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Press Start: Lead an Empowered Life as a Clinical Laboratorian

Formularies Might be Coming to a Lab Near You

Published February 12, 2012 4:51 PM by Glen McDaniel

We are all familiar with the concept of generic versus brand name for medication. Once a pharmaceutical manufacturer loses its patent exclusivity to make and sell a drug (at an inflated price, usually), other manufacturers can make the same drug. Competition drives down the price and consumers benefit from getting a certain medication of the same efficacy at a price less than the brand name drug.

Many hospitals, physicians, HMOs and insurance company strongly advocate the use of generics over brand name wherever available.  The cost savings for a payer can be significant. Another cost-saving measure adopted by many hospitals is the development of a formulary- a set of drugs carried by the pharmacy and available for use. Carrying only a finite inventory saves money. But there is a more convincing reason for the use of formularies: best practices often dictate the use of certain medications for certain conditions.

Physicians who want to prescribe medications not included on the hospital formulary have to provide justification (usually to pharmacy or a medical staff committee). Sometimes that application is approved and sometimes it is not. It is very difficult to imagine a cogent argument against such restrictions; especially if related to best practices for treating certain diseases.

Well, if you think about it a laboratory's menu is sort of a formulary as well. As laboratory utilization becomes more of an issue with payers like Medicare, laboratorians will be forced to look more at the tests which are offered on their menu and even whether physicians have carte blanche in getting every single test they order.

Labs have largely sidestepped the issue of limiting test availability by continuing to order archaic tests based on physician preference, or sending a test  off to a reference lab when an in-house test would have provided the same (or superior) information.

In the same way that pharmacists have worked with physicians and formulated P&T (pharmacy and therapeutic) committees, laboratorians need to go down that road as well.  Physicians realize that pharmacists are the experts on medication use. Laboratorians need to step up to the plate and educate physicians about removing archaic tests, limiting certain tests to once per hospital stay and limiting the frequency of even simple tests like  BMP. Physicians should be encouraged to order the single tests they need rather than a model. For example, maybe a physician is only interested in a creatinine or potassium, but he has been "spoiled"  in being allowed to order a BMP daily, or even twice a day.

Utilization management is not only about costs, it is also about best practices and better patient care. What steps have your laboratory taken regarding laboratory utilization management?

4 comments

you have medical iusses. Depending upon what those iusses are you may have a problem finding a company that will accept you. If they do, there will be waivers, riders, or waiting periods before the company will cover those iusses. This is why you need an agent. The agent can talk with the underwriters from the different companies to find out what the possible underwriting decision may be. There is no one best health insurance company. The best company for you is the company you want to go with. Nobody here can tell you which company is best for you because we don't know you or your health iusses.

maguithoo maguithoo, OTFgMohm - PmbFRBqZZ, MtHwRIzljv March 20, 2012 1:52 AM
ZwHFSqPLRPhvLi MS

The big problem is that doctors have been spoiled to get whatever they want. We tried educating docs by stuffing their mailbox with leaflets and articles etc. One doc said he uses the Sed rate on most of his patients because if it is normal then the patient is not realy sick. Unbelievable. So it's abnormal what do you do? So if it's normal and the patient is complaining of symptoms do you ignore him?. H

How do you argue with a doctor like that? But I bet if he prescribes something and the pharmacy doesnt carry it or only stocks the generic, I bet he is OK with that. It is a big uphill battle. Maybe if we could get them to think of lab menu as a formulary we would have  abetter chance of limiting what they order.

Charlise February 27, 2012 4:20 PM
Decatur GA

I was a MT at a hospital on the East Coast and I know we tried for awhile to manage utilization. It was a  big fight. We were able to get things like a certain number of manual diffs per day. We only do CMP every 3 days. Before some patients had CMP every day for 3 days straight.  We stopped doing PTT and started anti Xa assays. I wondder if they have made any more progress since I left 9 months ago.  But even with those simple changes our director said we saved something like $100,000 per year.

Jason V. February 19, 2012 12:49 PM
Henderson NV

Very timely article.  We just started lab utilizationa and the docs are fighting it. I am interested to see what other folks have done and if they have been successful. We are having problems I think because we have never questioned doctors before. They get used to getting whatever they want. You are right about that.  I dont know how many tens of thousands of dollars we spend each month on send out tests. Many times we find the same test on the same patient sent out 2 days in  the same week. We are not allowed to cancel so we get billed for both tests. It is very costly to our lab.

Maria Cordoza, MT, Supervisor February 12, 2012 6:16 PM
McAllen TX

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