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Residents Save $2M By Eliminating Needless Lab Tests

John Commins, for HealthLeaders Media, October 21, 2013

High expectations vs. unknown factors
While reducing the tests by 47% is an impressive achievement, Han and his fellow residents had pledged to reduce that amount by 50%. "We were just shy of that 50% reduction and the lesson we learned was that it is hard to make changes like this. When you set a goal that takes a lot of effort and foresight and when you are trying to implement these goals there are a lot of unknown elements that you don't always know about going forward," Han says.

"As a group of residents, one of the unknown factors we encountered was there were a lot of lab orders that we don't have control over. On our service the anesthesiologists help us take care of the patients and have the ordering privileges to order any kind of labs on their patients that they deemed appropriate around the operative and perioperative care settings. All the labs they ordered in some ways counted against us but they certainly felt it was an important part of the care so we never argued. That was probably what was included still in that group of 53% of tests that were still being ordered."

Even though they generated nearly $2 million in savings, including the $75,000 in direct costs for the medical center, the residents were not awarded the $400 prize from UCSF. Nonetheless, Han says they are all "very proud of our results."

"We were actually surprised that it wound up calculating out to be a fairly large sum of money," he says. "The medical center did thank us for our efforts at the quality retreat for the medical center they gave us the award for the best quality improvement initiative initiated by physicians."

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4 comments on "Residents Save $2M By Eliminating Needless Lab Tests"


Real savings (10/27/2013 at 9:25 AM)
Honest accounting is right. The majority of the tests are chemistry tests.The real savings are the cost of reagents and controls. Thus $75,000 are the real savings. As my CFO would say the $2 million is" funny money".

Honest Accounting (10/23/2013 at 2:05 PM)
Good story and good effort, but please some truth in accounting! The project reduced CHARGES by $1.7 million, which probably did not mean much (if any) in real costs differences to the insurers, who probably paid per case or per day reimbursements that were not changed by reduced testing. It is good to reduce utilization that does not benefit patients, but care should be taken to report that correctly.

DonaldStumpp (10/23/2013 at 1:08 PM)
In other news.... the Lab Director was fired for not achieving revenue goals. Oh what a tangled web we weave. If the hospital revenues are on a DRG or case basis, then there truly is savings to the hospital, otherwise, this savings cost them. I'm not arguing it should not be done, but shows how incentives can be misplaced. If there is not value in the procedure or test or service, it needs to be eliminated.