College of American Pathologists
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  Outreach keeps labs on their toes





cap today



September 2006
Feature Story

Ed Finkel

There’s nothing new about having to attract outreach work. But a new service to support labs in doing so is getting underway, and the lessons learned from those bold enough to try something new, and from those who got their start long ago, never get old.

Anxious about the future of its hospital laboratory clients who could have trouble competing, ARUP Laboratories—a national clinical and anatomic pathology reference laboratory—on July 20 announced the creation of ARUP Direct.

This service will provide ARUP’s clients with the knowledge and skills to compete with the major laboratories in the local and regional marketplace, says the Salt Lake City-based ARUP, beginning with assistance in contracting and networking.

“The impetus…came down to examining the market,” says Anne Messing, MSA, MT(ASCP), recently hired by ARUP as outreach development manager. “A lot of this was done before I got there. They were looking at ARUP’s business model and at how the lab industry has changed and has continued to evolve.”

ARUP will continue to partner with its clients, Messing says. “We don’t want to get in a situation where we’re competing against our clients for local physician business,” she says. “ARUP is adamant that we don’t want to change our business model… We need our customers to stay healthy and viable.”

To that end, Messing says, ARUP will help them compete more equally. “So many of our customers are involved in outreach or are considering starting an outreach program. If they don’t stay healthy, we don’t continue to grow.”

In beginning to design its suite of services, ARUP examined the fundamentals of what makes a successful outreach program, Messing says. ARUP’s business affiliations division, in operation for many years, provides customer service training, sales training, market surveys, outreach assessments, and other similar support. “We’ll go in and evaluate clients, do gap-analysis studies, help establish logistics, [and look at] marketing materials [and] user guides,” she says. “That’s been going on for years and years.”

But the requirements of the “outreach game” have changed, Messing says, which means other services are now necessary. A lab can offer exemplary testing and market it well, “but if you don’t have access to the contracts and the covered lives in your region, if you don’t have a [physician office] connectivity solution that allows you to compete, it’s going to be incredibly difficult.”

On the contracting side, ARUP has entered into a relationship with Mednet Services, a lab network and billing services IT company led by Jack Shaw, who has vast experience in managed care contracting, Messing says. “Customers may need to network to create a larger group of health systems that can work together, that will carry more clout. I knew Jack to be someone who is incredibly experienced in the contracting and networking environment, and even more important than that, I knew him to be successful,” she says, referring to the Michigan-based Joint Venture Hospital Laboratories, of which he is executive director. (Before joining ARUP, Messing was administrative director of clinical laboratories at William Beaumont Hospital, Royal Oak, Mich.)

“Every region of the country I’ve talked to, people are asking how they can get access to these contracts in their region that are exclusive. This is a clear need for our customer base, and we want to try to create a strategic partnership.”

With Shaw on board, ARUP has begun to collect information from its customers. “We’re sitting down with Jack, starting to look at these as case studies to evaluate where we want to begin, which opportunities we think are the most pressing, where there’s the greatest interest,” Messing says. “We’re trying to align the customers’ needs, their interest, and other customers or health systems in the region who may be interested, to try to determine where they want to go. Every health system’s situation is unique.”

ARUP will work with Mednet to triage the requests and develop a game plan for how to approach the different situations in the different markets. The partners are still “in the early stages of gathering information about health systems and covered lives,” she says.

As ARUP cooks up new services for its hospital clients, a one-year experiment to see whether direct outreach to the public helps boost the volume of outreach tests has ended at Physicians Laboratory, Ltd., of Sioux Falls, SD.

The $42,000 experiment for the 14-member practice that spans four upper midwestern states, which included newspaper, magazine, and television advertisements as well as direct-marketing materials, had little direct return on investment, says Henry Travers, MD, principal with Physicians Laboratory.

“We decided that a positive, honest advertising message, not comparing us to anybody else but stressing our quality, would be ethical, so we set out to develop an ad program and integrate our Web site with it to make it the primary point of contact for the general public and for physician practices,” Dr. Travers told CAP TODAY a year ago. Over the succeeding year, he says, “We found that, for the most part, our advertising to the public was not effective. It made absolutely no difference in our volume, our mix of patients, where they came from, or anything.”

Physicians Laboratory tracked the impact in two ways. The first was the number of direct contacts with patients rather than their physicians, and in that there was no change. “We didn’t get a bunch. We didn’t see any increase; it was only maybe one a week. Our workload volumes did not change at all as a result of any of this,” Dr. Travers says.

The second method used to track impact was a survey conducted by the advertising firm the pathology group employed. “It was a brief survey, not a lot of people because we didn’t want to pay a ton of money… Of those very few who could remember a television ad, or a radio ad, or a print spot, they really didn’t know who Physicians Laboratory was. It was not terribly effective,” he says.

Marketing specialists at Physicians Laboratory’s chief hospital told Dr. Travers and his colleagues that the hospital’s own advertising does little to boost public awareness of the hospital. “That’s a little bit discouraging, but it does say that there probably are going to be better ways to spend advertising dollars than TV, radio, and flashy print ads,” Dr. Travers says.

Physicians Laboratory kept at it for a full year, from February 2005 to February 2006, because of the belief that a shorter time frame would not have been a true test, Dr. Travers says. “We initially said we would do this for a year. We’re going to do it well, and we’re going to do it right. And then we would stop and evaluate it at the end of a year,” he says. If they had advertised to the public for a shorter period and it didn’t pan out, they would always question whether they gave it enough time, whether the ads were run often enough for people to take note. “We didn’t want to spend that kind of money and have that question hanging over us,” he says.

Although aborted, the move did have indirect benefits for the practice, Dr. Travers says. “The one very positive effect that it had was on our own personnel, who we found were taking a new pride in the organization because we had put our very best foot forward in putting these ads together,” he says. “And the fact that we were doing it, that we were gathering all the information about who we were, what we did well, what we were proud of as part of our organization, and then making that information public along with photographs of our people, [instilled] a great sense of pride. That has been sustained,” even though the advertising has been discontinued.

Another upshot of hiring an ad agency has been a consistent branding look and feel for Physicians Laboratory’s materials, Dr. Travers says. “It’s just a guess,” he says, “but if you looked at two laboratories, and one looked cool…one looks like they’re on the ball, progressive, looking good, compared with something dull and unimaginative, I can’t help but think that would influence people who have a choice to take a closer look at us.”

Physicians Laboratory has continued distributing direct-marketing materials aimed at both existing physicians and new arrivals to the area, as well as print advertisements in local, medically related publications. Those include the state medical association journal and a privately published magazine in South Dakota that targets the medical profession. “We’ll maintain an ad in that,” he says. “What we believe is that there is still a finer force that directs where laboratory tests go, and that is the individual practitioner. The better we look in publications they read, the more they’ll think of us.”

The discontinuation of the consumer print campaign has made it possible to shift resources to the group’s newly enhanced Web site,, through which the practice increasingly communicates with patients, Dr. Travers says. “We are finding that more and more of our patients are coming to us via the Web site, and often with questions,” he says. “We are seeing some patients come to us from quite some distance away.”

A steady clientele of physicians’ offices and the hospitals Physicians Laboratory serves also use the site to get information and supplies. “We’re going to be expanding that for remote test-order entry and result inquiry this year,” he says. “We intend to take probably the bulk of the resources we would have put into advertising and marketing and leave those to the Web site.” The practice does not intend to sell time or space, he adds. “We’ve been asked a couple times. It’s not our place.”

But Physicians Laboratory expects that Web traffic will only continue to grow. “It’s a social phenomenon these days throughout the country that people are spending more and more time on the Net,” he says. “People look to get stuff done on the Web. They’ll shop on the Web, they’ll get information on the Web, they’ll bank on the Web, they’ll pay bills on the Web.

“Now, many of our patients are looking for health care information on the Web. A patient who has a biopsy, for example, they’ll know enough to ask, ‘Where are you sending my biopsy?’ And then they’ll go look us up [and] see what we’re all about.”

Physicians Laboratory tracks the hits and thus knows they’re patients or potential patients. “The ones that are coming from our [physician] clients, they have to log in. They’re going to a restricted part of our site. It’s pretty clear who’s coming in.” Which has made it clear to Dr. Travers and the rest of his group that in a rural state like theirs, “the Web is very important.”

In Charleston, SC, Charleston Pathology, PA, continues to build its once-hospital-based, now-freestanding laboratory outreach program, says Frederick Worsham, MD, chief medical officer, who spoke at a Washington G-2 laboratory outreach conference in April.

Founded in 1979, the practice took off in the early to mid-1980s when it began to take more volume into the laboratory to reduce cost per test, in a region that then had no strong commercial laboratory presence, Dr. Worsham says.

Charleston Pathology assembled a plan for the development of the outreach program that involved the pathologists and the hospital working as a team, he says. “The focus of that was in the clinical laboratory. Obviously, there were implications for the anatomic pathology side of the practice,” he adds.

The practice already was doing Pap tests and gynecological biopsies and a few dermatologists were doing skin biopsies. They realized early on that anatomic subspecialties would drive volume and sponsored one pathologist on a dermatopathology fellowship while four or five pathologists took the first boards in cytopathology, he says. Dr. Worsham himself did fine-needle aspiration prostate biopsies, using a technique he terms “ancient history.”

“As the urology practices acquired the ability to perform those kinds of biopsies in their offices, we were ideally positioned to do that,” he says. Diagnostic centers were set up in convenient locations to service doctors’ offices. “We put in a small phlebotomy unit to handle essentially stat needs from those offices. That grew fairly rapidly from 1983–84, when it really started, to 1990,” he adds.

The climate shifted in the early 1990s, and Charleston Pathology had to adjust, Dr. Worsham recalls. “There were increasing pressures from managed care and insurance companies to send laboratory tests to laboratories on a contract basis,” he says. “The ability to refer to the laboratory of preference began to be limited. We did see some slowing of our growth in the outreach area.” They cut back some services. The need for stat testing lessened at specific locations. They reduced some of their full-service facilities to phlebotomy only.

In the mid-1990s, the hospital began to have difficulty keeping up with human resource-related issues such as salaries of cytotechnologists and histotechnologists, and the hospital began to have problems with turnover, Dr. Worsham says.

“We said to the administration, ‘You can fix these problems, we can form a joint venture, or we can do this business outside the hospital,’” he says, and Charleston Pathology ultimately chose the latter. “The administration was supportive of all this. It was a challenge for the human resources department to keep up with a very small number of employees. After mutual number crunching, we decided the best thing for everyone was to take that out of the hospital.”

Shortly thereafter, demand grew for anatomic reports to include graphic and endoscopic images in conjunction with microscopic images, Dr. Worsham says. “All of these things became much easier for our practice to implement because we had control of it. Working through the hospital is not difficult, but it’s very laborious,” he says. “We were always competing with other departments for dollars.” As an independent laboratory, “we were able to purchase technology that gives us reports that we think are state-of-the-art.”

The laboratory made sure its databases “talked” to those inside the hospital. Not having that ability “makes it difficult to find out what happens on the hospital or outreach side. The patients should be in a seamless continuum of treatment,” Dr. Worsham says. “Those are things that have been good about the move outside... It would be more difficult to do today, because there are more competitive pressures, but it’s still possible.”

Today, the outreach program continues to grow, he says. Charleston Pathology has purchased telepathology equipment and planned to go live with that in September. New challenges include “continued pressure from managed care to divert tests to contract laboratories” and the rise of physician-owned labs. About 60 primary care doctors in the Charleston area have merged their office laboratories into a relatively large laboratory, “and they now have a very large segment of the outpatient laboratory volume among the medical staff that serves this hospital,” he says. “Their outreach volume has grown.”

Another challenge, which Charleston hopes to surmount soon, is connectivity with physicians’ offices. “We will have the ability, this year, to allow physicians to order lab tests electronically in their offices with a minimal number of keystrokes, generate the result, and transfer it back in any format they need,” Dr. Worsham says.

Charleston Pathology faces the possible development of laboratory models in which revenues are shared with referring physicians. “That’s something we have not actually had to deal with directly yet,” Dr. Worsham says. So-called condo or pod labs also pose threats, he says. “Whether we can adapt to a new paradigm, whether it’s necessary to adapt to a new paradigm, is something we’re all watching very closely. That said, I remain optimistic. If you pay attention to your business and offer high-quality anatomic pathology, you can find a niche that will enable you to continue to be successful.”

Ed Finkel is a writer in Evanston, Ill.