Diagnostic laboratory tests performed in physician practice settings are maturing from convenient ancillary services to core business and clinical functions. As physician office labs become a focal point in patient care, independent physician practices must elevate the value that their labs provide to their practices and their patients.

Optimizing Physician Office Lab Performance AuthorAmong the industry forces moving physician office labs, or POLs, to primary care's center stage are:

  • Growth in value-based reimbursement models that pay doctors based on clinical and financial outcomes.
  • Competition from urgent-care centers and retail health clinics that offer an array of in-house diagnostic laboratory tests.
  • Rising healthcare consumerism that encourages - often with the help of financial incentives from health plans or employers - to shop for lab tests based on price, quality and service.

Most physician offices performing in office lab testing fall under either CLIA waived status or CLIA non-waived status (also known as moderately or highly complex testing). Examples of common CLIA waived tests are lipid panels, glucose testing, molecular and rapid flu/strep testing, and hemoglobin A1C testing. Examples of CLIA moderately complex tests include clinical chemistries such as comprehensive metabolic panels, liver function panels, kidney function panels, and electrolyte panels. Other common CLIA non-waived tests include thyroid tests, cancer markers, and tests for various infectious diseases like HIV and hepatitis. Additionally, molecular testing is also now available in the POL space, featuring robust test menus related to CLIA waived flu/strep/RSV and CLIA non-waived women's health/sexual health.

With new value-based health care practice and reimbursement landscapes in mind, I encourage independent physician practices to take the following five steps to ensure that their office-based laboratory services as described above are operating at their peak clinical and financial performance levels.

1. Practices should tailor their menu of diagnostic lab tests to their patient population

Physician practices should customize their menu of diagnostic lab tests to their medical specialty, and to their current patient mix and the patient population they aspire to acquire in the future. All physician practices should offer their most frequently ordered lab tests to ensure positive patient outcomes. In addition, when considering menu expansion, practices should plan ahead with their lab distributor account manager and laboratory equipment specialist for changing patient and operational demands.

With advances in lab testing, many tests specific to a physician's specialty are now available in the POL space. For example, OB/GYN practices are now able to perform lab tests for various sexually transmitted infections utilizing molecular methodology in their office lab. This helps to provide faster diagnosis and treatment to their patients. Another example is new point of care molecular technology, which eliminates the need for Group A Strep culture confirmation. This drastically reduces costs to outsource confirmation testing, improves workflows, and offers an accurate, real-time patient diagnosis at the point of care.

A physician practice should offer lab tests that have the greatest clinical impact on patients and make the most business sense.

Optimizing Physician Office Lab Performance Graphic2. Practices should have a distinct business plan for their menu of diagnostic lab tests

A physician office lab should have its own business plan. That plan should include what lab tests will be done in-house and what tests will be outsourced to a clinical laboratory. The factors that determine what stays and what goes include patient need, text complexity and projected test volume.

Volume is particularly important because a practice should have enough test volume to support a specific test and not waste consumable or perishable test supplies and reagents because too few patients need the test. Practices can't afford to be throwing away unused test supplies and reagents.

The POL business plan also should delineate the specific clinical and financial metrics that the practice wants to achieve. The practice should be reviewing its lab's performance against those metrics on a regular basis and make mid-year adjustments when necessary. Working with an accredited POL consultant can dramatically improve the success rate of a new in-house lab.

3. Practices should regularly check the performance and accuracy of their lab equipment

Physician practices must properly maintain the equipment and instruments they use for their POL services. The proper maintenance of lab equipment and instruments ensures that tests are being done efficiently and accurately. That usually starts with daily controls, or a series of daily tests to check whether the equipment and instruments are working properly. The next quality assurance step up is calibration, which, depending on the equipment or instruments, can be done monthly, quarterly, bi-annually, or annually.

Further up the quality assurance chain, equipment and instrumentation used for CLIA non-waived testing also undergo proficiency testing. Practices send their test results from controlled samples provided by lab test proficiency companies or vendors that compare the practices' results with those of their peers. Practices whose lab results mirror their peers are cleared to proceed. Practices whose lab results are statistically different from their peers must investigate and resolve the discrepancies.

4. Practices should train staff on proper use of lab equipment and coding/billing for tests performed

A practice's state lab license must match the practice's test menu. The practice should be performing only the tests it's licensed to perform. It's surprising how often this step is missed. It typically happens when a new test is added or an old test is eliminated or outsourced. Each time that happens, it's a good habit to check the change against the practice's license. It is also best practice to work with a reputable outside consultant to ensure all aspects of the lab operation are inspection ready.

The license also should specify who at the practice is legally qualified to perform the tests. Most often it's a non-physician clinical or staff member. With proper training, most other clinicians or staff members should be capable and qualified to run the equipment and instruments. That can sometimes negate the expense of adding additional staff to perform in-house lab tests.

Nor should the testing equipment and instruments require additional space. The size of the equipment and instruments is getting smaller each year, and most independent physician practices can set up their POL in an average size patient exam room.

On the revenue side, coding and billing for lab services done in a physician's office are fairly routine and require minimal additional training. More importantly, practices should know whether their patients' health plans cover specific lab tests as a benefit and how much each health plan reimburses for a particular test. Those payment details should be included and reflected in practices' POL business plans.

5. Practices should connect their office lab services to other key components of the practice

Independent physician practices should connect their POL services to other clinical and financial pieces of the practices. One way is to incorporate lab test services into the overall workflow of the practice. For example, the practice may ask a patient to come in separately for lab work and have the results ready to discuss during the subsequent visit with a physician. Building a workflow to include lab testing as standard same-day practice improves the clinical value of the visit and opens up another slot for the physician to see another patient.

Another way is providing the test results to patients via online technologies such as a secure patient portal or a secure messaging system. Depending on the results and your patient population, leveraging technology can avoid another office visit or expedite a diagnosis and treatment plan.

The practice should install a laboratory information system (LIS) and integrate that system with its testing equipment, instruments, and with its electronic health record (EHR) system. By doing that, a patient's test results immediately populate into the patient's electronic medical record (EMR), making them sharable with the physician and with other providers.

Finally, practices should promote the availability of their in-house diagnostic laboratory testing capabilities on their websites, in their advertising and through word-of-mouth to their current patients. For example, practices should place a promotional sign at their check-in counter and physicians should mention their new lab capabilities to current patients for increased awareness and adoption of their new services.

By optimizing the performance of POL services in the five ways I've described, independent physician practices can reduce their operating expenses and improve patient treatment outcomes, retain and grow their primary care market share, and demonstrate the value of their labs to patients and payers.

Related: Learn about McKesson's Patient and Clinical Care Solutions for Clinics and Laboratories.

Patrick Bowman

About the author

Patrick Bowman is a Lab Equipment Specialist with McKesson Medical-Surgical.  In his role, he serves independent physician practices and other health care providers in New York, New Jersey, Vermont, Delaware, Ohio, and Pennsylvania.