Alliance brings outpatient lab testing in-house
Vanderbilt diagnostic laboratories have joined forces with laboratories at Baptist Hospital, St. Thomas Hospital and eight community hospitals to form a company to compete against the large national laboratories that currently dominate middle Tennessee outpatient lab testing.
Launched in March after two years of development, LabNet of Middle Tennessee has begun marketing its services to managed care organizations and community physician practice groups in the region.
Under managed care, laboratory companies compete for contracts with health plans to provide outpatient lab testing. Community physicians must undergo the hassle of working with several different laboratories, depending on which health plans their patients belong to. For Vanderbilt to continue to do its own outpatient lab testing, it must routinely submit lab testing bids to health plans.
Some health plans have struck exclusive contracts with laboratory companies, cutting off Vanderbilt from any possibility of reimbursement. However, for the sake of convenience and timely service, VUMC sometimes opts to perform its own testing, bearing the cost in instances where outpatients are covered by exclusive lab testing contracts.
The convenience of on-site testing is becoming increasingly expensive, said Martha Miers, executive director of Vanderbilt diagnostic laboratories. In February, BlueCare, the Blue Cross TennCare plan, exclusively awarded its outpatient testing to LabOne, a national laboratory that tests at a facility in Kansas City. The volume of Vanderbilt¹s outpatient lab testing under BlueCare represents a cost too high to disregard, and Vanderbilt Medical Group has begun routing BlueCare specimens to LabOne rather than to Vanderbilt¹s own laboratory.
"LabNet was created to compete with national vendors in the managed care area, in order to keep testing within local hospitals and thus ensure continuity of care," Miers said. "Keeping your test volume in-house is critical. If you lose enough volume to the big national labs, you sooner or later must give up the ability to do the test on site."
The "big three" national labs, Smith Kline, Quest and Labcorp, are strong competitors on cost but they have some significant service weaknesses, Miers said. VMG members can expect turnaround within two hours for most routine tests done on-site, while national laboratories take 24 to 48 hours. Vanderbilt physicians have immediate electronic access to VUMC lab results through MARS, whereas results from laboratory companies are often simply faxed to practice groups. And, Miers says, LabNet can do a better job than the national labs in providing community doctors technical expertise and information.
The community hospitals in LabNet include Cookeville Regional, Bedford County, Williamson, Clarksville Memorial, Cumberland, Maury Regional, Middle Tennessee, and Sumner Regional. Under LabNet, VUH, Baptist and St. Thomas bid annually to do the tests that fall outside the repertoire of these community hospitals. That still leaves certain high-end, esoteric tests performed only by national vendors. These tests will be sent to California¹s Specialty Laboratories under a group purchasing arrangement.
For tests performed locally under LabNet contract, the test provider will contribute a portion of the revenue to fund LabNet sales, marketing and operations costs. The LabNet office is on West End Avenue. JoAnne Schroeder is the chief operations officer.
Membership in LabNet isn¹t Vanderbilt¹s sole remedy for dealing with challenges to lab reimbursement: Miers said VUMC will start to insist on including lab testing services in its contracts for hospital and physician services.