How LIMS Grows Money in the Test Tube

The most important thing people love about a LIMS is that the system makes them feel like everything is under control. They say, “Let’s install a LIMS and minimize costs. Nothing gets lost. Everything will be quick and cheap”.

But first, the feeling of control is usually false. And second, a LIMS is not just an ERP system. Yes, it is a special kind of ERP, but it’s also much more than that. It doesn’t simply better organize the boring side of the lab business. LIMS helps patients live longer, plus it makes money.

Let’s look at all the parties that benefit from the success of the lab.

First, there’s the patient. The clinician sends them to our lab and waits for tests that help correctly cure the patient. Or the patient may come in because they are chronically ill and think they know more about the disease than the doctor. (They may even have some reason, because every illness has its peculiarities in different people.)

Second, there is the clinician. They need to know everything important about the patient. According to statistics, the laboratory provides up to 60-80% of the diagnostic information. It varies from case to case, but all in all, its role cannot be understated.

Third is the financier: either the insurance company or the patient who pays out of pocket. Do you think the financier saves money and tries to give the lab as little as possible? Not exactly. They want to pay a fair price. But it’s very hard to know what a fair price is. On the one hand, if you pay too much, the insurance company will go bankrupt. On the other hand, sometimes the financier should pay the lab more to allow them to spend more money on staff training and quality control. It is not clear how much is not too much.

Finally, there is us – the laboratory. We want high demand for our services. We want to make enough money to cover quality management. We need the business to look attractive enough. If it does not, we won’t see any investors here. The financier will not love us because we generate no value. The doctor will not make the right decision. And the patient will suffer.

And that’s where the LIMS suddenly appears on the scene, seeming to be a marvelous money machine.

Yes, it can help all the parties described. Its magic lies in the amount of information it gathers. There is nothing more valuable than data that is accurate, complete, and in an easy to read  format. Adding it to our usual lab product (perfectly executed analyses), we dramatically increase our value to everyone involved.

But here’s the thing: this data only works if we manage it properly. There are many pesky obstacles to overcome along the way.

Obstacle #1. Labs are afraid of demand management. From a regulatory standpoint, it can look like mandating tests, which is forbidden. You have to show no initiative. You simply sit and wait for them to come. Oh and by the way, it’s usually the cheap tests that come in. They are necessary for the physician and the patient, but not all that profitable for the lab.

Obstacle #2. The laboratory market is very competitive. And, of course, everyone likes to take advantage of it. Laboratories hold on to their customers for dear life, small labs particularly. The lab depends on the clients, so the client can force the lab to do what is convenient for them. For example, a doctor may order tests that the insurance company will not pay for, and the lab will tolerate that and do the tests at its own expense so as to avoid a fight with the doctor. Insurance companies are picky, too. It is not profitable for them to add new, small labs to their service network. Case management costs go up. The insurer would rather have a few large customers than many small ones.

Obstacle #3. Scientific and technological advances lead to new and exciting tests (e.g., genetic and -omic tests). They provide interesting but expensive information for the clinician. But for complex, non-routine tests, you have to get prior authorization. The lab will buy these tests and the insurance company will say, “No, we’re not authorizing that for this patient. The clinical guidelines allow you to skip these tests and we will not pay for them”. That’s a risk.

It can be hard to know whether the patient needs the test and whether its absence will prevent the clinician from making the right decision. If the test result is already available, the doctor can evaluate the contribution of this information to the treatment. But until the test is ready, it is like Schrodinger’s cat: the data may be fascinating and critical to the course of treatment, or it may be irrelevant. To order or not to order, that is the question.

At the same time, the rule that the cost of laboratory diagnostics must be reduced by a certain percentage each year will soon come back into force. Prices for routine tests are decreasing, even though their volume has already fallen since COVID-19. Large laboratories can survive it, but many small and medium-sized laboratories risk losing their appeal or becoming unprofitable.

These are reasons why so few laboratories dare to play demand management. But we propose to look at the LIMS and see how it can help to overcome disruptions and achieve the 4W, win-win-win-win strategy. LIMS has all the information. It just needs to be enriched and approached correctly.

How, exactly? Here’s how.

Do as many necessary jobs as possible and as few unnecessary ones as possible

First, eliminate the unnecessary. Yes, that means those fifth tests that clinical guidelines say can only be done four times. Do not be afraid to offend the doctor. In fact you’d better warn him. If he sends an order, the LIMS analysis module will help us understand whether this test should be returned. Nobody benefits from unnecessary tests, and nobody makes the effort to eliminate them. But the patient, the physician, the financier, and you all don’t need them. Remember the 4Ws!

Instead of these unprofitable orders, we must learn to retain the useful ones that, for whatever reason, never came to us before. There can be a lot of these.

We work in a field where CRM feels a bit paradoxical. It would be weird to increase the number of healthcare customers. We want people to be healthy and to not need tests. However, we also want to manage the process the best we can.

For that, we need a comprehensive business intelligence system that tells us, “This patient should have been tested a long time ago! And that one over there – they missed something. Let’s inform the doctor and let him send the patient samples to a  laboratory!”

For the BI system to tell us about these cases and for the laboratory to pass the info on to the physician, the system needs to be supported by clinical information.

We can tell you when it is time for someone to have a test required by clinical guidelines. We should also analyze external info in order to understand who needs what and when.

And, of course, LIMS must help the laboratory to communicate with the patient and the clinician. Only then can we create an order flow within the limits of what legislation and evidence-based medicine allow us to do.

Sell tests directly to patients

You must follow clinical guidelines. So what about the exact opposite: to sell tests not paid for by the insurance company, i.e. not included in clinical guidelines?

Clinicians don’t like when patients do tests on their own. They increase the workload and are self-medicating, which is unhealthy.

But there are other situations when direct-to-consumer testing is the right strategy.

• The provider could not motivate the person to do the test in time, but later she decided to do the necessary screening on her own.
• In rare cases, people get atypical diseases and sometimes fall through the cracks of strict clinical guidelines. Even if there is just 1% of them, that makes three and a half million people in the country. Additional testing can help them.
• Insurance pays for evidence-based medicine. It is a massive pool of shared resources. It is devised as a compromise,offering workable medical solutions for most while still allowing money to be distributed evenly among patient groups. But any statistics are just statistics. A person may come to the clinician for whom the standard strategy has not worked, and they come up with something else. Maybe a patient is not limited to a general compromise solution for their money but wants to pay for something more precise and personalized. So they can invest in it, and become even more healthy. At this single patient’s expense, everyone will in turn receive something that the principle of fairness will not give. So if a patient could benefit from a particular test not covered by clinical guidelines, we can sell it to them. As a rule, these cases are not strictly direct sales: a clinician prescribes the test and confirms that the patient needs it.

So there is a balance: no silly self-medication, but a possibility to go beyond the limits of strict clinical recommendations.

Do you remember the 4Ws? Revenue for you, reasonable cost for the payer, information for the physician, and value for the patient. It works!

Increase compliance

Many patients don’t tend to follow their doctor’s instructions. They have a lot of other things to do, and their health is generally their own business. As a result, they fail to do the medical thing in time or do not do it at all. Another problem is that people with chronic illnesses are tired of being treated all the time. But freedom from compliance costs the financier dearly. These patients develop complications and are likely to be treated some other way, with more complicated methods.

Of course, the compliant patient lives longer, which means more money spent on him over the years.

But we want everyone to be alive and well. And besides, the majority of patients do not exist only in a vacuum, they have lives, do work, and otherwise benefit society outside the walls of the laboratory. Therefore, even the most cynical economist would not dare say that compliance is not beneficial to the insurance company. It is accepted that a compliant patient costs less in a given calendar year, provided that year is not the last for that patient.

LIMS can help improve compliance. To do this, we need to learn how to integrate clinical guidelines into the LIMS so that they can be constantly updated. We can communicate this information to the patient and the physician.

Often labs are afraid to talk to the patient. They seem uninformed and far away. More often, labs are afraid of offending the clinician. A doctor has knowledge and experience; she is the one who makes decisions about the patient. However, if the communication is appropriate and for the same purpose, it will bring benefits rather than misunderstandings.

The laboratory can support the clinician as well as a large hospital. It can be to validate decisions. It is crucial to communicate the benefits and importance of clinical guidelines to the patient in consultation with the physician and provide relevant and consistent information to the patient. Patients are more likely to follow instructions and be smart if they understand the reasons why they should. Especially if both the physician and the laboratory communicate this in clear and compelling language.

All of the features discussed above are applications within a BI system that allow us to quickly contact doctors and patients. These applications can  be built into the LIMS or provided separately as an add-on. These are the key tools that will allow us to manage orders as more than just a line item on a price list, and will gradually transform our LIMS into a magical money-making machine. Of course, the most meaningful results are a satisfied patient and an informed clinician. But the financier is also happy: they get more for their money. The laboratory expands its customer base, increases its revenues, and begins not only to manage and save more efficiently but also to make excellent profits.