Why Replace Your Laboratory Information System? Things To Consider

Many clinical laboratories and pathology groups acquired their laboratory information systems (LIS) in earlier days of plenty, when capital budgets were cornucopias of plenty or were, at least, reasonably adequate. Today, many of these same laboratories are still using the LIS system they acquired 10 or more years ago. Clearly, there have been many changes in the last few years, both in the laboratory operating and regulatory environments, with new regulatory constraints and an emphasis on cost containment and LIS system capabilities.

The older laboratory information systems may not be optimum for serving the needs of the laboratory or hospital at large. Nevertheless, the replacement of the legacy LIS system with an associated large capital or operating budget expenditure is not easily accomplished. To justify the replacement of the antiquated LIS it will be necessary to develop and present strong operating, cost-impact, and business-related justifications.

Some substantial reasons for replacement include:

• LIS system capabilities are insufficient and provide no opportunities for test volume growth or the addition of new clients, thus limiting the lab’s revenue potential.

• The lab information system is very expensive to operate and maintain and its pricing model no longer fits your lab's cash flow or financial situation.

• The current LIS system is poorly integrated with laboratory billing and revenue cycle management (RCM) systems, plus other institutional laboratory software systems. 

• The lab is using software and hardware that’s no longer mainstream (inconsistent with national or industry standards and incompatible with existing laboratory systems).

• The laboratory information system lacks a contemporary operating platform (not cloud-based). 

• The support services for the LIS system are poor. Problem fixing and/or enhancements are substantially delayed. Certain enhancements may have regulatory implications putting the institution at risk.

• The lab information system provides little or no comprehensive applications for molecular diagnostics, digital pathology, flexible reporting, direct-to-consumer lab testing, application of artificial intelligence, and other “leading edge” applications. All of which places the lab at a competitive disadvantage.

• The LIS system simply does not perform well. There are significant “slow-down” issues that affect the lab’s turnaround times.

• Maintaining the LIS software requires significant “in-house” expertise and the current LIS company vendor is not sufficiently responsive to the lab’s changing needs.

• The laboratory information system has difficulty or cannot comply with changing federal and/or state regulations.

• Security aspects of the LIS system are subject to penetration and/or not compliant with HIPAA requirements.

• The original LIS company is no longer in business and support for the LIS system is either limited or non-existent.

• The original LIS company has replaced the lab’s current LIS model with a more modern version and will be discontinuing enhancements and support for the older model.

• The lab’s LIS company has been acquired by a larger company with a competing laboratory information system and the new company has failed to provide contractual assurances of continuing support.

If any of the above replacement criteria have been met, a replacement LIS system may be appropriate.

In times of tight budgets, there is much competition for very limited capital funds. It will be necessary to prepare a well-thought-out and quantified rationale to justify why the laboratory should receive budget approval for a replacement laboratory information system. Very often a rigorous financial spreadsheet analysis will be required with expected financial criteria which must be met for the proposal to qualify for funding. A spreadsheet model to use for the analysis may be available from your financial office, lab information systems department, or from the potential lab vendors, themselves.

Today, various financing alternatives may remove or diminish the capital budget allocation requirement. Approaches include leasing and paying for the LIS system per transaction (based on testing types and volume and similar to the SaaS provider model). A transaction could be defined as requisition processing from accessioning through reporting. The number of tests processed could also be factored into the transaction volume cost formula. The SaaS model may be beneficial to laboratories with limited capital budgets as there are little or no “upfront” costs and the monthly costs for LIS system services will vary with workload. Therefore, if laboratory volume decreases, the monthly cost will be less in contrast to a capital acquisition where, after initial LIS system acquisition expenses, there will be a fixed cost per month for service/support that will not vary even if the business declines. When considering the LIS replacement be sure to discuss payment options with your prospective LIS software vendors and your institutional CFO.

Granted that, except in unusual and critically apparent circumstances, it will be necessary for the laboratory to do the required analysis and “number crunching” to help justify its case for a replacement laboratory information system. To the extent that a rigorous and definitive analysis and cost-benefits projection is made so shall the laboratory’s chances of obtaining the necessary approvals and budget allocation be enhanced.

References: 

Winsten, Dennis, “Why Spend the Money? Justification of Laboratory Information Systems”, Clinics and Laboratory Medicine, R. Aller & F. Elevitch, Editors, W.B. Saunders Company, March 1991.

Weiner, H and Winsten, D., Chapter 6, Pathology Informatics-Theory and Practice, Editors: Pantanowitz, L, Tuthill, JM, Balis, U. American Society for Clinical Pathology press, 2012.

Mr. Winsten is president of Dennis Winsten & Associates., an independent healthcare information systems consulting firm with headquarters in Tucson, Arizona. He has over 40 years of computer experience including over 30 years in healthcare systems.  www.dwinsten.com