Public Health Laboratories and Health System Change . Core PHL Function

A central concern of both state and federal actors is the definition of core PHL functions and activities. This subject has been closely studied over the years by the Association of State and Territorial Lab Directors (ASTPHLD) and by a number of PHL directors. As discussed above, the function of PHLs varies dramatically from state to state. The notion of a core set of activities is particularly charged, because it defines the appropriate role of the PHL in the safety net.

• Traditional Definition of Core Services

  • Historically, public health laboratories (PHLs) have focused activities on specified core functions. Considered broadly, these functions encompass activities in support of the three charges of all public health entities: (1) assessment, (2) policy development, and (3) assurance.³ PHLs perform functions directly associated with these objectives, as well as testing activities that are excluded for various reasons from the practices of commercial laboratory service vendors. Examples of PHL core functions include:¹¹

    • coordinating disease reporting activities among laboratories and providers in support of state disease tracking objectives
    • responding to increased testing needs during times of disease outbreaks
    • performing serological typing and other specialized tests useful for tracking disease and pathogen type across a population but insignificant to clinical therapy
    • performing tests that are not commercially profitable
    • performing environmental testing services
    • performing quality assurance across all clinical laboratories
    • conducting applied research in the areas of emerging infections
    • verification of results from other laboratories

    By performing these functions, PHLs provide state health officials with empirical information critical to assessing community health status, evaluating the success of existing public health initiatives (e.g., childhood lead abatement programs), and developing new policies related to disease prevention. Additionally, PHLs provide the specialized testing support needed in times of outbreaks or upon the occurrence of unusual diseases.

    While the primary source of funding for state PHLs is state government, this varies by state. All states receive support from the CDC in the form of training and information, and some receive some outside funding from the CDC through grants. User fees (e.g., those associated with prenatal screening or other tests provided to the public) can be an important source of funding for some state labs.

• Issues Inherent in Health Market Change

  • Changes in health markets and environment faced by PHLs naturally raise the question of whether the core functions of laboratories must change in response, or - to take a more activist position - whether more leadership from the laboratories can improve the public health. Our study suggests that while the overall charge of laboratories (e.g., involvement in assessment, assurance, and policy development) remains constant, many of the tactics used to achieve these goals must change in the context of health system and technological innovation.

    There will always be a heated debate over what laboratory services belong in the public sector. PHL directors typically maintain that states can often provide services less expensively and of a higher quality because there is no profit motive. Commercial laboratories typically maintain the opposite position. We would not presume to judge this debate, but would point out that every situation is unique and that neither side is always correct.

    There are some services that most agree belong in the public domain. These services typically include tests that are not commercially viable as well as those that are critical to ensuring that emerging infections are identified. Most MCOs will also not assume responsibility for environmental testing (e.g., lead and water) on their own, and it is unclear whether they will ultimately pay for population health management when there is no immediate payoff in reduced costs.

    PHL viability in generating revenues is a central issue in defining core PHL functions. Public health officials are split on this issue between those that believe that PHLs need to show value and avoid "dumping" of patients by assessing user fees, and those that believe that user fees establish a perverse relationship with the private sector and may discourage indigent patients from seeking services and should not be assessed. Most states have established a middle ground by assessing user fees on some services in some cases; others leave the decision to the LHDs.

    Another fundamental issue is whether direct patient care testing generally considered an "assurance" function is core. Over the years, many PHLs have done a considerable amount of direct patient care testing (e.g., STDs, HIV, TB, neonatal screening) and, in some cases, have derived significant revenues from such activities. Although such testing has often been provided in conjunction with counseling, case management, and other public health services, others have not. The debate in this area centers not around the reporting of results, but rather whether the state should be engaged in de-facto competition with the private sector.

    Most neutral observers agree that quality assurance remains a critical function for PHLs. While regulators will never be popular with industry, assuring the quality and consistency of testing is a core public function, particularly in the area of infectious diseases. However, quality assurance needs to be updated relative to information technology; private sector stakeholders expressed strong and legitimate concerns about the cumbersome nature of regulatory intervention in most states.

    Finally, policy development also needs to change in response to changes in the healthcare system. The notion of public-private partnerships has come into vogue, and, as the Washington experience shows, can be used proactively by states to help shape the delivery system. Policy development in laboratories also needs to come to terms with the growth of managed care, which is an important policy goal in most states. The Michigan experience demonstrates that states can use state managed care contracting proactively to forge a stronger safety net.