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Chapter 7 : The Changing Healthcare Environment

Authors: Ann L. Harris, David S. Wilkinson
Content Type: Reference
Publication Year: 2004

Category: Clinical Microbiology

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Abstract:

This chapter provides a historical overview of reimbursement for laboratory services from 1969 to the present. Traditional indemnity insurance pays claims for beneficiaries to healthcare providers on a fee-for-service (FFS) basis. In the laboratory, test efficacy is measured based on whether a patient’s management is influenced by the test result. Test effectiveness is a measure of whether it changes the patient’s outcome. The new focus of healthcare will be on the five generations of consumers from the last century. Each generation has distinctively different ethics, values, beliefs, and needs. Now, the laboratory’s role is expanding to promote prevention. Genetic testing, point-of care testing (POCT), home testing, and direct public access to preventative testing and screening are increasing. The primary objective for regionalization is to develop a system of laboratories capable of providing services to a larger geographic area and positioning the laboratory system to compete for managed-care contracts. Strategic redesign is emerging as the tactical strategy of the new decade. The ability to constantly deliver value in an ever-changing healthcare environment can be cultivated only through effective listening and learning. Healthcare is changing throughout the world, with screening, diagnosis, and chronic disease management being redirected from the hospital environment to the physician providers. The prospective payment system for inpatient reimbursement and managed-care capitation in the outpatient market led to a commodity pricing strategy, with commercial laboratories using loss leaders to gain managed-care contracts.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
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The Changing Healthcare Environment
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Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.fig7-1
Figure 7.1

Evolution towards regional laboratory system. In a network model, independent laboratories affiliate under a network organization without any consolidation. In a consolidation model, two or more laboratories consolidate core operations to one primary site operating rapid-access operations in remote sites. In a regional laboratory system, a hybrid operation is formed with participants from academic medical center laboratories, a commercial laboratory partner, and participating consolidated hospital laboratory models. (Reprinted with permission from reference .)

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Figure 7.1

Evolution towards regional laboratory system. In a network model, independent laboratories affiliate under a network organization without any consolidation. In a consolidation model, two or more laboratories consolidate core operations to one primary site operating rapid-access operations in remote sites. In a regional laboratory system, a hybrid operation is formed with participants from academic medical center laboratories, a commercial laboratory partner, and participating consolidated hospital laboratory models. (Reprinted with permission from reference .)

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
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Figure 7.2

Bottom-up customer focus: the inverted paradigm. In the new business paradigm, the customer as king maintains the position of influence at the top of the chart. Employees are empowered and trained to provide exceptional customer service, exceeding the customer's expectation. The management teams within the organization must lead by example, building trust among the staff.

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Image of Figure 7.2
Figure 7.2

Bottom-up customer focus: the inverted paradigm. In the new business paradigm, the customer as king maintains the position of influence at the top of the chart. Employees are empowered and trained to provide exceptional customer service, exceeding the customer's expectation. The management teams within the organization must lead by example, building trust among the staff.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
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Tables

The Changing Healthcare Environment
[com.pub2web.rdf.cci.facet.ContentItem[id=http://asm.metastore.ingenta.com/content/author/10.1128/9781555817695.chap7-1,webId=/content/author/10.1128/9781555817695.chap7-1,properties={foaf_givenname=Ann L., foaf_name=Ann L. Harris, foaf_surname=Harris}], com.pub2web.rdf.cci.facet.ContentItem[id=http://asm.metastore.ingenta.com/content/author/10.1128/9781555817695.chap7-2,webId=/content/author/10.1128/9781555817695.chap7-2,properties={foaf_givenname=David S., foaf_name=David S. Wilkinson, foaf_surname=Wilkinson}]]
Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-1
Table 7.1

National limitation amounts

National limitation amounts became effective in 1986. Median payment caps for laboratory services continuously decreased from 1986 to the present. See D. Weissman, , p. 315–318. (Washington G-2 Reports, Washington, D. C., 2002).

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Table 7.1

National limitation amounts

National limitation amounts became effective in 1986. Median payment caps for laboratory services continuously decreased from 1986 to the present. See D. Weissman, , p. 315–318. (Washington G-2 Reports, Washington, D. C., 2002).

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-2
Table 7.2a

Legislation and regulation impacting healthcare and clinical laboratories

HCFA, Health Care Financing Administration; CMS, Centers for Medicare and Medicaid Services.

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Table 7.2a

Legislation and regulation impacting healthcare and clinical laboratories

HCFA, Health Care Financing Administration; CMS, Centers for Medicare and Medicaid Services.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-2b
Table 7.2b

Legislation and regulation impacting healthcare and clinical laboratories

HCFA, Health Care Financing Administration; CMS, Centers for Medicare and Medicaid Services.

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Table 7.2b

Legislation and regulation impacting healthcare and clinical laboratories

HCFA, Health Care Financing Administration; CMS, Centers for Medicare and Medicaid Services.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-3
Table 7.3

Decline of health coverage

From Miller ( ); see also reference 50.

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Table 7.3

Decline of health coverage

From Miller ( ); see also reference 50.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-4
Table 7.4

Percentage of clinical laboratory industry market revenues by segment

In 2001, the clinical laboratory industry was worth $35 billion. Figures for 1995 and 1998 are from the Centers for Medicare and Medicaid Services Office of the Actuary. According to the SMG Marketing Group, the number of hospitals in integrated networks was 2,060 in 1995, 2,819 in 1998, and >3,100 in 2001, for a 6-year difference of about 1,000. See reference 58.

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Table 7.4

Percentage of clinical laboratory industry market revenues by segment

In 2001, the clinical laboratory industry was worth $35 billion. Figures for 1995 and 1998 are from the Centers for Medicare and Medicaid Services Office of the Actuary. According to the SMG Marketing Group, the number of hospitals in integrated networks was 2,060 in 1995, 2,819 in 1998, and >3,100 in 2001, for a 6-year difference of about 1,000. See reference 58.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-5
Table 7.5

Comparison of traditional indemnity and managed-care insurance ( )

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Table 7.5

Comparison of traditional indemnity and managed-care insurance ( )

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-6
Table 7.6

Types of MCOs and services

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Table 7.6

Types of MCOs and services

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-7
Table 7.7

HEDIS performance criteria developed by the NCQA for rating MCOs

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Table 7.7

HEDIS performance criteria developed by the NCQA for rating MCOs

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-8
Table 7.8

Quality management tools used by MCOs

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Table 7.8

Quality management tools used by MCOs

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-9
Table 7.9

Evolution of the educated consumer

See reference 37.

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Table 7.9

Evolution of the educated consumer

See reference 37.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-10
Table 7.10

Internet stakeholders: barriers and benefits to healthcare

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Table 7.10

Internet stakeholders: barriers and benefits to healthcare

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-11
Table 7.11

Advantages and disadvantages of POCT

See reference 42.

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Table 7.11

Advantages and disadvantages of POCT

See reference 42.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7
/content/10.1128/9781555817695.chap7.tab7-12
Table 7.12

Genetic mapping techniques

See reference 79.

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Table 7.12

Genetic mapping techniques

See reference 79.

Citation: Harris A, Wilkinson D. 2004. The Changing Healthcare Environment, p 160-192. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch7

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