College of American Pathologists
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Apples to apples to oranges—comparing lab practices

June 2003
Karen Lusky

The College’s PathFocus program, now in its second year, can help
a pathology practice determine if it’s on the right path with its staffing, practice activities, and contract negotiations with hospitals and managed care plans. But to describe PathFocus as a staffing and practice management tool is akin to calling Secretariat a saddle horse.

In a nutshell, PathFocus participants complete two data-collection forms, and the program gives them a comparative analysis of how their practice is performing in relation to similarly configured practices. “The peer group analysis allows the practice to see how other practices have addressed the same balance of responsibilities,” says Tom Sodeman, MD, chairman of laboratory medicine for North Shore Long Island Jewish Health System Laboratories, Lake Success, NY.

Pathology and Laboratory Management Associates, Ann Arbor, Mich., credits its PathFocus analysis with saving the practice money on negotiating a Part A contract with a large hospital system. Using a combination of readily available compensation benchmarks, the group had already reached agreement with hospital administration about fair market reimbursement for a pathologist full-time equivalent devoted to medical director and administrative services, says Paul Valenstein, MD, president of the group. The more difficult task was determining how many full-time pathologists the hospital’s laboratory needed to perform the Part A services. PathFocus provided the answer in objective, quantifiable terms.

Dr. Valenstein and his colleagues are currently using PathFocus to help set staffing levels. “Right now we are involved in hiring a pathologist. We made the decision to hire a pathologist by looking at our workload and where our workload is going,” Dr. Valenstein says. “And we have used PathFocus to help us determine how well our group’s productivity compares to similarly configured operations.”

The PathFocus survey and analysis also helped St. Louis Pathology Associates negotiate with its hospital. “Hospital administrators, to some extent, know what the pathologist is supposed to do under CLIA requirements, but few have identified the amount of time required for a CLIA medical directorship,” says the group’s president, Scott Martin, MD. The hospital administrators shared the practice’s PathFocus time study data with the lab’s section supervisors and learned that they wanted the pathologists to spend more time, not less, in certain areas of the lab.

“So we used that feedback—not to hire more staff but to reallocate work to free up certain pathologists so they could spend more time on the specified clinical laboratory management activities,” Dr. Martin says.

The PathFocus analysis forced the Topeka (Kan.) Pathology Group to scrutinize its billing and other data, reports Mark Synovec, MD, president of the group. As a result, the practice was able to correct missed opportunities for coding services.

Fingerprinting practices
Pathology groups that enroll in PathFocus collect data to complete two documents. One is a practice complexity form, which captures, among other things, information about the practice’s services, CPT coding volume, hospital customers, and number of other personnel used. The other is a pathologist activity form that includes a one-week time study completed by pathologists, which the practice aggregates before submitting. (PathFocus does not measure an individual’s productivity, and all of the information is maintained in an anonymous format.)

PathFocus translates the data submitted by a practice into a unique snapshot, or “fingerprint,” of that practice based on the presence and absence of characteristics that have been determined statistically to have the greatest influence on staffing. The computerized program then creates fingerprint clusters of 10 pathology groups that resemble each other. The program, therefore, is able to provide an apples-to-apples comparison—or, more precisely, it compares a McIntosh red to a McIntosh red, a Jonathan to a Jonathan, and so on.

Starting this year, practices can also choose a customized peer group for comparison by selecting up to five characteristics from a master list to measure the practice’s performance. In this way, practices with unique components can make sure they are compared with similar groups.

Changing that which can be changed
Once their data are analyzed, PathFocus participants receive a package of reports, including an executive summary, group practice activity report, peer group characteristics report, and key characteristics report.

The group practice activity report compares a group practice’s activity and volume data to its peer group and practice-defined group. It also displays the data for the best and second-best matches.

The peer group characteristics report provides a graphical and numerical overview of the extent, expressed in percentages, to which an individual practice matches its peer group and its two closest matches on what the program calls short-term and long-term manageable characteristics. “It’s simply meant to provide a general measure for how well the group practice matches its peer group,” says Rhona Souers, CAP biostatistician.

PathFocus also determines the key characteristics that have the most influence on pathology practice staffing levels overall. Ten key characteristics were identified in 2002, including specific CPT codes, practice setting, and certain services. “But the number and the characteristics might vary in the future as the database changes,”
Souers says.

The short-term manageable characteristics, which like the long-term manageable characteristics apply to much of the analysis, “are those things that have the potential to be modified in terms of what is going on in the practice’s environment now,” Dr. Synovec explains. Examples are the number of specimens the practice sends out or whether it agrees to accept certain types of specimens. Some, but not all, of the long-term characteristics might be altered, such as the practice’s mission or the hospital’s service mix, but it would take time and negotiation. Other long-term care characteristics are practically written in stone.

Once the practice understands its short- and long-term management issues, it can better manage staff for those functions and negotiate more effectively with a hospital or managed care organization for contracts. In addition, says Stephen Ruby, MD, MBA, president of Palos Pathology Associates, Palos Heights, Ill., “When you compare groups that are
control-matched based on factors that can’t be modified, the manageable aspects emerge as potential areas that the practice can change to improve its performance.”

Data collection burden and benefits
PathFocus requires pathology practices to collect and compile data—and therein lies the rub for some practices that view the process as too daunting at first glance. Dr. Ruby admits that he felt “overwhelmed” at first when he saw the PathFocus data-collection tools, which he thinks are good but could benefit from instructions that are a bit more user friendly. “Yet once I understood it and explained it to the pathologists, they were motivated to participate and found it to be rather simple,” he says.

The practice complexity form takes about two hours to complete, and
the time study is similar to the one most hospital-based pathologists do as part of the Medicare cost-reporting process. Compiling the statistical information about the CPT code counts and the number of laboratory tests performed requires the most effort and time, but that will vary from one practice to the next.

“Some pathology practices say they don’t know the frequency distribution of CPT codes of the services provided in their practice,” Dr. Martin says. “But I can guarantee them that someone in a cubbyhole somewhere in the fiscal section of the parent organization does know.”

There’s also a synergy that can be developed when practices use the PathFocus tool and the Medicare-required time study, says David Mongillo, CAP director of professional and regulatory affairs. The time study that pathologists complete for hospitals helps Medicare determine Part A or B reimbursement for the hospital and is used also for the wage index calculation, according to an official from the Centers for Medicare and Medicaid Services.

Dr. Ruby’s practice, in fact, has decided that the one-week PathFocus
time study isn’t long enough to capture the variety of activities in which
the practice’s pathologists are engaged. So they plan to keep time logs for four randomized weeks and then aggregate the data before submitting it to the program.

Not a ‘dummy’s guide to practice management’
While PathFocus provides a template for benchmarking, “it’s important to keep in mind that the program simply provides raw data,” Dr. Ruby cautions. “And it’s very dangerous to conclude one practice is doing better or worse than another practice based solely on that data.”

Dr. Synovec agrees. “When we [the program’s developers] first went into this, we wanted something that was easy to look at and say, yes, we should hire or fire someone,” he says. But they soon realized it wasn’t that simple. “In other words, PathFocus is not intended to be a dummy’s guide to practice management,” he says. “The individual practice has to really analyze the data unless the practice is so glaringly outside the standard that it slaps them in the face.”

“This analysis,” he adds, “may show that one practice, when compared to peer groups with similar surgical pathology volume and complexity, takes 50 percent more time to provide similar services. The practice can use these data as a quality improvement opportunity to see where their time is less efficiently expended—say, for example, in report sign-out procedures.” Members of the practice, says Dr. Martin, can look at benchmarks from the College’s Q-Tracks and Q-Probes or from other organizations to ensure that their turnaround time for reporting results of surgical pathology specimens meets the benchmarks.

For example, the most recent PathFocus summary report for Dr. Valenstein’s practice shows that the practice’s 11 pathologists are performing work that would typically require 14 pathologists (based on a standardized 40-hour week). In placing that information into context, however, the group identified similar groups that were equally productive. When the practice looked at its short-term manageable characteristics, it seemed that the group’s pathologists were very efficient in handling professional (Part B) work. So, as a next step, the members of the practice asked themselves whether they felt pressure to complete their work too quickly. They concluded that was not the case.

“We believe that our extensive use of synoptic and standardized reporting allows us to operate more efficiently,” Dr. Valenstein explains.

On the other hand, PathFocus suggested that the practice might be able to reduce the time it devoted to administrative work. “Like all groups, our practice has some unique characteristics, and we had concerns that these characteristics were not fully represented in the peer groups to which we were compared,” Dr. Valenstein says. Nevertheless, the practice has been able to re-engineer its workday in the past few years to spend less time on administrative work. “And we have trained technologists to perform some of the activities we [pathologists] used to perform and have eliminated some pathologist work entirely,” he says. “This has enabled us to maintain reasonably high overall productivity.”

St. Louis Pathology Associates’ PathFocus summary report showed that practice to be an outlier in time spent on surgical pathology services. “We had more hours in that category than did other practices in our cluster,” Dr. Martin reports. But in looking at the summary report’s top 10 key characteristics affecting staffing for all practices, Dr. Martin saw that his practice scored at very high percentiles in its volume of certain CPT codes for specimens known to be more complex and labor-intensive. “We were at the 75th percentile on CPT code volume for 88305, and close to the 95th percentile in volume for 88307 and 88309,” Dr. Martin says. “And our practice exceeded the 95th percentile for CPT 88311 volume, which is partly related to bone marrow accession.”

The practice also has an active transfusion medicine service with special blood product services. “So we have two labor-intensive services that contribute to an explanation of the staffing requirements for our group relative to others in our cluster,” Dr. Martin says.

Sedan vs. sports car
While PathFocus is designed to provide close matches between
practice groups, a pathology practice that wanted to improve its
efficiency in a certain area could use the program to make an apples-to-oranges comparison.

“Say a pathology practice in a teaching hospital, with built-in inefficiencies due to resident teaching and other factors, wanted to improve its efficiency in performing surgical pathology work to bring it more in line with a nonteaching hospital in performing surgical pathology work,” Dr. Ruby suggests. “If so, the practice could use that key characteristic to compare itself to nonteaching hospitals based on the CPT coding volume for surgical pathology services.”

Of course, the practice would have to realize this is not a fair comparison. “It would be like comparing your family sedan to a sports car,” Dr. Ruby says. “You use the sports car as an external benchmark or goal, even though you know you may not be able to achieve its performance. Yet it would give you a tangible goal to work toward.”

A practice could also plan for the future by participating in the program anew and creating a future scenario that might change the complexity format of its practice environment. That way the group could see if the projected change might require an additional pathologist.

Dr. Ruby believes the PathFocus program may have even more creative uses, which is why it’s important, he says, for practices to share feedback on how they are using it.

Power in numbers

Moving into the future, the aim is to build the PathFocus database by encouraging pathology practices to participate. The more, the merrier—and the more robust the database. As of 2002, the database contained information from 232 practices, including those that participated in the PathFocus pilot program in 2000.

And while some practices have questioned whether the current database is sufficient to give them a valid result, PathFocus developers and proponents say the program is ready for prime time. “The PathFocus program developed slowly and went through a series of alpha and beta tests to build the initial database so it would provide a valid comparison when it started last year,” Dr. Sodeman says. “That’s why CAP fellows need to participate in the program, to help build the database so that it can provide increasingly
valid information.”

“The ideal is for everyone to participate,” Dr. Ruby adds. “Then a practice can compare itself to the whole population.”

As PathFocus continues to grow, it can provide a broader perspective on what’s happening in pathology. As chair of the CAP Economic Affairs Committee, Dr. Synovec views PathFocus as another tool that the
College can use in conjunction with its practice characteristics survey, which identifies socioeconomic trends in pathology. “We will have the type of data and the volume of data to dialogue with players in the payment sector to verify problem areas in remuneration for pathology practices,”
Dr. Synovec says.

But that’s “frosting on the cake,” he adds. The real value of the program is to the individual practice. “The program has a lot of power,” he says. “Even the data collection itself is powerful because it makes pathologists think and manage their practice more intentionally.”

Karen Lusky is a writer in Brentwood, Tenn.

The cost of participating in PathFocus for 2003 and 2004 is $425 for CAP members (per group), $650 for nonmembers (per group), and $99 (per group) for those who enrolled in 2002 but did not submit data. For more information about PathFocus, contact David Mongillo in the CAP Division of Membership and Advocacy at 800-392-9994 ext. 7110,