Lab Quality Confab San Antonio, Texas 6 November 2012

1. Labs Need Lean, Process Improvement, QMS Prospering in the Age of ACOS, Medical Homes, and Integrated Care ROBERT L. MICHEL Editor In Chief THE DARK REPORT Spicewood, Texas rmichel@darkreport.com ph: 512-264-7103 fax: 512-264-0969 Lab Quality Confab San Antonio, Texas 6 November 2012

2. My Goals Today! • One: Discuss new report by Institute of Medicine and itsimplications for healthcare and labs. • Two: Demonstrate essential link between new healthcare goals and techniques of Lean, performance improvement. • Three: Identify useful strategies and action items for clinical labs and pathology groups.

3. Big Development:IOM’s New Report!

4. IOM’s Views • “Americans would be better served by a more nimble healthcare systemthat is consistently reliable and that constantly, systematically, and seamlessly improves.” • “In short, the country needs healthcare that learns by avoiding past mistakes and adopting newfound successes.”

5. $2.2 Trillion Health System • “By one estimate, almost 75,000 needless deaths could have been averted in 2005 if every state had delivered care on par with the best performing state.” • “Current waste diverts resources; the committee estimates $750 billion in unnecessary health spending in 2009 alone.”

6. Business Intelligence Plays to Labs’ Strength • IOM says: • “Decision support tools and knowledge management systems can be included routinely in health care delivery to ensure that decisions are informed by the best evidence.”

7. IOM’s New Operational Mindset • Healthcare delivery organizationsshould develop organizational cultures that encourage continuous improvement by incorporating: • best practices, transparency, open communication, • staff empowerment, coordination, teamwork, and mutual respect, and, • align incentives accordingly.

8. Great News for Lean Labs • Advantage for labs already practicingLean and process improvement. • Opportunity for all of you here to “borrow frequently” from outside healthcare. • You have the encouragementand the endorsement the Institute of Medicine! • Let’s look at what IOM says…

9. 1 Laboratory Informatics

10. 2 Laboratory Workflow & Physician Support

11. 3 Reducing Lab Errors—Internal & External

12. 4 Patients Can Readily See Prices of their Lab Tests

13. 5 Labs Support Clinical Workflow

14. 6 Labs Have Patient-Friendly Services and Access

15. 7 Labs Implement Continuous Improvement, Drive Out Waste

16. Add It Up! • Institute of Medicine tells providers now time to adopt modern management methods and tools. • More use of informatics and real-timebusiness intelligence to eliminate waste, add value. • Mindset of continuous improvement. • Clinical labs are complex organizations and will benefit from taking these steps.

17. Overlooked Lab Basics( Ignore at your peril! ) • For hospitals, laboratory testing averages 5¢ of every $1. • Keep that fact in mind today! • Lab test data typically represents 80% of patient’s permanent health record. • Lab test data typically plays a role in 60% of the decisions to admit or discharge an inpatient.

18. Healthcare Macro-Trends • ObamaCare is BIG! (Accountable Care Act) • Demographics are BIG!Silver Tsunami = Skyrocketing test volume • Chronic disease is BIG!

19. Healthcare Macro-Trends • Electronic Medical Records • Proactive Medicine • Personalized Medicine • Whole Human Genome Sequencing

20. Age-adjusted percentage of adults aged ≥20 years who are obese, 2007 MMWR 58:1259-1263, 2009 Austin

21. Why Integration of Clinical Care? • ACOs inspired by the care models used at: • Kaiser Permanente • Geisinger Health • Mayo Clinic • Intermountain Healthcare • Cleveland Clinic

22. For Laboratories… • Laboratories must evolve to befully integrated in their community’s healthcare continuum. • Laboratories must integrate their information technology capabilities with each sector in healthcare. • Laboratories produce information and can only serve their customers by integrating access to this information.

23. Use of targeted laboratory testing, including POCT, reduced cardiac readmission rates. Mortality from CAD declined 73%, number of patients meeting cholesterol goal went from 26% to 73%. 12,000 patients were enrolled in the Collaborative Cardiac Care Services (CCCS) program.

24. Engleberg Center for health Care Reform at Brookings/Dartmouth Institute

25. Lab Medicine’s Vital Role • Concepts of personalized medicine and genetic medicine require doctors to utilize laboratory tests. • Flood of new diagnostic technologies enables more clinically-useful lab tests. • More accurate and earlier disease detection. • Capabilities to help physicians select therapies that are most appropriate.

26. Personalized and Precision • Use these terms to guide decisions about laboratory information technology. • It is the lab test which informs physician as to patient’s unique health status. • Making lab test data—and pathologists’ interpretations—available to all caregivers will be critical success factor.

27. Here at LQC Today… Lab Industry “First Movers” • You have special skills and insightsfor achieving high performance. • Over seven years, Lab Quality Confab only lab industry meeting devoted to Lean and process improvement. • That makes everyone here leaders in this sector of healthcare!

28. Lean Labs’ Window of Opportunity • The “Squeeze” is on! • Need fewer errors. • Need to test more with less money. • Need to invest in genetic technology. • Need to deliver knowledge from raw test data.

29. Coming: Age of QMS • No lab will be able to meet these goals using traditional management and workflow. • Quality Management Systems (QMS) are an integral part of the solution. • Think ISO 9001, ISO 15189, CSLI GP 22, to name a few.

30. QMS as Global Standard • As many as 100 nations are in the process of making ISO 15189 their accedition/license standard for medical labs. • Expect the requirement for labs offering laboratory-developed tests (LDTs)to have a QMS in place. • Think about the FDA’s “Good Manufacturing Practices” (GMP) for medical devices.

31. New QMS Resource • Looks at role of QMS in helping labs meet CLIA & CAP Accreditation. • Based on presentations by Yost, Berte, Flaherty, Nichols, Serrano. • Available for purchaseLQC registration desk.

32. Question for Your Lab… • With all these developments, shouldn’t your lab take steps now to implement a QMS? • Plenty of resources to help yoyuat this year’s Lab Quality Confab. • Case studies of ISO 15189 implementation. • Extended workshops in Lean skills and tools.

33. Yes, It’s a Time of Change! • Healthcare’s coming transformation will unfold a pace unseen by this country since World War II. • Next cycle of change in healthcare is poised to fundamentally reshape the lab testing industry. “Change Means Opportunity” Disruption of status quo in lab marketplace creates the opportunity for nimble lab organizations to prosper in new ways!

34. Final Thoughts on Change… “In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.” –Warren Buffett “You miss 100% of the shots you nevertake!” –Wayne Gretzky -30-