Why Replace Your Laboratory Information System? Things To Consider

Many clinical laboratories and pathology groups acquired their laboratory information systems (LIS systems; LIS software) in earlier days of plenty, when capital budgets were cornucopias of plenty or were, at least, reasonably adequate. 

Many of these organizations still use the lab information system they acquired 10 or more years ago to their detriment. That’s because 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 software capabilities.

The older laboratory information systems may not be optimum for serving the needs of the laboratory or hospital at large. Nevertheless, replacing the legacy LIS laboratory information system with an associated large capital or operating budget expenditure often requires a lot of groundwork. 

To justify replacing the antiquated medical LIS system it will be necessary to develop and present strong operating, cost-impact, and business-related justifications.

Some substantial reasons for lab information system 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 expensive to operate and maintain and its pricing model no longer fits your lab's cash flow or financial situation.

• The current LIS system’s integration with laboratory billing/lab revenue cycle management (lab RCM) systems and other institutional laboratory software systems is poor. 

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

• The laboratory information system doesn’t have a contemporary operating platform (not cloud-based or not user-friendly). 

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

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

• The LIS system has a performance problem with significant “slow-down” issues affecting the lab’s turnaround times.

• Maintaining the LIS system 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 complying with changing federal and state regulations.

• Important security aspects of the LIS system are subject to penetration and not compliant with HIPAA requirements.

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

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

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

Learn More: How to Turn Your Mid-Sized Medical Laboratory into a Thriving Large-Scale Operation

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 limited capital funds. To combat this, 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 for this analysis may be available from your financial office, the LIS system department, or the potential laboratory information system vendors offering the LIS software upgrade.

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 most attractive 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 also decreases in contrast to a capital acquisition where, after initial LIS system acquisition expenses, there will be a fixed monthly cost for service and support that will not vary even if the business declines. 

Learn More: LigoLab Informatics Platform: Uniquely Designed to Deliver Maximum Value

When considering the best LIS software replacement options for your lab include discussions of various payment options with the 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 rigorous and definitive analysis and cost-benefits projections are made, the laboratory’s chances of obtaining the necessary approvals and budget allocation shall be enhanced.

Learn More: What You Need to Know Before Contracting with a Laboratory Information System (LIS) Company

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 headquartered in Tucson, Arizona. He has over 40 years of computer experience including over 30 years in healthcare systems.  www.dwinsten.com