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The prospect of running into regulatory or reimbursement hassles sours some practices on the idea of establishing their own in-office lab operation. Others, however, says the idea is a relatively low-risk and high-profit connivance for both physicians and patients — as well as good medicine.
Some experts estimate an efficient lab could produce a profit margin of 40% or more by doing tests in-house. Depending on patient mix and how many lab tests you typically run, this could amount to big bucks for practices with as few as four or five doctors. Smaller practices could also benefit by limiting the cost of their most common tests, while still being able to send out less popular ones to cheaper outside labs.
When considering creating an office-based lab, one of the first things you’ll want to think about is hiring a certified medical technologist to consult on setting up a Clinical Laboratory Improvement Amendments (CLIA) compliance manual and related procedures for you. This person can also help get the lab going and help train your laboratory staff.
Getting a good handle on CLIA is critical because CLIA sets the standards for quality control, personnel requirements, test management procedures, proficiency testing, and inspections you must follow. For a list of consultants who specialize in lab issues, you can call American Medical Technologists of Corpus Christi, TX, at (847) 823-5169, ext. 226.
Of course you’ll need equipment, and what you need varies from practice to practice. But three types of machines common to most office labs are a chemistry analyzer, a hematology analyzer, and an immunoassay machine.
Competition among vendors and improved technology have driven equipment costs down in recent years, putting this equipment within reach of more practices. Also, consider the options of leasing equipment or purchasing used machines. If you go the used route, make sure you get at least a one-year written warranty.
You also should think about downstream operating costs as differentiated from the up-front purchase price. For example, if your test machine operates on a closed system that uses individual cartridges that contain reagent, it will have a higher operating cost per test than machines that use batch reagents that carry a higher initial sticker price.
Once you have the proper equipment, you’ll need someone to work either part-time or full-time running the lab. This could be an existing staff member such as a nurse or medical assistant. A baseline consideration when deciding how qualified — and costly — a person to hire to manage your lab is how complicated the typical test will be.
Many experts say it is a better investment to hire an experienced person to minimize the possibility of future regulatory and testing problems.
Believe it or not, most HMOs will reimburse you for your in-house lab services.
"True, HMOs have national contracts with big labs to do their tests," notes Charles B. Root, PhD, of Venture Resources, a Chicago-based firm specializing in laboratory economics. "But, I’ve found if you simply write and tell them you have the ability to perform these tests in-house and ask to be reimbursed at the standard Medicare rate, typically there’s no problem."