Reshaping the Clinical Laboratory in the Era of Patient-Centered Outcomes, Accountable Care Organizations, and Pharmacogenomics

Reshaping the Clinical Laboratory in the Era of Patient-Centered Outcomes, Accountable Care Organizations, and Pharmacogenomics

Reshaping the Clinical Laboratory in the Era of Patient-Centered Outcomes, Accountable Care Organizations, and Pharmacogenomics 150 150 Avalon Health Economics LLC

In recent years there has been renewed attention devoted to coordination of medical care services across the continuum of care, particularly in the area of prevention, monitoring, diagnostics, and disease management. This is not entirely new to the U.S. In the early 1990s, as managed care began to widen its reach and increase market share, financial risk migrated away from insurers and toward health care providers, increasing the incentives for providers to focus on population-based medicine and management across the continuum of care.

However, as health care costs continue to grow (See Figure and related blog), and rise even faster in the aftermath of the Affordable Care Act (“ACA”), there is renewed interest in cost control and the recognition that a key part of cost control is prevention, early diagnosis, and management across the continuum of care. The creation of the new Patient Centered Outcomes Research Institute (“PCORI”) in the U.S. is another indicator of the robustness of this trend. With coordination of care, there is potential to reduce inefficiency, medical errors, duplication, and delays that contribute to nearly one half of U.S. healthcare expenditures.

A critical component of the continuity of medical care services is the clinical laboratory, where advances in prevention science and biomarkers have added value to clinical laboratory data. Anecdotal evidence suggests that between 60% and 70% of diagnosis and treatment decisions are based on quantifiable laboratory data.

A new generation of clinical laboratories has emerged in response to the call for coordination and cost control. These labs offer more services, including advanced diagnostics and patient education and advising services, and are designed for integration with disease management. These services include disease screening for early identification of disease, predictive measures to identify those at risk for a disease, disease identification to diagnose and confirm a disease, treatment which can be initially identified or changed based upon test results, and compliance/surveillance to identify whether a treatment is working or if the appropriate level of medication has been prescribed.

In addition to common blood and laboratory analyses, the new generation of full-service clinical labs offer complete health risk assessment and chronic disease management programs consistent with nationally accepted protocols for diabetes, hypertension, cholesterol, stress, obesity, and smoking cessation. In addition, these integrated labs offer advisory services, including interpretation of test results and the incorporation of those results in patient health management plans and educational materials. These services move the new generation of clinical labs from the passive to the active, positioning the lab as a key part of patient-centered prevention and treatment optimization.

This sort of disease prevention and management delivers more information to patients and healthcare providers and enhances the flow of that information to the points along the care continuum where it is of greatest value. It offers promising opportunities for individuals, patients and clinicians to identify disease in its earliest presentation and tailor prevention and treatment plans to fit the profile of the individual and disease. The availability of enhanced information enables a range of secondary actions, an essential part of which is improved adherence to evidence-based medicine and clinical practice guidelines; the more clinicians and individuals know, the more effectively prevention and treatment can track evidence-based practices.

What is the economic value of a combined and integrated approach to clinical laboratory and disease prevention and management? There are several points that are relevant to this question. Clinical laboratory is an increasingly critical element in personalized medicine and disease prevention and management. Given the wide array of advanced diagnostic and laboratory tools available, there are potential economic benefits to tightly coupling clinical laboratory functions with disease prevention and management functions. Advanced clinical laboratory data offers a rich source of information, particularly when combined with data generated from other assessment tools, such as clinical evaluation and medical imaging. Assuming that clinicians have the time and ability to sufficiently “digest” a wider array of information, and that the additional information has some positive level of utility, the ability to provide appropriate and optimal prevention and treatment will be improved.

When combined with the many recent advances in pharmacogenomics, these diagnostic tools have four areas of potential impact on cost management (See Figure).

  • Screening. Screening is likely to have positive economic benefit if the total costs of treatment differ between early diagnosis (usually asymptomatic) and diagnosis following the presentation of symptoms and disease manifestation.
  • Diagnosis. Definitively establishing the presence of disease has the potential to save resources by optimizing treatment approach and treatment timing.
  • Prognosis. Advanced diagnostics are showing great potential value in matching patients with the most appropriate therapies. Also referred to as “stratified” medicine, this application of diagnostics is defined by the ability to provide “reliable, predictive correlation to differential patient responses.”
  • Monitoring. Monitoring refers to the monitoring of treatment effects during treatment and the surveillance of patients during or following treatment. As with screening, monitoring has the potential to save resources if the costs of early treatment are less than the costs of later treatment. The diagnostic and prognostic capability of advanced diagnostics is also of positive economic value if patients with adverse treatment effects or recurrent disease can be stratified into optimal second-line therapeutic regimens.

At Avalon Health Economics we have conducted a number of studies related to diagnostics, including the economics of cancer biomarkers and the economic value proposition for a full-service integrated laboratory. These services were conducted within our Business Analytics service. For more information, visit

(John E. Schneider, PhD & Cara Scheibling)