Case Study

Palmetto Health Diagnostic Laboratories Scales a High-Performing Outreach Program

Key takeaways

Results:

New Outreach sales generate over $350,000 per month in Net Revenue ($4.4M+ outreach sales over first 2.5 years)

  • 6 Hospitals
  • More than 2,000+ affiliated physicians
  • Servicing more than 20+ counties in South Carolina

Background:

Palmetto Richland Memorial Hospital (PRMH), located in South Carolina’s capital of Columbia, is one of six hospitals that form the Palmetto Health system.  PRMH started an outreach program to realize its goals of developing a statewide reference laboratory and turning the laboratory into a profit center for the hospital. Like many other institutions venturing into outreach, PRMH placed an incumbent employee in the newly created role of outreach manager, and at the end of that fiscal year, the outreach program generated $10,000 in new revenue. Without a professional salesperson and using a sales approach developed on the fly, PRMH’s program grew modestly over the next two years, posting $335,000 net revenue per month by the end of Year 2 of the program. Dissatisfied with these moderate gains, Palmetto sought the assistance of an outside firm specializing in outreach laboratory sales and marketing.

Challenges:

Primary Challenges:

  1. Create a professional sales team to compete with well-trained and strategically-focused commercial laboratory representatives.
  2. Enhance and create new internal operational systems to provide quality and consistency of deliverable laboratory services equal to or better than competitors.
  3. Outsource billing functions to obtain better data, pricing control, and billing submissions/collections.

Secondary Challenges:

  1. Obtain financing for, evaluate, and integrate physician web-based order-entry and electronic results retrieval connectivity system.
  2. Expand key managed care contracts and develop marketing plan to establish laboratory as a competitive player in the marketplace.
  3. Tighten system between contracted pathology service company and laboratory to offer seamless one-stop solution for laboratory clients.

Strategy:

In Year 4 of the program, Palmetto engaged hc1 to perform a complete outreach analysis.  The hc1 specialists worked both on- and off-site to conduct an in-depth market opportunity assessment as well as an operational readiness and compliance review.  The hc1 analysis concluded that to profitably expand the outreach program statewide in a highly competitive market, Palmetto needed to create a distinct identity for the laboratory, view the laboratory as a profit center, and be willing to invest resources to grow the outreach business.

Acting on these recommendations, Palmetto hired hc1 late in Year 4 to analyze and redesign the laboratory’s central processing operation, develop a sales plan and strategic options, and manage the outreach sales and marketing program. At the beginning of Year 5, Palmetto Health Diagnostic Laboratories was created.

Results:

Growth And Profitability:

  • New outreach sales now generate over $350,000 per month in net revenue and total more than $4.4 million for the period since hc1 began managing the outreach program (Year 5 to mid way through Year 7).
  • Outreach charges for Year 7 have grown in excess of $20 million.
  • Net revenue for Year 7 will surpass $9.1 million from over 550,000 tests performed.
  • Total outreach generates an average of $802,000 in net revenue per month.
  • Outreach test volume and revenue have nearly doubled from same-month comparisons over the last two years.

Sales:

  • Sales team includes two new sales representatives added in at the beginning of Year 5 and an Account Service.
  • Representative added in Year 7.
  • Expansion into sales plan’s secondary market is underway, including seeking sites to create patient access and market presence.
  • Implementation of a physician electronic order entry and results retrieval connectivity system with ability to interface PMS and EMR systems began midway through Year 7, opening the door to begin testing for many more large multi-practice physician groups.

Operations:

  • Central processing was reorganized to improve efficiency, provide checks to reduce errors, and create ability to handle large increases in volume without changes in process flow or excessive addition of staff.
  • Key metrics were defined, measured, and displayed each month and all key department leaders reviewed in a monthly laboratory sales/operations meeting.
  • Client service manager and phlebotomy supervisor positions were created to ensure proper focus and delegation of responsibilities and allow key laboratory leaders to focus on laboratory strategic initiatives and operations.
  • Billing functions were successfully transitioned to a third-party service provider in Year 5.

Additional Resources

5 Ways to Grow Your Outreach Lab Business

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The Importance of Outreach for Health System Labs

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4 Tips to Grow and Manage Your Lab Outreach Program

August 21, 2024 Outreach is an important piece of any successful laboratory. For reference or specia...

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