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					       Healthcare’s Transformational Journey:
   New Threats and Opportunities
     for Clinical Laboratories


                   ROBERT L. MICHEL
                         Editor In Chief
                        THE DARK REPORT
                         Spicewood, Texas



CLMA Delaware Valley                        rmichel@darkreport.com
Chester, Pennsylvania                               ph: 512-264-7103
October 21, 2009                                   fax: 512-264-0969
         My Goals Today!
   One: Review primary trends
    currently reshaping healthcare.
   Two: Explore how laboratory services
    must evolve/change to effectively
    support these new healthcare
    objectives and needs.
   Three: Identify specific opportunities
    for laboratories to deliver added value
    to physicians, patients, and payers.
Clinical Lab Market

   Let’s look at 1990, 2000, 2009.
Landscape for Change-1990
     A simpler time in lab medicine?
 Independent lab sector with many
  local independent labs, about 10 major
  national laboratory companies.
   Most hospitals were independent
    and operated single-site laboratories.
   Anatomic pathology services were
    provided primarily by private pathology
    group practices.
   Even publicly-traded commercial lab
    companies outsourced all AP and much
    cytology to local pathology groups.
                   The year is 1990…

         Where Are they Now?
   SmithKline Beecham            Universal Standard
    Clinical Labs                  Medical Labs
   National Health Labs          MetPath
   Damon Clinical Labs           Meris Labs
   Allied Clinical Labs          MetWest/Unilab
   Nichols Institute             DIANON Systems
   Roche Biomedical Labs         Home Office
                                   Reference Labs
   Bio-Reference Labs             (LabOne)
Landscape for Change-2000
         Ten years of rapid change
   Handful of independent local
    commercial lab companies.
   Quest Diagnostics and LabCorp
    now multibillion-dollar behemoths.
   Consolidation of hospital ownership
    triggered creation of a large number
    of consolidated hospital lab
    organizations serving multiple hospitals.
   Hospital lab outreach programs
    relatively limited in number.
    Fast Forward to Year 2009
      Looking at Clinical Lab Services
 Dominance by the two blood brothers
  in national market for clinical lab testing.
 Entry of new billion-dollar competitor, as
  Sonic Healthcare, Ltd. buys CPL in Austin.
 Number of local independent commercial
  lab companies continues to dwindle.
 Since 2000, steady growth in the number
  of hospital laboratory outreach programs
  providing services to office-based
  physicians in surrounding communities.
Anatomic Pathology Market

 We discussed AP in 1990.
 Let’s look at 2000, 2009.
Landscape for Change-2000
      Big Changes in Anatomic Pathology
   Emergence of national AP firms, such
    as UroCor, DIANON Systems, IMPATH.
   Some consolidation of pathology groups
    in large urban markets (related to
    consolidation of hospital ownership).
   Emergence of first specialty testing
    companies in molecular diagnostics,
    such as Myriad Genetics.
   As a profitable, growing sector, AP
    catches attention of two blood brothers.
Fast Forward to Year 2009
       Looking at Anatomic Path Services

   Quest Diagnostics and LabCorp
    expanding into anatomic pathology.
    (Quest/AmeriPath now employees 900+ pathologists.
    LabCorp employs 400+ pathologists.)
   Growing number of national AP labs,
    such as Bostwick Labs, CBL Path,
    Clarient, Claris, Lakewood Pathology,
    OUR Labs.
   Specialty physicians, such as urologists
    and GIs, establishing in-house anatomic
    pathology services. (TC/PC arrangements.)
Fast Forward to Year 2009
       Looking at Molecular Diagnostics
   Steady growth in numbers of specialty
    testing companies with proprietary or
    patent-protected diagnostic technology.
 Genomic Health, RedPath Innovative
  Pathology, Signature Genomics are
  just a few examples.
 These firms want the specimens
  so tests can be performed in their
  laboratories. Business goal is to be
  exclusive provider of these diagnostic
  technologies.
    Today’s Market Segments
 Routine testing for office-based physicians
  (traditional market).
 National anatomic pathology lab firms.
 Specialized testing firms
     Organized   around specialty:
     Athena for neurology, DIANON for urology.
             patent-protected/proprietary
     Offering
     diagnostics: Myriad for BRACA testing.
 Wide open segment: “knowledge-based”
  lab testing providers.
 Wide open segment: molecular diagnostics.
LabCorp’s View (a)...
      “In both the short term and long term,
       chronic disease will be treated in
       outpatient settings [physicians’ offices].
       More of the testing, whether for cancer, for
       infectious disease, and for other illnesses,
       will be done in support of outpatient
       treatment.”
                  Thomas MacMahon, LabCorp CEO
                  THE DARK REPORT, April 14, 2003
LabCorp’s View...
   “To diagnose cancer requires tissue. To me, the greatest
    opportunity for a pathologist, moving forward, is to get
    control of molecular diagnostics. Pathologists should be
    expanding both their skill base and their business base,
    not only to read tissue, but to read tissue as it relates to
    molecular biology. Molecular pathology is expected to be
    the cutting edge of medicine as we move forward. Ongoing
    scientific advances in genomics and proteomics guarantee
    this will be true.”
                              Thomas MacMahon, LabCorp CEO
                                  THE DARK REPORT, April 14, 2003
National Labs Are Aggressively
Seeking More AP Case Referrals
 Anatomic pathology is now considered
  a “high profit” line of lab testing.
 Lots of competition.
   Threat to academic center labs…
    but also an opportunity!
    Now For Opportunities, but first:
    Who Is Doing Well?
Thriving Labs with Hospital Ownership
   Pathology Associates Medical Labs (PAML)
     Spokane, WA
   Sonora Quest Labs (Banner Health / Quest)
     Phoenix, AZ
   Central Dupage Hospital
     Winfield, IL
   University of Massachusetts Lab Outreach
     Worcester, MA
    Now For Opportunities, but first:
    Who Is Doing Well?
Thriving Independent/Regional Labs
 Bio-Reference Laboratories, Inc. (BRLI)
    Elmwood Park, NJ
 Shiel Medical Labs
    Brooklyn, NY
 Sunrise Medical Labs
    Hauppauge, Long Island, NY
 Boyce & Bynum Laboratories
    Columbia, MO
A Different Approach Today
 Let’s take a look at macro forces
  reshaping society.
 Several elements are gathering
  that will directly influence healthcare
  in the United States.
 Objective is to discuss trends that
  normally aren’t openly dissected
  in laboratory medicine forums.
     Where is the Money?
   United States is criticized for spending
    $2.4 trillion on healthcare in 20081.
   United States is criticized for spending
    16% of GDP (Gross Domestic Product)
    on healthcare.
   Studies regularly point out how certain
    healthcare outcomes in the United
    States are not as high as other
    developed countries that spend less
    money on healthcare.

                        Source: Centers for Medicare & Medicaid Services
       Some Questions:
   What is the Gross Domestic Product
    (GDP) for the entire world?
    A: $15 trillion
    B: $30 trillion
    C: $45 trillion
    D: $60 trillion
    E: $75 trillion

ANSWER          C: $54.4 trillion
                 Source: International Monetary Fund 2007 data on wikipedia
       Some Questions:
   What Country has the largest GDP
    in the World?
    A: Japan
    B: United States
    C: Germany
    D: China
    E: Great Britain

ANSWER          B: United States
                 Source: International Monetary Fund 2007 data on wikipedia
       Some Questions:
   With the World’s GDP at $53.4 trillion,
    what is the United States’ GDP?
    A: $4 trillion
    B: $9 trillion
    C: $13 trillion
    D: $17 trillion
    E: $22 trillion

ANSWER            C: $13.85 trillion
                   Source: International Monetary Fund 2007 data on wikipedia
      Some Questions:
 What is the country with the second
  largest GDP in the world?
A: Germany
B: China
C: Japan
D: Great Britain
E: India

ANSWER         C: Japan ($4.3 tril.)
                 Source: International Monetary Fund 2007 data on wikipedia
U.S.A. Is World’s Economic Engine

     United States produces one-quarter
      of the world’s goods and services.
     Economic expansions and
      contractions in the U.S.A. affect
      the economies of every country
      across the globe.

    …Let’s See Why!
Rank   Country           GDP     Cum GDP              Percent      Cum Percent
  1 United States    $13,800      13,800             25.8%               25.8%
  2 Japan             $4,350       18,150               8.1%             33.9%
  3 Germany           $3,300       21,450               6.2%             40.1%
  4 China             $3,250       24,700               6.1%             46.2%
  5 United Kingdom    $2,760       27,460               5.2%             51.4%
  6 France            $2,520       29,980               4.7%             56.1%
  7 Italy             $2,100       32,080               3.9%             60.0%
  8 Spain             $1,420       33,500               2.7%             62.7%
  9 Canada            $1,410       34,910               2.6%             65.3%
 10 Brazil            $1,290       36,200               2.4%             67.7%
 11 Russia            $1,220       37,420               2.3%             70.0%
 12 India             $1,090       38,510               2.0%             72.0%
 13 South Korea        $950        39,460               1.8%             73.8%
 14 Australia          $890        40,350               1.7%             75.5%
 15 Mexico             $880        41,230               1.7%             77.2%
 16 Netherlands        $750        41,980               1.4%             78.6%
 17 Turkey             $480        42,460               0.9%             79.5%
 18 Belgium            $440        42,900               0.8%             80.3%
 19 Sweden             $430        43,330               0.8%             81.1%
 20 Switzerland        $410        43,740               0.8%             81.9%
                               Source: International Monetary Fund 2007 data on wikipedia
California & Texas GDP
   California’s GDP, at $1.7 trillion in 2006,
    would place it #8 in the world.
     That’s   behind Italy and before Spain

   Texas’ GDP, at $1.1 trillion in 2006,
    would place it #12 in the world.
     That’s   behind Russia and before India
       Ranking California & Texas
Rank   Country                    GDP          Cum GDP              Percent       Cum Percent
  1 United States             $13,800         13,800              25.8%                25.8%
  2    Japan                   $4,350          18,150                8.1%               33.9%
  3    Germany                 $3,300          21,450                6.2%               40.1%
  4    China                   $3,250          24,700                6.1%               46.2%
  5    United Kingdom          $2,760          27,460                5.2%               51.4%
  6    France                  $2,520          29,980                4.7%               56.1%
  7    Italy
                 California    $2,100          32,080                3.9%               60.0%
  8    Spain                   $1,420          33,500                2.7%               62.7%
  9    Canada                  $1,410          34,910                2.6%               65.3%
 10    Brazil                  $1,290          36,200                2.4%               67.7%
 11    Russia                  $1,220          37,420                2.3%               70.0%
                   Texas
 12    India                   $1,090          38,510                2.0%               72.0%
 13    South Korea              $950           39,460                1.8%               73.8%
 14    Australia                $890           40,350                1.7%               75.5%
 15    Mexico                   $880           41,230                1.7%               77.2%


                                        Source: International Monetary Fund 2007 data on wikipedia
  Global Economic Powers Are
  U.S.A and European Union
                     GDP in $ Billions
Top 20 Total           $43,740                          81.9%

World Total            $53,450                       100.0%



European Union      $16,570                           31.0%

United States       $13,800                           28.1%
                 Source: International Monetary Fund 2007 data on wikipedia
                GDP Per Capita
Rank Country                  GDP Per Capita

   1 Bermuda                         69,900
                                                          Note:
   2 Luxemberg                       68,800
                                                          United States
   3 Jersey                          57,000               is the only
   4 Equatorial Guinea               50,200               large nation
   5 United Arab Emirates            49,700
                                                          in the World’s
                                                          Top Ten Rank
   6 Norway                          47,800
                                                          by GDP
   7 Cayman Islands                  43,800               Per Capita
   8 Ireland                         43,600
  9 United States                 43,500
  10 British Virgin Islands          38,500
                                 Source: International Monetary Fund 2007 data on wikipedia
  More on Per Capita GDP
                               GDP Per            Difference From
Rank   Country                  Capita                    US GDP
  15 Canada                $35,200                         -$8,300
  19 Japan                 $33,100                        -$10,400
  20 Australia             $32,900                        -$10,600
  25 United Kingdom        $31,500                        -$12,000
  25 Germany               $31,400                        -$12,100
  41 South Korea           $24,200                        -$19,300

  Point: United States has more money,
  per person, to spend on healthcare
  if that is what society chooses.
                      Source: CIA World Factbook 2007 data on wikipedia
What Are the Implications?
   Fact: homeownership in USA is at 68%.
   Point: what else can Americans spend
    money on?
   How about healthcare? As a luxury good?
   Middle class Americans want
    access to healthcare.
   When someone in the family is sick,
    Americans will spend lots of money
    to regain health.
Next, A Look at the Uninsured
    Following data is from
     “The Uninsured: A Primer”,
     October 2007.
    Produced by Kaiser Family Foundation.
    “One in every six Americans
     under the age of 65 did not have
     health insurance (18%) in 2006,
     for a total of 46.5 million people.”
Some Uninsured Facts
   In 2006, 8 of 10 uninsured were
    in working families.
   More than 70% of uninsured are
    from families with one or more
    full-time workers.
   11% of uninsured are from families
    with part-time workers.
   Poor: defined as incomes of less than
    100% of the federal poverty level—
    $20,614 for a family of four in 2006.
     More Uninsured Facts
   78% of the uninsured are native
    or naturalized citizens (35.6 million).
   That means, of the 45.6 million
    uninsured, 10 million are alien
    residents.
   75% have been uninsured
    for more than one year.
   That implies that 25%, or 11.4 million
    people, are between jobs
    (and health coverage) at any one time.
This Table from Kaiser shows that 7.5% of non-elderly
Americans who make more than $40,000 per year lack
health insurance. That’s 11.45 million of the uninsured,
about 25%.
    Observations about Uninsured
 46.5 million in U.S. don’t have health
  insurance during the year.
 About 25%, 11.4 million, are between
  jobs at any time and will regain health
  coverage when rehired; an average
  of six months between jobs.
 About 25%, 11.45 million, make more
  than $40,000 per year and opt not to
  purchase health insurance.
 About 23%, 10 million, are illegal aliens.
$57.83 per Month




                   $273.41 per Month
How Huge is Uninsured Problem?
  Close study of Kaiser’s numbers reveal
   that most of middle class America has
   health insurance—or could afford
   coverage but chooses not too.
  Medicaid is the health safety net
   for lower income individuals.
  Widely recognized that Medicaid
   is a flawed solution and not a way
   to achieve “universal coverage.”
  The oft ballyhooed number of 46 million
   Americans who don’t have health
   coverage is basically accurate—but
   doesn’t tell the whole story.
Don’t Forget CDHP Trend
      (Consumer-Directed Health Plans)

 Source: Inside Consumer Directed Care
 9.8 million now in CDHPs (Jan 2008),
  according to payer self-reports.
 Actual CDHP enrollment is reported at
  12.5 million people, about 6-7% of the
  commercially insured population.
 CDHP enrollment grew approximately
  50% in the last 12 months, so a lot of
  momentum.
Now to Demographics, or…
Meet the “Silver Tsunami”
 Today: 303 million Americans
 Currently 65+ = 38,690,169 (17%)
 Baby Boomers = 80,000,000 (26.4%)


 In 2050: 420 million Americans (est.)
 In 2050: 65+ = 86,705,637 (20.5%)



                                Source: U.S. Census Data
65+




65+
      Meet Baby Boomer #1
                         Generally recognized as the nation's
                          first boomer—born in Philadelphia
                          on Jan. 1, 1946, at 12:00:01 a.m.
                                    In 2008, the first wave
                                     of 3.2 million baby boomers
                                     turns 62—365 an hour!
                                    By 2030, Social Security's
                                     caseload will be 84 million
                                     people, up from 50 million
                                     today.
                                    Medicare will go from 44 million
                                     beneficiaries to 79 million.
                                    That will leave barely more than
                                     two workers paying payroll
Kathleen Casey-Kirschling            taxes for every retiree.
Grandma or Active Boomer?
     Early coverage of her showed
      her like the kindly Grandma
      typical of the past generations
      of Senior Citizens
                 But, This Boomer is not your
                            average grandma!
                                                She owns a yacht
                                                 moored in Maryland.
                                                Has residences
                                                 in Florida, New Jersey.
                                                She won’t be scrimping
                                                 in her retirement,
                                                 dependent on SS,
                                                 Medicare.

                                            Plus, look what else
Kathleen Casey-Kirschling will get her
first Social Security check in January...   she has!
She is photographed on the back of her
boat "First Boomer."
            Meet Her Press Agent!




“Kathleen Casey-Kirschling, with press
agent Lisa Stringham, talks about
being the first Baby Boomer Thursday
at Lake Mead.”

 At Social Security
 office, using the                             Getting her first
 Web site to apply                       social security check!
 for her benefits
Silver Tsunami’s Direct
Implications for Lab Medicine
  Utilization of lab tests is about
   to skyrocket over the next decade!
  Commercial lives (under 65 years),
   average about 2 lab tests per person
   per year.
  Medicare lives (65 or older)
   average about 9+ lab tests
   per person per year.
  80 million baby boomers are rapidly
   advancing into this age cohort.
  Do the math: 9 tests X 80 million!
Healthcare’s Employment Hurricane
 Factories Fading, Hospitals Step In
 The Wall Street Journal—15 April 2008

  Manufacturing jobs nationally shrank
   by 310,000 in past 12 months.
  Healthcare employment rose by
   363,000 jobs in past 12 months.
  Long term job growth in healthcare.
  This is significant strategic trend.
Healthcare Is THE Growth Sector!
   Duluth, MN saw healthcare go from
    14% of jobs in 1995 to 20% today.
   Bangor, ME saw healthcare go from
    12% of jobs in 1990 to 20% today.
   Eastern Maine Community College
    now has six health-related degrees,
    double from ten years ago—courses
    oversubscribed.
   Healthcare employment must grow
    to accommodate retiring Baby Boomers.
Hurricanes, Tsunamis, & Cyclones
   These macro trends discussed today
    represent extremely powerful forces.
   Keep in mind the example of the Asian
    Tigers during our lifetime:
       Japan first, then Hong Kong, Taiwan,
        Singapore,South Korea, Malaysia
        achieved status as a developed country.
     Now it’s China, India, Eastern Europe
      moving swiftly to large middle class,
      status as developed countries.
Let’s Put Things Together
 America has the wealth and income
  to spend on healthcare—even if the
  spending is “sloppy.”
 Middle class Americans are willing
  to spend to get the “best.”
 Thus, tension in the system will be
  between payers wanting to rein in
  utilization and spending—and
  consumers wanting access
  to quality care, without limitation.
    (Remember the fate of gatekeeper HMOS!)
    Uninsured & the Future
 By one perspective, uninsured can be
  viewed as an issue of “who pays.”
 Of 46 million uninsured,

     25% make more than $40,000 per year
     25% are between jobs for less than six
      months
     23% are illegal aliens.

   Hospitals, state and local governments
    (Medicaid funders) want a solution
    to the cost of caring for uninsured.
What the Numbers Tell Us
   United States has the income
    and wealth to spend lavishly
    on healthcare—which is the wish
    of middle class Americans.
   Media coverage of Social Security,
    Medicare, and Medicaid funding,
    spending, and long term demographics
    fails to tell the real truth about today’s
    political choices and the refusal of
    politicians in both parties to speak
    candidly to the American public.
    Solving Uninsured?
   Great deal of handwringing over
    uninsured primarily concerns
    social equity:
    “Everyone should have equal access
    to care and wealthy should not get
    better care than poor (simply because
    wealthy can pay for it).”
   Expect lots of battles between
    “class warriors” and “free marketers”
    on crafting a new healthcare coverage
    program in the United States.
What We Know for Sure
   Aging Baby Boomer demographics
    will trigger dramatic increases
    in utilization of existing lab tests
    and other health services.
   Expect Baby Boomers to support—and
    pay for—expensive genetic/molecular
    lab tests that can provide useful
    diagnostic information.
   Growing employment in healthcare
    means politicians must balance cost
    of care versus access to care.
Just a Reminder…
 “Follow the Money!”
 Middle class patients want access
  to healthcare and the latest technology.
     They’llpay, just like they willingly pay
     their dog and cat veterinary bills today.
 Vendors, providers, hospitals want to
  preserve access to patients and provide
  services in fee-for-service arrangements.
 These are powerful constituencies
  for Congress to ignore.
      Support for CDHPs?
   Employers want consumers to select
    providers and pay the provider directly.
    (CDHP trend, with HSAs, etc.)
 Middle/upper class Americans want
  choice and unlimited access.
 Hospitals and physicians want
  fee-for-service reimbursement,
  and most want freedom to compete
  for patients.
 These are powerful forces in favor
  of CDHPs.
Current Congress and Prez
   Intense fights to “reform” healthcare
    taking place in Washington, DC.
   Meanwhile, utilization will increase
    due to demographics.
   New health technologies will add
    to healthcare costs.
   Best for labs and pathology groups
    to have a “high service” strategy and
    deliver “patient-friendly services.”
So… What Lies Ahead?
   Healthcare systems in all developed
    countries are under great stress.
   Too much demand for services.
   Not enough money to pay for services.
   Similar problems in most countries.
   Let’s look at United States
    as an example.
Checklist of Change Agents-A
 Control/reduce annual increase in cost of care

 CDHPs / HDHPs / HSAs

 Transparency in provider pricing to patients

 Transparency in provider outcomes

 Provider pay-for-performance (P4P)

 Providers practice to accepted standards
  (reduce variability in care)
 Shift from reactive to proactive
  (acute care to early detection/early intervention)
 Patient safety—reduce medical errors
Checklist of Change Agents-B
 Emphasis on life style changes
  (Corporate wellness, NY City diabetes program)
 Recognition that Personalized Medicine
  is the future
 First Personalized Medicine services,
  with companion diagnostics
 EMRs in hospitals and physicians’ offices

 Wireless technologies in healthcare

 National goal of universal patient health record
  (PHR)
 Quality management methods (Lean, Six Sigma)
 Checklist of Change Agents-C
 Integration of patient data within health systems
  and local communities (eliminate paper records)
 Evidence-based medicine (EBM), driven
  by real-time collection of outcomes data
 Real-time patient eligibility and claims settlement
  for providers (including labs)
 ICD-10 implementation

 Use of Internet and World Wide Web
  for health services and health information
 Telemedicine
Checklist of Change Agents-D
 Issue of uninsured and underinsured

 Competition between concept of single payer
  (government) versus market-driven health
 Inadequate funding for state Medicaid
  programs
 Demographics of Medicare program

 Access to new health technologies

 Medical tourism and international competition

POINT: Many discrete forces of change!
Four Basic Sources of Change
  In U.S Healthcare Market
    One: Consumers as primary buyers of
     healthcare. (Private and Medicare/Medicaid.)
    Two: Major commitment to universal
     electronic medical record (EMR) and
     integration of healthcare data.
    Three: New diagnostic & lab technology:
     genetic-based lab tests, automation, POCT.
    Four: Widespread introduction of Deming-
     based quality management methods into
     healthcare and clinical laboratory profession.
                   Change Agent
New Technology in the Lab
   Steady stream of new diagnostic tests,
    many based on molecular technologies.
   Point-of-care testing (POCT) growing
    regularly in tests and capabilities.
   Different automation products
    available for pre-analytical, analytical, post-
    analytical. (Even middleware as
    automation.)
   Impact of these technologies magnified by
    enhanced informatics solutions.
   Remember: Labs’ end product is info!
                Change Agent
Quality Management Methods
   Healthcare—with push from employers—
    becoming more comfortable with using
    quality management systems.
   Savvy hospitals and labs are learning
    that Lean/Six Sigma provides competitive
    advantage, once the organization
    embraces these quality methods.
   Quality requires accurate measurements,
    more on this later.
   Lab Quality Confab, every September.
                  Change Agent
Consumers as Force for Change
     Growth in Consumer-directed
      health plans (CDHPs) makes
      more consumers to be primary buyers
      of healthcare. (HSA growth is rapid.)
     As buyers, consumers have higher
      expectations for accessing health
      services (appointments, referrals,
      ancillary services, etc.).
     As buyers, consumers want fast access
      to information: medical records, new test
      results, e-mail consults with docs, etc.
Worsening Health in the U.S.
  United States is experiencing declining
   health at a startling rate.
  Parallel trends in other developed
   countries, like the United Kingdom.
  Widespread incidence
   of chronic diseases.
  Younger people show symptoms
   of chronic conditions typically seen
   in middle-aged adults.
  Obesity is one example.
    Obesity Trends Among U.S.
    Adults between 1985 and 2007
    Definitions:
   Obesity: Having a very high amount of body
    fat in relation to lean body mass, or Body
    Mass Index (BMI) of 30 or higher.

   Body Mass Index (BMI): A measure of an
    adult’s weight in relation to his or her height,
    specifically the adult’s weight in kilograms
    divided by the square of his or her height in
    meters.
    Obesity Trends Among U.S.
    Adults between 1985 and 2007
    Source of the data:
   The data shown in these maps were collected
    through CDC’s Behavioral Risk Factor Surveillance
    System (BRFSS). Each year, state health
    departments use standard procedures to collect data
    through a series of monthly telephone interviews with
    U.S. adults.


   Prevalence estimates generated for the maps may
    vary slightly from those generated for the states by
    BRFSS (http://aps.nccd.cdc.gov/brfss) as slightly
    different analytic methods are used.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1985
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1986
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1987
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4”
                       person)




   No Data      <10%      10%–14%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1988
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1989
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1990
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1991
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1992
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1993
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1994
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1995
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1996
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1997
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       ≥20%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1998
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       ≥20%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 1999
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       ≥20%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 2000
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       ≥20%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 2001
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       20%–24%   ≥25%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 2002
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       20%–24%   ≥25%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 2003
                      (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data     <10%       10%–14%       15%–19%       20%–24%   ≥25%


Source: CDC Behavioral Risk Factor Surveillance System.
             Obesity Trends* Among U.S. Adults
                        BRFSS, 2004
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




   No Data      <10%      10%–14%       15%–19%       20%–24%   ≥25%


Source: Behavioral Risk Factor Surveillance System, CDC.
              Obesity Trends* Among U.S. Adults
                         BRFSS, 2005
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




    No Data     <10%       10%–14%      15%–19%       20%–24%   25%–29%   ≥30%


Source: Behavioral Risk Factor Surveillance System, CDC.
              Obesity Trends* Among U.S. Adults
                         BRFSS, 2006
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




    No Data     <10%       10%–14%      15%–19%       20%–24%   25%–29%   ≥30%


Source: Behavioral Risk Factor Surveillance System, CDC.
              Obesity Trends* Among U.S. Adults
                         BRFSS, 2007
                       (*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)




    No Data     <10%       10%–14%      15%–19%       20%–24%   25%–29%   ≥30%


Source: Behavioral Risk Factor Surveillance System, CDC.
             Obesity Trends* Among U.S. Adults
                 BRFSS, 1990, 1998, 2007
                (*BMI 30, or about 30 lbs. overweight for 5’4” person)

                   1990                                                   1998




                                                  2007




   No Data     <10%       10%–14%       15%–19%       20%–24%   25%–29%   ≥30%


Source: CDC Behavioral Risk Factor Surveillance System.
       Healthcare Worldwide
   Across the globe, every healthcare
    system has a similar problem:
    it cannot control the year-over-year
    increase in the cost of care.
   U.S.A. is only unique for the percent
    of GDP spent on healthcare.
 Medical tourism is the coming trend
  for middle and upper middle class
  of all developed countries.
 Examples exist: Singapore, Thailand,
  and India have thriving hospitals
  organized to serve medical tourists.
Medicine’s Evolution:
Reactive to Proactive
 Old model: wait for patient to show up
  in doctor’s office or the hospital.
 New ideal: proactive health services.

     Early   detection of disease
     Activeintervention to prevent chronic
     conditions and acute episodes
     Useof genetic-based technologies
     assess patient’s risk of disease
     over the course of his/her life.
So What’s Up in Lab Medicine?
     Consolidation and regionalization
      in pathology and laboratory services.
     More use of information technology
      within laboratories.
     More use of electronic and
      Web connections between labs
      and users of lab test data.
     Impending explosion in molecular
      and genetic testing.
     Rapid evolution toward fully-digital
      anatomic pathology imaging and
      integrated informatics systems.
What is Quality Management?
  It is not QA/QC.
  It is a comprehensive management
   philosophy appropriate for use
   in all operational and service areas
   of the enterprise.
  Key differences from earlier
   management paradigms:
      Customer  defines quality.
      Continuous improvement.
      System of prevention.
      Rigorous use of real time data.
Labs Meet “Lean”
 In United States in 2003, first
  laboratories launched Lean projects,
  primarily in chemistry and hematology.
 By 2006, these labs were introducing
  Lean into their histology labs.
 “First mover” pathology labs in the
  United States are combining Lean
  with automated histology solutions.
First Lean Project Outcomes…in 2003
                               TAT     Pre-Lean   Post-Lean
                             reduced     MTs        MTs

  Naples General
                             51%         7           2
  Hospital (Florida)
  West Tennessee
  (Tennessee)
                             42%         6           3

  Fairview Southdale
                       50%               7           3
  Hospital (Minnesota)
  Core high-volume chemistry/hematology lab
  Each Lean project lasted 12 to 16 weeks
Understanding
Six Sigma Quality
                Defects per
 Sigma Level      Million       Yield
               Opportunities
     6                 3.4     99.9997%
     5                233       99.977%
     4              6,210       99.379%
     3             66,807        93.32%
     2            308,537         69.2%
     1            690,000           31%
      Where Does the Laboratory
      Industry Stand?
DPMO                IRS tax
                    advice
1,000,000                         Doctor prescription writing
 1,00,000                              Payroll processing
   10,000                                   Airline baggage handling

    1,000
                                                Clinical
      100                                       laboratories
                      Average
       10             Company
        1                                                          Airline fatality rate



            1   2             3    4          5             6          7

                Sigma Scale of Measure
              Six Sigma for Lab Processes
            Q-Probe QUALITY INDICATOR                          % ERROR            DPM          SIGMA*
        TDM timing errors                                               24.4 244,000                    2.2
        Cytology specimen adequacy                                      7.32      73,700              2.95
        Surgical pathology specimen accessioning                          3.4     34,000                3.3
        PAP smear rescreening false negatives                             2.4     24,000              3.45
        Order accuracy                                                    1.8     18,000                3.6
        Surg path froz sect diagnostic discordance                        1.7     17,000                3.6
        Duplicate test orders                                           1.52      15,200              3.65
        Laboratory proficiency testing                                    0.9       9,000             3.85
        Wristband errors (not banded)                                   0.65        6,500                  4
        Hematology specimen acceptability                               0.38        3,800             4.15
        Chemistry specimen acceptability                                  0.3       3,000             4.25
        Reporting errors                                            0.0477            477               4.8


        *Conversion using table with allowance for 1.5s shift

The following Sigma metrics are drawn from Nevalainen D, Berte L, Kraft C, Leigh E, Morgan T.: “Evaluating Laboratory
Performance on Quality Indicators with the Six Sigma scale.” Arch Pathol Lab Med 2000;124:516-519.
Lean Management Methods
   Patient safety trend creates the need
    to reduce errors and mistakes.
   Measuring provider outcomes creates
    the need to develop management
    systems which, by design, generate
    consistent and high quality outcomes.
   Complexity of molecular testing creates
    need to develop systems which are simple
    for lab to use and to manage.
   Budget constraints and cost increases
    creates need for a lab system which
    produces at lowest cost.
New Paradigm in Lab Management?
   Acceptance of quality management
    methods in lab medicine signals new
    paradigm in pathology management.
   Use of detailed, real time information
    to allow tight management of work
    processes in pre-analytical, analytical,
    and post-analytical.
   Tools provided to sustain continuous
    improvement.
   Customers (clinicians, patients, payers)
    define quality, so lab can organize
    to deliver that quality.
Evolution or Revolution?
 We can argue about pace of change…
 …but it is clear that healthcare systems
  in many developed countries
  will undergo radical makeovers
  during the next decade.
   Many laboratories already adapting
    to these changes and striving to
    maintain their clinical value to clinicians.
Thoughts on Molecular
 Molecular has transformed infectious
  disease testing.
 Molecular is actively transforming
  oncology:
     Predictive (risk)
     Diagnostic
     Therapeutic options
     Monitoring patient progress
     Likelihood of recurrence
 Personalized Medicine
Currently, much of medical practice is based
on “standards of care” that are determined by
averaging responses across large cohorts. The
theory has been that everyone should get the same
care based on clinical trials. Personalized Medicine is
the concept that managing a patient’s health should
be based on the individual patient’s specific
characteristics, including age, gender, height/weight,
diet, environment, etc.
                 Source: www.wikipedia.com
Key Drivers (Follow $s & Rs!)
 Starting point is “companion diagnostics”
    Briefly stated, [companion diagnostics] is a strategy
    pursued by some IVD companies, Roche Diagnostics
    in particular, whereby the company develops a
    gatekeeper biomarker assay. This is a lab test that
    serves to qualify a patient for treatment with a
    particular drug. The most common example of such
    a test is the HER-2/neu assay that is required prior
    to treatment with Herceptin.
Source: Bruce Friedman, M.D., www.labsoftnews.com
How Labs Need to Change
   Informatics becomes
    critical success factor.
   Need to capture, store, assess,
    share huge quantities of data.
   Whole human genome sequences
    have 3 billion base pairs!
   Interconnectivity, two-way links
    with all lab users.
   Use lab data to produce information
    which creates clinical knowledge.
Comment on Current LIS
   LIS vendors, as a class, have failed their
    laboratory customers.
   Key failing: most LIS do not have a
    relational database for lab test data.
   This single fact is one historical barrier
    preventing lab medicine from contributing
    huge value to healthcare.
   Most LIS products have not been updated
    with newest technologies, frustrating labs
    that are IT innovators.
   PAML in Spokane represents one example
    of innovation—as a “do it yourself” effort.
Other Demands on Labs
   Become a multi-dimensional lab testing
    organization.
   Lead, organize, guide, manage,
    and execute lab testing in all settings
    within the integrated health continuum.
   Pathologists and lab professionals
    understand diagnostic technology.
     When to order test.
     When technology provides reliable result.
     How clinician should use test results.
Labs Must be Adopters
 Ready to offer new technologies
  and new services as clinical efficacy
  is demonstrated.
 Must incorporate “system of prevention”
  management methods to achieve
  required standards of quality.
 Proactive at serving needs
  of tomorrow’s health consumer:
  a patient with high expectations!
 Willing to be an active and available
  consultant to clinicians as normal
  course of business.
Value Added Opportunities
   Expedite the effectiveness of EMRs.
   Create clinical knowledge from lab test
    data that raises patient outcomes.
   Use of quality management methods,
    to reduce and eliminate errors that
    affect test integrity and accuracy.
   Contribute to evidence-based medicine
    that advances medical care.
   Develop specific capabilities as a
    consultation resource for clinicians.
Some Final Thoughts
   It’s all about use of IT! A lab test result
    delivered on paper will soon be
    an impediment to superior healthcare.
   With medicine becoming more
    complicated, laboratories that
    add value to clinicians will be
    paid extra for that value.
   Tomorrow’s laboratory winners
    will be extensive users of IT.
   These lab winners will be savvy
    and innovative in deploying IT.
Dont’ Overlook…
   Genetic medicine and molecular
    diagnostics have true revolutionary
    potential.
   Labs are positioned to lead that
    revolution.
   Laboratory medicine is at a crossroads,
    yet most lab professionals unprepared
    for the coming swift transformation.

                    -30-
A useful resource…
…for laboratory news, trends,
& management innovations!



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