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.

DOTmed News: And to your second point: what are lab data insights that keep people healthy? Can you elaborate?

TK: Lab tests are obviously crucial to individual diagnoses, and it’s agreed that lab results drive about 70 percent of all clinical decisions. But people are just now recognizing how aggregated lab values — results across specific patient populations or within a geographic area — can drive decisions about public or population health.

The possibilities for data analytics in the area of population health in particular are numerous and lucrative. Analyzing laboratory data could enable providers to anticipate disease outbreaks, understand cost and quality drivers, track patients for outreach programs, steer the highest-cost at-risk populations to timely and quality care, and identify and help manage populations suffering from chronic disease.

DOTmed News: Let’s return to how labs can help with hospital operations. What kinds of business intelligence can lab data provide?

TK: Laboratories have similar operational challenges as many of the departments across the hospital — how to deliver its services as efficiently and effectively as possible. Here are just three of the areas in which the lab also impacts hospital operations:

Turnaround Time (TAT) — The key performance indicator for laboratory services is turnaround time (TAT). Given that the laboratory is often the initial diagnostic indicator for treating patients, the laboratory’s ability to provide results back to those making medical decisions in a timely manner is critical. Business intelligence enables laboratories to identify workflow issues and provide the optimal TAT.

Staffing — Labor drives more than 50 percent of a hospital’s operating costs. Optimization of human capital resources from top to bottom can often be challenging, especially in a hospital environment where demand fluctuates.

Business intelligence and analytics not only provide predictive indicators for staffing requirements, but also performance management tools which help to motivate and enable employee productivity.

Quality — Much like any other area in the hospital, the laboratory also strives to minimize errors. Errors in the laboratory lead to unnecessary waste/cost, delays in patient care and even misdiagnosis. This impacts the operational and clinical process across the care continuum.

These are just a couple examples of a number of ways that the laboratory is critical to the hospital’s financial and clinical objectives.