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Cost-benefit analysis: Upgrading your CLIA waived lab to moderately complex

At some point, busy practices may consider expanding their onsite CLIA waived lab operations into a moderately complex point-of-care (POC) lab facility. While this care setting advantage gives providers the benefit of faster turnaround times and improved patient service, these upgrades can come with new investments and costs — some expected, some not.

CLIA waived testing may meet patient needs if a provider's onsite testing is limited to basic cholesterol or glucose screening. However, if physician offices are sending out a high volume of bloodwork tests each day, they can benefit from the ability to run more complex tests in-house and receive results faster. This is when you'll want to consider upgrading your lab, according to Paul Jaswal, director of laboratory consulting services at McKesson Medical-Surgical.

"It's not necessarily because of the convenience of a moderately complex lab — or even the reimbursement potential," says Jaswal. "Having an onsite lab can help enhance your facility's offerings and support improved patient care, especially if you're already unsatisfied with the reference lab's turnaround time or quality." 

Here's a look at the costs and benefits to consider when deciding whether to expand your CLIA waived lab to a moderately complex facility.

5 costs involved with the investment of a POC lab

Beyond the known investments of the equipment and set-up of a moderately complex POC lab, there are some costs that might be unexpected or occur later on in the expansion process.

1 | Downtime from launch date delays

Upgrading to a moderately complex lab can take time, which varies based on the location of your lab and your staff and equipment needs.

Heather Salyer, director of lab services at McKesson Medical-Surgical, explains that after you've gone through the process of applying for state and federal licenses, it can take several weeks to purchase and receive equipment. Coordinating manufacturers' delivery schedules and training sessions can be complicated and labor-intensive. Unfortunately, these dates don't always align with the customer's initial plan.

"You should expect varied delivery dates," Salyer says. "Different analyzers come from various manufacturers who will all have their own delivery schedule. On top of that, be prepared to schedule trainings that depend not only on your own staff's availability, but also the manufacturers'."

Supply chain challenges can also contribute to unforeseen backorders, which can further delay launch.

"[The timing] may vary based on the manufacturer and the instrument. You have to be flexible," Salyer advises.

The best way to plan around these hiccups? Build more contingencies into the timeline to account for unexpected delays. It's better to accelerate your opening than to postpone it.

2 | Lab space modifications

Part of the lab planning will likely involve reconfiguring lab space to accommodate your new equipment. These new considerations may include electrical outlets, water hookups and other physical needs. Some of these modifications may be more apparent, like the need for enough plugs and fittings for the analyzers themselves or more space for increased foot traffic and new staff. Other equipment modifications may be less foreseen, like the need for extra refrigerator storage for reagents.

3 | Purchasing the appropriate supplies

In addition to the equipment costs of new instruments, you should factor in the costs from all the accessories that keep those instruments functional, such as reagents and consumables.

"There are typically other accessories that aren't part of the instrument that you will need to purchase on an ongoing basis to replenish your inventory of everyday lab materials," Salyer says. "Plus, you're also going to need to store those accessories, so accounting for extra cabinetry and other storage options is essential."

4 | Staffing

Labor can sometimes be difficult to source and the cost of labor may vary, depending on the caliber of equipment you purchase. State regulators may also require investments that can increase labor costs.

As Jaswal explains, "Beyond federal guidelines, each state may impose stricter guidelines around qualifications, staffing requirements and how many labs a single lab director can oversee... In some cases, those regulations may be focused on the safety of the patient." Others may be more about staff readiness and performance. In addition to these labor costs, you may have other staff related fees as well. All of these factors can impact your lab's staffing plans.

5 | Inspections, state regulations & other startup costs

Moderately complex labs involve regulatory fees, from the volume-based annual CLIA fee structures to bi-annual inspection fees. In addition to those standard federal fees listed on the CLIA fee schedule, some states may require separate fees for state-run inspections.

In addition to inspections, be sure to consider proficiency testing. These determine the performance of an individual lab for specific tests and monitor the lab's continued quality and performance. Proficiency samples are run through the lab and treated just like your patient's orders.

"Proficiency surveys charge a sliding scale based on how many and what types of tests are performed," Jaswal says. "Fees are based on the different types of tests offered in your lab and they can add up quickly."

"Since fees can vary so widely," Jaswal advises, "it's best to consult an experienced team, like McKesson, who can review your overall plan and provide an estimate based on your lab's particular needs."

Our laboratory implementation team helps with initial lab setup and implementation, ensuring you have enough space for lab equipment, verifying hazard protocols, validating and testing equipment and more. This team can help set up single pieces of lab equipment or help build an entire new lab. Email us today to get started >

6 clinical & operational benefits of a moderately-complex in-house lab

While the investments of a moderately complex lab might be significant, the advantages may outweigh the costs. These are some of the key benefits of converting your CLIA waived lab into a moderately complex lab. 

1 | Faster turnaround times

For many providers, waiting three or four days for reference lab results can disrupt the continuity of patient care. When a moderately complex lab is onsite, both providers and patients get the benefit of same-day test results to guide treatment decisions.

Jaswal says that fast turnaround times are most helpful for urgent or emergency care environments as well as specialties like oncology, where early detection can make a world of difference.

"If someone's coming in with chest pains, for example, it makes sense to have a test on deck so that you can either treat directly or transfer to an emergency setting," he says. "And of course, if you're trying to diagnose an illness, having answers earlier is certainly better."

2 | Improved patient satisfaction & outcomes

Waiting for lab results can make patients apprehensive and dissatisfied with their provider — even when the delay is out of the provider's control. With a moderately complex in-house lab, however, many patients get the benefit of same-day results and, potentially, a same-day diagnosis and treatment plan. This may be a positive change from their prior medical experience, and it can also drive word-of-mouth support for your practice. It can give you an advantage over other clinics when patients are deciding where to spend their medical dollars.

Karen Magovern, senior director of lab implementation at McKesson Medical-Surgical, paints a clear picture of how different things can be for a patient who has access to in-house testing versus a patient who has to go somewhere else for bloodwork.

"The minute a patient is presented with the need for bloodwork, they're worried about what their results will be," Magovern says. "They're worried if they're okay, they call a best friend or family member... They make an appointment two days later and then you're disconnected from when they're getting those results."

A far better scenario is when the patient gets those results during their initial visit.

Magovern suggests an alternative scenario: "Instead, you go to your doctor's office, go inside and are told 'Our technician will take your blood and then we'll review your results together.' You'll have all the answers you need before you go home."

Not only can faster turnarounds support improved patient satisfaction, but there are other benefits to glean as well. Having onsite lab testing can drive improved outcomes when early diagnosis leads to early treatment planning and supports improved patient compliance.

3 | Quality you control creates a strong return on investment

Occasionally, providers might start to question the performance of their reference lab, which can lead to trust issues and disrupt clinical care. With onsite labs, providers get the benefit of controlling the quality of testing that they directly oversee. This minimizes the uncertainty of reference labs if you have had concerns about this in the past.

In addition, you have more equipment options with an upgraded lab, allowing you to invest in the best equipment upfront so you can achieve the most efficient results.

Magovern says: "You can either buy the more inexpensive equipment that's slower and takes more personnel hours or you can spend more on the capital investment to keep labor costs manageable... My advice is to always invest in better technology so that you can optimize workflows with the staff you have."

4 | Increased follow-up from patients

From a patient's perspective, having to schedule a separate lab appointment at a different facility can introduce barriers to care that lead to patient compliance problems and other impacts.

"I've had practices where over a third of our patients wouldn't make it to the lab," Magovern says. "And no one follows up to remind them that they never went for bloodwork."

With an in-house moderately complex POC lab, however, there is little if any loss to follow-up because lab tests take place in the same facility — or even the same exam room where patients are initially seen. In addition to providing more convenience and efficiency for providers, onsite testing removes these barriers to care for patients.

5 | Better reimbursement opportunities

If you run your own moderately complex POC facility, you might have access to other reimbursement opportunities.

The Medicare Access and CHIP Reauthorization Act (MACRA) is changing how Medicare rewards clinicians through the Merit Based Incentive Payments System (MIPS).1 Now, you're rewarded for providing better care based on factors such as quality, resource use, cost and clinical practice improvement activities.2 You'll want to talk to a specialized consultant, like McKesson's MedSol laboratory consulting team, to determine if upgrading to a moderately complex lab might help elevate you to a higher reimbursement tier.

"Physicians are rewarded for outcomes today," Magovern explains. "If they're keeping their patient out of the ER because they're adjusting medication based on lab results, the reward for better outcomes is there."

If you're considering upgrading to a moderately complex lab, then you're already running a busy practice. Magovern explains that your volume might help you enjoy lower costs over time. For example, a waived lab may have a higher cost per test than a moderately complex POC lab, but with fewer up-front costs. If you have a high volume, making that up-front investment and lowering your cost per test can pay off over time.

However, Jaswal cautions against upgrading your lab solely because of reimbursements, as this can lead to making laboratory decisions for the wrong reasons.

Instead, he says, a lab should focus on more tangible and lasting benefits, improved patient satisfaction, higher quality care and better patient outcomes. "You should be using a laboratory as a complement to help diagnose the patient," he says. Reimbursement may follow, but on the other hand, current reimbursement policies are always subject to change.

From setup, to ongoing lab consulting, and compliance training, MedSol's licensed professionals can provide the support you need for your laboratory. Check out MedSol >

6 | Reduced community spread of infectious diseases

Another benefit to having an in-house moderately complex lab is helping to reduce the community spread of infectious diseases. The fewer places your patients have to go for medical treatment, the better. With the COVID-19 pandemic, every exposure is an additional opportunity to possibly catch or spread the virus. Many patients, especially those who are at higher risk from comorbidities, may prefer a medical practice that allows them to get all their labs in-house.

Making the decision to upgrade to a POC lab

While these costs and benefits may seem complex, they don't have to be. Collaborating with a group like McKesson can help you assess your own cost-benefit ratio, so you can decide if upgrading to a moderately complex lab is appropriate for your facility.

"You definitely want to be sure that whatever company you're working with has a diverse and experienced team to help walk you through the process, because there's a lot involved in coordinating contracts, orders, processing, delivery, installation, training, implementation and more," says Salyer. "That's really what sets McKesson apart and it's why we're uniquely suited to support customers throughout this journey."

Check out our laboratory services & solutions designed to help you run a better, more efficient lab.


Be advised that information contained herein is intended to serve as a useful reference for informational purposes only and is not complete clinical information. This information is intended for use only by competent healthcare professionals exercising judgment in providing care. McKesson cannot be held responsible for the continued currency of or for any errors or omissions in the information.

© 2021 McKesson Medical-Surgical Inc.