."

For many healthcare organizations, substantial potential revenue is tied up in the accounts receivable department due to improper diagnosis codes and other billing errors that result in denied claims. Not only is revenue delayed and cash flow affected, but billing and lab personnel are also kept busy rectifying each claim. With the LIS, many of these errors would have been identified during order entry, and delays and inconveniences would have been reduced or eliminated.

Lynda Carroll is lab supervisor for Family Care Center of Arlington in Jacksonville, FL. In 2002, this was a two-site, multipractice medical group with 21 physicians and one lab; today, the lab serves six sites and 37 physicians. Carroll says, "The medical-necessity screening and CPT coding we do at the point of order entry in our LIS has reduced from 45 to 28 the number of days our claims are in accounts receivable."

Reduce FTE expense

An LIS can be a powerful tool for increasing productivity; however, such systems will vary in features, training, support, frequency of upgrades, and their ability to integrate with other systems. One of the most recognized LIS ROIs is the reduction of full-time equivalencies (FTEs) and/or being able to redirect those FTEs. Body indent: Carroll's LIS did not have an interface to her reference lab. "Before we installed our new LIS in 2002, we processed about 150,000 tests with 14.3 FTEs. In 2005, Family Care is now processing over 250,000 tests with only 12.5 FTEs." The reference-lab paperwork and data entry required a 40-hour-per-week job, which was eliminated when the reference-lab interfaces were established. Quality control (QC) is a one- to three-hour-a-week review from her desk computer now, rather than a visit to each of four sites once every two weeks to review and sign off. "This, alone, has saved me at least five to eight hours weekly."

Add new testing revenue

Chris Gallinger is the laboratory manager for Associates for Women's Medicine, an OBGYN practice with three locations located in Syracuse, NY. Before getting her LIS, Gallinger says, "We were crazy with all our paper and manual logs, and actually it was our practice administrator who drove us towards the purchase of our LIS. We went live in late 2005 and are now processing more patients with half as many FTEs. Today, we are looking at doing more tests because we have the extra time to do them."

Another cost saving LIS implementation is the elimination of manual processes, both in the lab and in the billing department. Within the lab, electronic interfaces between the EMR, the practice-management system, analyzers, and reference lab(s) allow data to flow between systems and eliminate duplicate manual entry of demographics, insurance, orders, and results. Through these interfaces or by using a Web-based lab portal, electronic results can be reviewed remotely, which eliminates faxing, filing, and numerous phone calls back to the lab to retrieve misplaced paper results.