Proving Your Lab’s Value and Embracing Lab 2.0

Lab 2.0 is a growing ideology in the laboratory industry that can best be defined as an effort to use diagnostics to help improve quality and outcomes while reducing cost. This means breaking away from laboratory norms and focusing more on innovation.

The Lab 2.0 initiative is proving that with the proper use of diagnostics data, labs can not only change the healthcare cost curve, but they can also improve quality. A key element in getting your laboratory to embrace Lab 2.0 is to demonstrate the value of diagnostics, in terms that make sense to your stakeholders. A great example of how to accomplish this was displayed by Dr. James Crawford and Dr. Philip Chen in a program they developed at an Accountable Care Organization (ACO) at the University of Florida. They provided the diagnostic road map of how costs were going to be saved, and outcomes were going to be improved and were able to initiate change within their organization.

Normally the risk share involved with an ACO is divided amongst all the ancillary providers and the health center itself. The traditional way of dividing up these dollars is based on the percentage of the overall cost structure that the department represents. So with labs accounting for an average of only 2% of the overall cost structure in an ACO, then they would get 2% of the risk share. However, Dr. Chen and Dr. Crawford demonstrated through quantitative data that the lab was actually responsible for the lion share of gains (improvements), through their diagnostics efforts. Doctors Chen and Crawford argued that the laboratory should get a percentage of the gain it created and not the percentage of the cost to the ACO. This unique approach successfully demonstrated that the laboratory is responsible for more than just a lab report; it’s part of the actual practice of medicine and is part of a coordinated effort with the physicians to utilize diagnostics in a strategic way to improve outcomes.

Cancer associations have reported that when pathologists, oncologists, and radiologists speak together to compare notes in real-time, they end up changing the therapy decision 30-50% of the time— an apt illustration of how diagnostics and diagnostic providers can directly impact treatment and outcomes. More attention needs to be placed on the share-of-gains approach to value estimation. Now is the time to make the business case and demonstrate that diagnostics are the key to improving outcomes and lowering costs.

Interested in learning more about the value of diagnostics and the current laboratory environment? Download our white paper:

Diagnostics and Market Disruption: 

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