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Demonstrating the Value of Laboratory Medicine [BLOG]

Nov 23, 2016

Healthcare leaders are currently calling for a change in the way health care is evaluated, from activity-based assessment to outcomes-based assessment. Check out a new blog below, in which Howard Morris, PhD FAACB FFSc(RCPA), and colleagues discuss the concept of moving to a “value proposition” business model for laboratory medicine and how this model could benefit health care. 

Improving quality of health care and patient safety in times of budgetary constraints: Demonstrating the value of laboratory medicine

Healthcare providers are required to continue improving quality of health care and patient safety in a context of ever decreasing budgets. This occurs at a time when the overall cost of health care continues to rise at a rate significantly greater than the general consumer price index, placing unprecedented strains on the funders, whether they are insurance companies or governments. Hence the major question is whether the current model is sustainable over the longer term. To address this question, leaders in the healthcare field are calling for a shift in the evaluation of the delivery of healthcare from assessment based on activity to assessment based on patient outcomes.

 Current business models for the healthcare delivery, which include laboratory medicine, are primarily activity-based, and designed, managed, and executed in individual, independent units or silos. The consequences of such a model are that each individual unit is managed according to its performance metrics rather than the product of the healthcare system that includes the clinical pathway for the patient and the contribution of the stakeholders. Consequently in the case of laboratory medicine, which operates on the fee-for-service (or cost-per-test), the focus is on the quality of analytical performance, volume of activity, and cost of delivery. However, the central role of the laboratory medicine service is to deliver results of procedures that enable clinicians and other stakeholders to improve their decisions and thus improve patients’ outcomes. Consequently, the value of laboratory medicine in achieving these goals must be found in other silos and be founded on outcome- and value-based agendas through a paradigm shift in its business model.

One such business model is adoption of the concept of a value proposition for individual test utilities, embedded in the overall healthcare service. This needs to be developed on the basis of evidence of impact on clinical, operational, and resource outcomes, and in the context of a patient-centred care pathway. Details of this concept have been recently published (1).

The value proposition of any product or service describes the utility of the product or service in terms of benefit to the customer. In the context of laboratory medicine the value proposition comprises (i) the unmet clinical need, (ii) the nature of the service, (iii) the potential benefits of the service, and (iv) the demonstration that the benefit claimed can be achieved. The customer values the resolution of a problem or the service provided to meet an unmet need, which can be defined in terms of clinical, operational, and economic (resource) outcomes. In health care, while the patient is the ultimate and most important stakeholder, all stakeholders can be considered as customers. Thus while laboratory medicine may provide a service that directly impacts a patient, typically it offers benefits to carers, healthcare providers, those purchasing healthcare services, and policymakers.

The value of laboratory medicine can only be considered in the context of the patient care pathway in which the test is used, as the delivery of a laboratory test result, in and of itself, will not deliver any benefit. In other words, a particular action has to be taken on receipt of the result. Therefore, the value proposition for laboratory medicine is expressed in terms of contributions to guide decision making in clinical care, the process of the care delivered, and the resource required to deliver that care.

If assessment of value in health care is to move away from activity-based metrics and move towards an outcome-based and patient value-based approach, then the value of all contributors to health care needs to be demonstrated and recognised, and importantly become the basis on which health care is resourced, organised, and delivered.

The key objective of laboratory medicine is to contribute to guiding decision making that ensures the best health outcome for the individual patient, while minimising risk and adverse outcomes, and maintaining reasonable cost. Adoption of a value proposition in health care, including that for laboratory medicine, carries with it significant implications for all stakeholders. The clinical and cost effectiveness to be gained from the appropriate utilisation of laboratory medicine can deliver clinical, operational, and/or economic benefits spread across the whole care pathway, thereby addressing the interests – and responsibilities – of all stakeholders.

Ultimately the value proposition will offer the opportunity to develop a healthcare system that will be financially sustainable over the longer term.


1. Price CP, John AS, Christenson R, Scharnhorst V, Oellerich M, Jones P, Morris HA. Leveraging the real value of laboratory medicine with the value proposition. Clin Chim Acta. 2016 Sep 17. pii: S0009-8981(16)30379-5. doi: 10.1016/j.cca.2016.09.006. [Epub ahead of print]


Christopher P Price1, Andrew St John2, Robert Christenson3, Volker Scharnhorst4, Michael Oellerich5, Patricia Jones6, Howard A Morris7

1Nuffield Department of Primary Care Health Sciences, University of Oxford, Radcliffe Observatory Quarter, Woodstock Road, Oxford, OX2 6GG, United Kingdom
2 ARC Consulting, Mt Lawley, W Australia 6050
3 Laboratories of Pathology, University of Maryland Medical Center, 22 South Greene Street, Baltimore, MD 21201, USA
4Clinical Laboratory, Catharina Hospital and Dept. of Biomedical Technology, Technical University Eindhoven, Eindhoven, The Netherlands
5Department of Clinical Pharmacology, University Medicine Göttingen (UMG), Kreuzbergring 36, 37075 Göttingen, Germany
6 Department of Pathology, University of Texas Southwestern Medical Center and Children’s Medical Center, 1935 Medical District Drive, Dallas, Texas 75235 USA
7School of Pharmacy and Medical Sciences, University of South Australia and Chemical Pathology Directorate, SA Pathology, Adelaide, South Australia 5000

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