Public Health Laboratories and Health System Change . Washington State Case Study

10/06/1997

Background/Objectives

We interviewed the following individuals during our site visit to Washington State:

Dorothy Canavan, Lab Manager, Dynacare

Jon Counts, Dr.P.H., Director, Public Health Laboratories

Jac Davies, Health Services Administrator, Public Health Laboratories

Daniel Jernigan, Medical Epidemiologist, Public Health Laboratories

Paul Stehr-Green, State Epidemiologist, Department of Health

Jon Counts, Dr.P.H., Director, Public Health Laboratories, articulates clear goals for the public health laboratory in Washington state: (1) shift routine clinical testing to the private sector unless there is a direct role in enhancing community health or quality control; (2) provide efficient and cost effective service when the lab does engage in testing; and (3) play a leadership role in developing health policy and directing the evolution of Washington state's laboratory infrastructure. Of particular note (discussed in detail below) is the formation of the Clinical Laboratory Advisory Council (CLAC), a mechanism for facilitating dialogue between the public and private sectors, which Washington uses as a proving ground for achieving all three primary goals.

Public Sector

Financially, the state public health laboratory has been stable over time. Overall, Dr. Counts reports that the budget has remained about constant over the past 5 years, while the number of FTEs has dropped modestly to maintain COLA and other increases. Dr. Counts believes that the lab should not be reliant on user fees and charges only for newborn screening, and drinking water microbiology; fees account for less than 15% of the total budget. Capital acquisitions have not posed a problem -- the lab sets an acquisition plan annually, and does not feel constrained. Capital acquisition sometimes relies on lease / purchase plans, or sometimes relies on financial assistance from the CDC.

In keeping with its philosophy of avoiding patient testing, the lab provides no testing for cancers and hyperlipidemia. It does provide some STD, HIV, and TB testing in association with public health programs. Test volume for TB and E. coli in food have been rising due to increased incidence and lab consolidation. The lab also provides water, radiation, and blood lead testing around clinical studies; environmental chemistry test volume is decreasing as compliance testing is reduced. Chlamydia test volume has increased dramatically because the PHL is currently working on a study funded by the CDC. The lab provides inexpensive newborn screening for all infants born in Washington State, and volume has increased modestly due to population growth.

One of the primary issues facing the lab currently is testing for tuberculosis. The public health laboratory believes that most labs are not using the appropriate technology and do not have sufficient test volume to support the cultivation of expertise. As a result, samples have been shuttled between sites resulting in significant delays in diagnosis and increased exposure. This issue has been discussed through the CLAC, and the Director is currently crafting a plan through which only 6 facilities (2 state and 4 hospital) would serve as core testing facilities. The PHL would continue to serve as a reference testing lab. Centralization of doing sensitivity testing is a core aspect of the Director's vision for the delivery system.

Organizationally, PHLs reside within the department that houses the Office of Epidemiology, and report to the same Assistant Secretary within the Department of Health. While organizationally distinct, the offices work closely together, particularly on issues of infectious diseases. Of note, the Office of Epidemiology and the Labs also share information technology support. It is also important to note that the PHL is organizationally distinct from the Office of Laboratory Quality Assurance, although the two offices communicate frequently. Offices within the state PHL include:

clinical and environmental microbiology

environmental and radiation chemistry

newborn screening

operations and technical support

The interrelationships between the PHL and the Office of Epidemiology in addressing public health concerns has been illustrated in responding to outbreaks, including the Jack-in-the-Box and Odwalla Apple Juice E. coli 0157 outbreaks. During the 1993 Jack in the Box outbreak, testing occurred in the public health lab, but additional testing was carried out by the FDA, the University of Washington, Children's Hospital, and the Seattle / King County laboratory. The state PHL worked closely with the Office of Epidemiology, which assumed overall responsibility for the state's investigation.

In keeping with its goal of promoting efficient use of resources, the lab has also attempted to reduce duplication in public laboratory testing. The state PHL facilitated discussions between all government laboratories in the area, including federal laboratories (e.g., the FDA has a regional lab in Seattle), state laboratories, and university laboratories, and also published a directory of services. There is still significant redundancy in testing, although some duplication is necessary to ensure continuity of services.

The PHL has devoted significant time and resources to education and outreach. The primary venue for such activities is the Clinical Laboratory Advisory Committee (CLAC), described below. The PHL also publishes a free monthly newsletter entitled "Elaborations" to educate labs throughout the state on issues of public health importance, and to further the agenda of the CLAC. For example, a recent edition focused on tuberculosis in Washington State, and included an overview of TB with general statistics from the CDC and other sources, an article on advances in mycobacterium testing, and a practice guideline for TB screening derived from CDC guidelines and other publications.

Private Sector

The private market for laboratory services has not evolved as rapidly as it has in other states. The system is highly fragmented, with 1,300 physician office labs, 131 hospital labs, 97 commercial labs, 36 HMO labs (considered hospital-based labs for the purposes of regulation), and 279 ambulatory and community health clinic / local health department laboratories. SmithKline, LabCorp, and Dynacare are the three largest commercial labs in the state, but none is dominant -- each holds less than 20% of the total testing market. The aggressive capitation rates for lab services observed in some parts of the country (e.g., $0.30 PMPM) have not yet emerged in Washington.

Dynacare is a large full-service laboratory that agreed to be interviewed for this study. With over 500 employees, the lab performs primary patient care testing for Swedish Hospital, serves as a reference laboratory for the Hutchinson Cancer Center, and also performs a significant amount of contract testing for clinics, other hospitals, and physicians. Dynacare also serves as a National Institute of Drug Abuse (NIDA) laboratory, completing pre-employment drug testing and random screening for DOT and other state agencies in compliance with the drug-free workplace regulations. The laboratory has been very cautious about taking on capitated contracts, and has lost some managed care contracts to large commercials as a result.

The dominant player in managed care is Group Health Cooperative of Puget Sound (GHC). The PHL has a strong historical relationship with GHC; currently, GHC sits on the CLAC and is also working with the Office of Epidemiology and the PHL on an automated laboratory reporting system funded by the CDC (described below). Other MCOs are present, but those interviewed characterized the market as being in the early stages of managed care market penetration.

The Clinical Lab Advisory Council

The Clinical Lab Advisory Council (CLAC) is an innovative venue for shaping the laboratory delivery system in the State of Washington. The CLAC was created by Jon Counts, Dr.P.H., the state PHL director, in cooperation with the Office of Laboratory Quality Assurance and a range of private laboratory interests in the state. The CLAC was initially conceived as a response to the fragmented laboratory system and the need for dialogue between stakeholders in the laboratory community. It currently serves to address these needs, as well as a range of other issues raised by membership.

Council membership is composed of 16 representatives of the following groups: (1) major lab professions (i.e., lab scientists, lab managers, medical assistants, pathologists); (2) managed care organizations; (3) hospitals; (4) physician office laboratories; (5) independent labs; (6) other health or medical associations; and (7) the state department of health. Full meetings of the CLAC occur periodically. In addition, the Council has appointed advisory work groups to develop recommendations on issues such as:

structure and integration of the laboratory delivery system

practice guidelines / use of clinical labs in medical decisionmaking

Laboratory Information Systemsreimbursement issues, including treatment of specific tests

licensure of laboratory personnel, training, and credentialing

the role of the PHL relative to core public health function

emerging science policy (e.g., genetic and point of care testing)

Both public and private sector interests indicate that they have benefited significantly from the CLAC. The PHL also uses key members of the CLAC informally as a sounding board to test likely reaction to new laboratory policies and procedures.

Practice Guidelines

One of the areas of focus for CLAC has been practice guidelines (Washington PHL Newsletter, Elaborations, April 1996). The purpose of the guidelines has been to assist private laboratories in achieving appropriate levels and approaches to testing. The guidelines were prepared by PHL staff, a consultant (John C. Blanchard), and panels of clinical experts. Activities have included the formulation of clinical laboratory guidelines for testing in a variety of areas, including:

Tuberculosis (April/May 1997 Elaborations)

PSA / Urinalysis (March 1997 Elaborations)

Hepatitis (November 1996 Elaborations)

Dynacare indicated that these guidelines have been widely used. The PHL is currently studying usage of the thyroid and lipid guidelines in two large clinics, under the direction of Leonard Kargacin from the PHL.

Reimbursement Support

The CLAC also provides a venue through which labs can clarify and pursue reimbursement issues with the knowledge of state health officials. While the state takes no position on the level of reimbursement, the goal from the PHL's perspective is to help shape the reimbursement environment to promote cost-effective testing. The goal of this effort from the private laboratory perspective is to enhance the reimbursement environment through wider coverage of tests. The CLAC has been instrumental in facilitating discussions with Aetna and Medicaid on issues of reimbursement. In fact, the PHL reported that Aetna suggested that they may use the CLAC guidelines as a basis for reimbursement. This access has helped maintain and build enthusiasm for CLAC among private sector members.

Washington Clinical Laboratory Conference

The CLAC also runs an annual conference, in which it convenes public and private laboratory experts (e.g., from commercial labs, MCOs) to discuss various issues related to clinical laboratories. This venue enables the CLAC to set the agenda for discussion, and to promote rationalization of laboratory system in Washington State.

Managed Care and Public Health Laboratories

The PHL lab has historically had a strong relationship with the Group Health Cooperative of Puget Sound (GHC), and is actively working with them on a CDC-funded project on laboratory reporting (described below). In addition, relationships with primary managed care interests are being nurtured through the CLAC, and the PHL also informally monitors MCO activity.

Beyond these efforts, managed care, per se, is not a direct focus of the PHL's activities. Consistent with the philosophy of leaving patient care testing to the private sector, the state PHL has no contracts for services with managed care organizations, and no desire to initiate them. In addition, MCOs still enroll a small minority of the population in Washington, and there are no major laboratories that operate solely in the context of managed care. Of course, most hospital and commercial labs in the state do have capitated managed care contracts, and therefore interact with MCOs.

The Director anticipates that as MCOs' presence grows, the PHL will assume a leadership role in establishing relationships. They will look to the activities in Michigan (e.g., use of the managed care contracting process to promote compliance with basic public health goals, assignment of a managed care coordinator) as one model. Going forward, areas for collaboration with MCOs might include:

electronic reporting of lab results with public health interest

establishment of clinical practice guidelines for testing

lab testing policies -- quality improvement / quality control

outbreak investigation and disease surveillance

Laboratory Information Systems

The PHL is also involved in the creation of an innovative system for electronic disease reporting between private laboratories and the state health department. The goal of the system is to automate reporting in hopes of lessening the burden of reporting, improving the accuracy, and expediting reporting. The Washington State Office of Epidemiology has a grant from the National Center for Infectious Disease (NCID) at the Centers for Disease Control to pilot the system. The Office of Epidemiology is working closely with the PHL (under the leadership of Jac Davies), Group Health Cooperative and Laboratory Pathology Associates on clinical and technical issues involved in automated reporting. Current issues being addressed by this project include establishing a mechanism for data transfer between private sector and public sector organizations and developing protocols for data recording and encryption / maintaining confidentiality of records.

The PHL is also involved in internal efforts to improve information systems. Internal systems have been developed to track specimens and support some types of investigation. The state PHL recently obtained NeoMetrics, an automated system for use by PHLs in tracking neonatal screening samples (16 other states have this software currently). The PHL also recently obtained the Laboratory Information Tracking System (LITS) from the CDC, and is experimenting with this system.

The PHL's long-standing interest in LIS issues also led to the establishment of a medical informatics group. With representation from the University of Washington, and other interested organizations, the group runs a conference that facilitates communication across multiple stakeholders.

The longer-term vision, as articulated by Jac Davies, Health Services Administrator, Public Health Laboratories, is to develop a comprehensive and integrated LIS that could facilitate epidemiologic surveillance as well as public health case support. The vision includes development of common community health indicators that could be monitored on a real-time basis to improve public health. Such a system would clearly require cooperation from other offices within the state department of health, and the state has established a working group to support this vision. The current grant from CDC is a step in this direction, and we expect that Washington will be a cutting edge state in the development of such a system in the future.