Tim Kuruvilla is the co-founder and senior vice president of sales and marketing for Viewics, Inc., a Sunnyvale, California-based company providing business intelligence and analytics solutions for health care organizations. DOTmed News asked him about key tips for hospital leaders on the impact of labs to patient care and the bottom line.

DOTmed News: What is the current value of medical labs for hospitals? Have hospital leaders paid enough attention to labs, in your view?

Tim Kuruvilla: Hospital executives have to focus on so many moving parts in today’s health care system, it’s hard to demand that they add another priority to their list.
Labs have always had significant value for hospitals as the driver of over 70 percent of medical decisions. We find that labs are earning more C-suite attention as the value of lab data has been critical to many key initiatives in health care, having an impact on the bottom line, quality of care and patient/physician satisfaction.

DOTmed News: Let’s touch on those ideas, starting with how labs can help hospitals with their bottom line. Is this department much of a factor, financially?

TK: Since direct laboratory operations only represent 3 percent of medical costs, it is often overlooked as a financial opportunity. However, the reality is that it impacts 70 percent of healthcare costs, given its role in medical decisions. The laboratory can not only help hospitals cut costs, but also increase revenue.

There are numerous ways that laboratories can help the hospital decrease costs. For example, laboratory utilization is often inefficient. Laboratory and medical leadership, enabled with the right tools and information, have been able to decrease costs by an average of between $50,000 and $150,000 for each test they have run a program on. Blood management is also an area with significant financial opportunity.

In general, the laboratory can be further leveraged to ensure the right tests are provided to the right patient at the right time. Errors and variance in this effort can lead to increased length of stay, more medical errors and decreased patient and physician satisfaction, all having significant financial impact.

Many hospital and health system laboratories have capitalized on excess capacity to provide laboratory services to the outpatient physician community. In some hospitals, laboratory outreach services contribute up to 50 percent of the hospital’s overall profit. This is driven by the fact that while hospitals have low margins, laboratory outreach can be a high margin, direct revenue opportunity.

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