Wilmington consulting firm takes aim at healthcare costs of lab tests
By Roger Morris
Special to Delaware Business Times
The primary business goal of Kentmere Healthcare Consulting is to ask the question: “Can there be
Over the past 25 years, the amount of knowledge that doctors and patients can get from medical laboratory testing has exploded. Conventional chemical testing has broadened greatly with new methodologies to find out whether we have diseases or medical conditions that before were not detectable and then help guide us toward their treatment.
Beyond these tests, the whole new arena of DNA testing ““ once considered the stuff of science fiction ““ can give us insights into what traits we might have inherited, both good and bad. These DNA tests can provide us with information needed to guide our treatment decisions and help answer the philosophical considerations that often arise once we have this information.
But how much of this knowledge is necessary to make treatment decisions? Will the knowledge gained significantly enhance the patient’s well-being? How much repetition and redundancy is just plain wasteful? And can the knowledge be acquired more economically without adversely affecting patient outcomes?
Trying to answer these questions is a “relatively new business,” said Dr. Russel E. Kaufman, M.D. chief medical officer for Delaware-based Kentmere. “Testing has gotten so much more complex and expensive over the past few years” he said. “Once, a test might cost $12, while today it can cost $3,000 to $4,000.”
Since it was founded in 2000, Kentmere has worked solely with insurance companies’ health care plans to give them the basis for making reimbursement decisions that give physicians information they need for patient treatment while also being cost-effective to the reimburser.
“We are an independent company, and we don’t do lab testing,” Kaufman emphasized, “so we have no conflicts of interest in working with insurers. We never accept meals or gifts.” Indeed, Kentmere claims it is both the oldest and the only independent LBMP ““ lab benefit management program ““ in the country, patterned somewhat after similar companies that work with insurers on their pharmaceutical purchases and reimbursement.
Kentmere’s clients range in size from programs with as few as 16,000 members to those with more than 23 million. Its goal is cost-savings to the plan of at least 10 percent with no reduction in quality of patient outcomes. These lower costs do not just help the insurer ““ they can also can show up in lower subscription costs and co-pays for the patient.
One of Kentmere’s Delaware clients is a prominent one ““ Highmark Delaware, the Blue Cross/Blue Shield provider. “Highmark Delaware is constantly looking at ways to address rising health care cost,” Highmark said in a prepared statement. “Our top priority is to provide our members the highest quality health care at the lowest possible cost. Partnering with organizations like Kentmere Healthcare is one way that we work on behalf of our members to lower health care cost.”
A starting point to Kentmere’s consulting is keeping up to date on treatment articles published in peer-reviewed publications and with ongoing clinical trials. “We tend not to concentrate on abuse [by those who prescribe patients tests] as much as we do on helping insurers form the appropriate policies,” Kaufman said. “In spite of health plans’ massive organizations with intense analytics, we help them better understand their business and help them re-shape their policies.”
While DNA testing can be a powerful tool in some cases, in others it is information that can’t always be acted upon. Knowing that a patient has a genetic probability of contracting an incurable disease may have limited medical applicability. It’s also important to realize that re-testing for hereditary diseases such as breast cancers has to only be done once ““ DNA doesn’t change with age or differing circumstances.
Kentmere also helps insurers decide when to unbundle lab testing to eliminate tests not needed, to determine how often a test should be repeated ““ if at all ““ and seeing if there is alternative testing. “We also help them determine whether or not a test has to be pre-authorized,” said Kaufman, that is, whether a physician has to check the insurer before ordering a test, and even which type of general practitioner or specialist is permitted to order the lab test. “We also often get involved with contract negotiations on what will be reimbursed or not and at what costs,” he said.
“It’s important to realize that ““ unlike in Canada, Germany and England ““ government and private healthcare policies in the U.S. often don’t agree,” Kaufman points out, “and that the many stakeholders can’t be pulled together with one set of rules.”
Not surprising, there is pushback from the companies that provide laboratory testing. The American Clinical Laboratory Association (ACLA) asserts that, “Although many labs have managed to navigate changes in markets and reimbursement while still continually improving quality, continued arbitrary and severe payments reductions will result in reduced access to essential tests for critically ill patients, less innovation, more closures or consolidation of businesses and more people out of jobs.”
The organization said that there are more than 622,000 employees in the laboratory business nationwide and points to the amount of taxes paid by both employers and employees.
Kaufman, however, emphasizes the need for someone such as Kentmere to navigate the complexity of the systems. “The challenge is in when you think of all the shareholders involved in health care ““ patients, providers, labs, pharmacies, pharmaceutical companies, hospitals, insurers ““ is how to get them all on board if you want to consider total population’s health.”