Webinars

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_{Michael Kalinowski}: Okay, I think we're ready to begin.So first off, welcome to today's webinar. We know for everyone, their time isvaluable, and we really appreciate the folks that have joined this webinar totake a little time with us and go through this presentation. We have industryexpert and advocate Stan Scofield on, and the presentation of this webinar isentitled Healthcare Disruptors and Transition Strategies forSuccess.

_{Michael Kalinowski}: Now, most people probably alreadyknow who Stan is. Former president of NorDx Regional Laboratory Corporationwithin the Maine Health System. Also founder and managing principle of TheCompass Group, a federation of 32 regional laboratory corporations within thelargest and most prestigious healthcare systems in North America.

_{Michael Kalinowski}: Actually Stan's role with that groupis head of new product, technology and evaluation. Our audience here, independentclinical laboratories and pathology groups. So we've tailored this presentationto hit on points that should resonate with you. Without further ado, welcomeStan. We do appreciate your time and we really look forward to this.

^{Stan Schofield}: Thank you, Michael. Good afternoon,ladies and gentlemen, or good morning, wherever you might be. It's a pleasureto be here today. I'm coming to you from Portland, Maine.

^{Stan Schofield}: So let's kick it off. Healthcaredisruptors and transition strategies for success. There's a lot going on inhealthcare in general, and, we're all working to do a better job. Hopefullytoday we'll give you a roadmap of the things that are happening in thelaboratory space.

^{Stan Schofield}: Today's lab world is vuca. What isvuca? VUCA is a military term. It means volatile, uncertain, complex, andambiguous. Sounds a lot like the world I live in and work in every day.

^{Stan Schofield}: Disruptive themes we live in ata  time of disruption…

^{Stan Schofield}: Workforce availability, can you findanybody?

^{Stan Schofield}: Stability, will they stay?

^{Stan Schofield}: Reliability, will they show up?

^{Stan Schofield}: Competition, we used to take fromhospitals and restaurants and movie theaters for entry level people but theyall have 401k plans now and they all have health benefits and so now we'restealing from each other. On top of that, other industries are stealing from usbecause they're paying better.

^{Stan Schofield}: Compensation is driving everythingand wage pressures are mounting. Just in our organizations, we've seen 14, 16,18% wage pressure increases in the last two and a half years. Automation iskeeping services open and operating and this means machines and technologywhere there are no people. It also means getting things digitized,computerized.

^{Stan Schofield}: Pathologists don't want to run all over to two or three or four locations. They want theslides and they want to electronically render the diagnosis. Insurance payersare getting very powerful. They're used to be 40 insurance companies 25 yearsago you had to deal with. there's probably five or six big ones now, andthey're all trying to take over each other and they're hiring and employingphysician groups and medical office and computer system people. They areturning into a major threat.

^{Stan Schofield}: Government payers, we've all hadmassive cuts, somewhere around 50 to 52%. All revenue per test in the lastseven years has been lost.

^{Stan Schofield}: You got Medicare, you got Medicaid,and then on top of all of that, the insurance companies are trying to driveeverything below Medicare rates.

^{Stan Schofield}: Financing's got a whole new wrinklewith the economy in the last year and interest rates, increasing bondcovenants, debt structures for hospitals, health systems and businesses ingeneral are problematic. People haven't come up with more money. The cost ofgetting money is a lot more than what people have had. We had a pretty good runthere for 10 years, almost zero interest consolidations.

^{Stan Schofield}: You got large commercial labs buyingall these other clinical labs and pathology groups. You've got hospitals buyinghospital systems and joining with systems. It's all about scope and scale andtrying to reduce costs. At the same time, the insurance companies and thegovernment payers are trying to reduce cost and pay you less margins.

^{Stan Schofield}: We've touched on that. Hospitals andhealth systems have historically run at about a 3-4% margin. Private business.If you don't do anything more than 10%, you shouldn't be in business. Largeindustrial complexes, 20 or 30%. You get places like it and informatics, andthey're running 60% margins.

^{Stan Schofield}: Margins are being lost because of labor costs, decreased reimbursement andsupply chain. Material costs going up more, re more of the disruptive themes.We've talked about mergers and acquisitions, lost mergers, contract labor costsare the number one reason. Hospitals, right now, 50% of all the hospitals andhealthcare systems, the United States are in the red.

^{Stan Schofield}: The consulting group just releaseddata yesterday that things are looking better because a couple of months ago,it was 60% of the hospitals losing money. But the margin now for healthcaresystem hospital networks in this country is at 0.3%.

^{Stan Schofield}: Nurses cost $125 an hour. That is notgoing away. It's gotten a little better. It's not like at the peak of Covid at$250 an hour for a critical care nurse, but there's no new revenue streamscoming into these facilities and they just can't be sustained without newrevenue growth and cost reductions, plus assisted intelligence and informatics.

^{Stan Schofield}: ChatGPT and AI are interesting. WallStreet's going crazy. Anything to do with assisted intelligence, they sayartificial intelligence, but it's not. It's always been assisted. And theninformatics. Informatics is the nervous system of what we all do for our labs anddelivery of services to patients.

^{Stan Schofield}: The never ending cost of informatics.The idea is you used to be able to have a basic laboratory informtion systemand you could do result reporting. No longer allowed. Same time cost ofinformatics, cybersecurity. I know our health system here just spent another 26million on cybersecurity enhancements to its laboratory information management system. It'sjust crazy.

^{Stan Schofield}: Crisis management. We've had thepandemic, we've had the workforce, and you say what's next? Could there beanything else? We've managed to hold on and we're getting our feet back, andthen we got hit, of course, with inflation. Next we're hit with theproliferation of consumer and urgent care delivery.

^{Stan Schofield}: There's competition on every streetcorner for delivery of services. Patients want convenience, but they don'twanna pay for it. They want home testing, but they don't want pay for it. Soall these are big challenges. And then of course, at the end of all this aresupply chain constraints. It was impossible to get reagents and consumables andpipette tips during covid.

^{Stan Schofield}: Then it got hard to get blood drawingtubes with anticoagulant. Supply chain constraints are still difficult andthey've increased all our costs for shipping and delivery of goods. So in thelab world, and this is all labs, independent labs, anatomic pathology labs,even research labs, there are five rules.

^{Stan Schofield}: These are my five rules for success in independent clinicallaboratories and pathology groups.

^{Stan Schofield}: Rule number one, you gotta addclients. Hey, that's good. You gotta grow the business. Rule number two, yougotta keep the clients. It's very expensive to get 'em. You don't wanna losethem cause chances are you can't get 'em back.

^{Stan Schofield}: Create new revenue opportunities.Hey, you can't do the same old stuff all the time and grow and keep clients.It's hard to run a lab. It's really hard to get paid and paid well. Andfinally, you have to reduce expenses. If you don't, you're gonna see what’shappening at technology companies. They're all cutting way back because theyover expanded. They thought they had it all figured out and they know nowthat's just not true. So expense mitigation, expense control is a very criticalfunction.

^{Stan Schofield}: The old school for adding clients,how you did that? You'd do some outreach. You'd be in the community and you'ddo some doctor's offices and you'd do a few local hospitals and it all workedout pretty well.

^{Stan Schofield}: You'd have providers that were yourfriends, they'd practice at your site or used you and it all worked out. Healthsystem. The new school is clinical integrations. If you're working with ahealth system or you're near a hospital or a health system and you have arelationship with them, it's all about clinical integrations.

^{Stan Schofield}: You have to be seamless. You have toalmost be invisible to them. If you're providing the service, you can't be theexception. You cannot be the outlier. Direct contracting with employers. As alab, independent lab or pathology lab, direct contracting with employers is avery attractive option, but difficult to do.

^{Stan Schofield}: It takes time, takes connections, andtakes talent, and it takes data. Direct-to-consumer testing. Sounds good.Here's a box, have 'em, mail it back It’s far more complex. State law.Reimbursement. Who's paying for it? Inventory. Supply chain. All of thesethings.

^{Stan Schofield}: Keeping clients. The old school, itwas like you'd have the account rep or somebody go by and say, Hey, how's itgoing? And bring them a lunch or, a subway order or a pizza. You do an annualbusiness review. How you doing? How you doing? Okay. We're good. We're good.Thank you very much. It was connected. We hook you up to the computer. We hookyou up to the fax machine, and we're good to go. Keep the office staff happy.Keep the office manager happy. Take her Christmas presents today.

^{Stan Schofield}: The new school is strong customerservice. They don't have enough people to do their job and they want you to dohalf of their jobs for them. They don't wanna look up the result. They want youto tell them the result. They will call you and say, what's the result? Theywon't look it up. Tailored metrics programs for quality services. What'simportant to them? You have to ask. Why do you want this? What do you need andhow are we going to do it? And then you have a plan and they want to know howthey're doing on the plan.

^{Stan Schofield}: Balanced scorecard. What's a balancedscorecard? For you as the organization, what's the financial performance ofthis account? What's the financial performance of this relationship? How's theservice going? Is it costing us too much? Are we making any money on thisthing? You need to know because if you don’t you will be out of business.

^{Stan Schofield}: Patient experience. Everybody nowgets an email or a text. How did you like your carwash? How did you like yourgrocery shopping experience? You gotta do this. People are expecting it andthey want a voice when it's not good, they want somebody to talk to them aboutit. And then you have to participate in all payer agreements. If you are notpaying attention to the agreement, somebody else is and they're getting thebusiness. And I've heard all the stories about how they only pay 40 cents onthe dollar. That's true. Maybe your costs are too high.

^{Stan Schofield}: Create revenue opportunities. The oldschool, you'd add an occasional new test. Oh yeah, we've got this new kind ofassay or this new kind of stain and we’re wonderful. You'd add a few localclients, maybe do clinical trials. You kinda work with them, create newopportunities.

^{Stan Schofield}: For new school, it's value-basedcontracting. Value-based is all the buzzword. Everybody's saying, we gotta doit, we gotta do it. Method, equipment validation, clinical trials, clinicaltrial work is very lucrative. It's hard to get into it as a standaloneindependent lab or as a pathology practice, but you can do partnerships.

^{Stan Schofield}: You can work as a site or asatellite. More highly complex testing. It's all about cancer medicine and nextgeneration sequencing. Everybody needs to be doing that because that's thefuture of laboratory informatics. Biobanking and data warehousing, you gottahave scope and scale for this biobanking and data warehousing. It’s verylucrative, but it's very complex and very competitive.

^{Stan Schofield}: You get paid. The old school labbilling operation. We wanna be able to do our own laboratory RCM processes. Wedon't wanna have to count on anybody else, and we don't really need abookkeeper. We need a revenue cycle management system. There weretempered collection efforts. If the doctor down the street didn't really payyou, or the small hospital didn't pay you, you kinda work with them and everybodygot it worked out over time.

^{Stan Schofield}: Political physician relationships.Some things you messed with, some things you did not. And medical necessity was“is this the right test and should this have been done in a fairly rudimentary,lab formulary kind of way.

^{Stan Schofield}: Now the new school is sophisticated revenue cycle management (RCM).That sounds like that's a complex thing. It is. You gotta have smart labbilling capabilities, you've gotta have smart laboratory information systems.You gotta chase the money. You have to have a billing staff, a coding andcollection ability. The old days you didn't see very many coders or billers ina lab.

^{Stan Schofield}: You gotta have themand you know that. They need to get the right kind of access to data andanalytics to help them do their job better. Fighting for what is owed. It's onething to do the work, it's another to get paid, and let me tell you something,the insurance companies are not making it easier to get paid.

^{Stan Schofield}: You have to fight with them, and youhave to have the facts, and you have to have the sophistication and theinformatics that come from advanced laboratory information systems to do it.Static extraction tools. Business analytics. You need to know what you'regetting paid and how much because there are more denials than ever.

^{Stan Schofield}: As we've moved into more of thepre-authorization realm of the insurance companies and all the Z codes that arerequired for authorization of molecular assays, good revenue cycle managementis absolutely critical.

^{Stan Schofield}: Reduced expenses. The old school,you'd cut your FTEs, you'd freeze travel, freeze capital, freeze hiring. Thelast six months seeing all the hospitals, health systems and labs that I knowthat's kinda what they're trying to do but how much is freezing travel reallygonna do to knock down the $125 an hour for a nurse contract labor cost perhour. But anyway today, The new school is about reducing expenses. You gottahave sophisticated metrics. You have daily monitoring. What is the operation?What are your volumes? What's the workload?

^{Stan Schofield}: We have 12 hospitals and we checkevery shift, every work station, volumes, instrumentation, staffing levels,performance. We have this big report card every morning.

^{Stan Schofield}: Nobody wants to work a second shift.Nobody wants to work a third shift. They certainly don't wanna work weekends,but they'll give you a Tuesday and a Saturday for four hours. If they've gotthe skills or they're willing to do it, you can count on 'em.

^{Stan Schofield}: You gotta be flexible. Labadministration, no matter what you do. 30% less senior leadership. Why? BecauseQuest and LabCorp come in and outside for-profit entities come in and they say,I'll cut your expenses 20%, 30% automatically. If you've got lab administrationand somebody like Quest or LabCorp or another national lab comes in and says,oh, we're gonna cut your leadership group out by 40 or 50%, you're just hangingout there looking for trouble.

^{Stan Schofield}: Okay, so those arethe rules. From the rules. We move into the questions that you must be able toanswer in order to be a successful laboratory. How do you enhance your services?How do you improve quality? How do you reduce your costs? And how do you addvalue? If you can do all four, you got a growing, viable organization.

^{Stan Schofield}: You can't, two out of three, two outof four. No. It's just not gonna fly. How do you enhance your services? Firstof all, you gotta know where you are in this world. You need to know how youstack up against everybody else. Because no mama ever had a ugly baby. Whatdoes that mean? It means you think you've got a good organization and you thinkthat you're doing a great job. You don't know what everybody else is doing, oryou think you know, but you gotta have really hard information and informatics.You got data, you need data. You gotta know what your client's expectationsare. You gotta ask them, you gotta meet with them, you gotta talk about it. Yougotta remember it. You gotta have regular contact by service and sales repseven when there's no problems.

^{Stan Schofield}: Client scorecard. What's important tothem and how you've been doing it. It's your report card back to them every sixmonths. Once a year, quarterly, whatever you guys agree on. Remember, know yourclient expectations, management and leadership expectations, your managementand your leadership.

^{Stan Schofield}: The expectations of them by yourcustomers. Need to be well understood. You as an operator, need your managementand leadership. Expectations defined and well established as part of yourculture and your operations and direct to consumer testing, the demand isthere. They want the convenience. What's important, what's legal?

^{Stan Schofield}: How can you meet those needs? How doyou improve? Quality daily operational huddles? As I said, 8:30 am everymorning. All 12 hospitals, the labs are on the phone and zooming and talking toour teams about what the operations are? What happened last night? Whathappened yesterday? What's the instrument performance?

^{Stan Schofield}: Anything going on with the problem?What's happening with any incidents, turnaround times, all that right there,every day on a spreadsheet and people, it takes time to run it and time topopulate it, but it's invaluable for management. Best practices. If you gotta dosomething, like change Laboratory information systems or add a new service oradd new tests, you need your best practice teams who are the best of the bestthat you have.

^{Stan Schofield}: Have them set the standards, don'thave the same old thing done by the same old people all the time. Bring in newblood. Shift it up, switch it up, and get the best out of everybody. Leadershipdevelopment. How do you get the best out of everybody? You develop yourleaders. There aren't any med techs and lab people that are extroverts andnatural born leaders and managers.

^{Stan Schofield}: It comes with time, training andeducation. And how do you do that? You invest in them. Site member meetings. Ifyou have multiple sites for your lab or your department or your pathologyservice, you gotta go to the other sites. You gotta show 'em some love. Yougotta go hang with them a little bit. You gotta go meet with them.

^{Stan Schofield}: What's the issue? What's the problem?Here we are. We're one big family. You gotta know what's going on there too.Participate in operational excellence programs. What is that? First of all, youneed your own program that you're constantly improving. You're trying to enhanceand develop your staff, and at the same time, many of your customers have theseprograms.

^{Stan Schofield}: You need to participate. What's myrole? How do I do this? What can I do to help? You move your organizationforward. Standardization of technology and processes and procedures. If youhave multiple sites, you can't have six ways of doing stuff, or we used to doit this way, but now you know, we don't do that except this one place.

^{Stan Schofield}: They're the outlet. You can't haveit. You need standardization and through the standardization and staffcompetency and retraining, you gotta have people who know what's going on andthrough mergers, acquisitions, transfers, or new people, you can't let theintellectual capital of your organization slip.

^{Stan Schofield}: It's about competency and retraining.Best of class objectives, benchmarking percentiles. You don't know what youdon't know. That I can't help you. But if you know where you're going, how doyou wanna get there is an easier roadmap. If you're operating at the 95thpercentile, good luck and God bless you, and you don't need to listen to thislecture.

^{Stan Schofield}: But if you're running at 50%, okay,you got work to do. How do you decrease costs? Management of the sites. Ifyou're not watching them, they're probably doing okay, but not as well as theycould. Standardization of buying. One of the things that we did no matter what,if we took over another hospital or another laboratory, we could save 20% ofthe cost just because of our buying ability.

^{Stan Schofield}: I'm part of a large trade federation,which is The Compass Group, and we've got about 700 hospitals and we swingdirect contracting deals for equipment reagents and service contracts, and it'sa huge difference. Just remember the national labs. On any given day, theiroperating expenses are 30% lower than yours on your best day because theirstuff they buy is much cheaper.

^{Stan Schofield}: They have more automation, and theyhave scope and scale, and you're competing against them. You gotta measure theproductivity, and that doesn't mean that you need to draw 12 patients an houras a phlebotomist or you need to cut 300 slides a day, or you got a screen 75pap smears a day. What it means is you need to know what's going on.

^{Stan Schofield}: You need to know that the staff youhave is competent and that they're doing a good job. If they're not at the 95thpercentile, that's a management issue and a technical issue, but you have tomeasure. If people know you're measuring, they will perform better. Mix andadjust levels of staffing. What's the right number?

^{Stan Schofield}: Now, what this means is, do I have tohave the most technical qualified M T A S C P stocking the refrigerator?Dumping the trash? No. What's the right mix? Could it be 70% technical staff,30% assisting staff, 50 50, four year degree versus two year? That's not whatwe're talking about. We're talking about you have to have the highly trained,highly educated, and skilled doing what they do best and nothing else.

^{Stan Schofield}: I know. They don't want to hear it.They like the variety in their job. If you got enough of those people floatingaround good luck and god bless you. Okay. But the rest of the world and therest of The Compass Group members, which now 17% of all positions in all thelabs of 700 hospitals are open and they don't have a whole lot of MTASCPsaround, floating around with nothing to do, and everybody's trying to get tothe mix and adjustment levels for staffing, which the right skillset, and thatthey're not wasting those skills by, like I said, sweeping the floors orloading the refrigerators.

^{Stan Schofield}: How do you add value optimizing yourpatient testing business analytics? Some people call it pointof care testing. Some it's convenience, some it's same day testing, some it'srandom access. We don't do batching anymore, but you gotta have the data. Yougotta figure out what is it that the lab or pathology practice can really do tomake a difference.

^{Stan Schofield}: We're constantly moving patientsthrough the healthcare system. That does not mean a hospital system down thestreet. It's all of healthcare. Patients don't want to hang around healthcare.You gotta get 'em in. You gotta get them seen. You get them treated. If they goto your lab for any kind of services, you have to be on the ball, on time anderror free.

^{Stan Schofield}: Okay? So you gotta get 'em throughthe system because length of stay or access or appointment time or missedwellness checks and things like that. All score against the deliver andprovider of services. Value-based lab analytics. Now this is where you reallyneed good information, specific studies on the right test.

^{Stan Schofield}: What was the test done on thepatient? For the right patient? The right reason? Do we have any medicalinformation about that? And at the right cost? If you're gonna do contractingand risk contracting for services, you better know what you're gonna do toprovide all this kind of information. Support and analyze data and scorecards.

^{Stan Schofield}: I've been talking about collectingall this data and all this information. It doesn't mean just put it in adrawer. It means look at it what can you do? What's important? What do youreally have to attack? Your clients? Wanna know it, support and analyze yourdata and your scorecard.

^{Stan Schofield}: You gotta share your scorecards. Soif you guys are so good and you have a wonderful organization, wonderfuloperation, don't keep it a secret. Give it to your clients. Share it. Share itwith your insurance companies who are paying you. Share it. Brag about it, butyou gotta have it in a format and a design that'll impress people.

^{Stan Schofield}: Just cuz you say you're good quality,you get a chance with real LIS systems and really good data to prove it.And finally, you need to establish schools and training programs. We gotta growour own. We've been training on our own phlebotomist for 15, 20 years. In aformal way, programs every two months, 20 students, things like that, medtechs, histo techs, they're not growing on trees.

^{Stan Schofield}: They're not coming up through theranks for medical universities and technical schools, and so you have to growyour own. And if you're depending on the local junior college or the localcollege to produce these folks in a formal, recognized, trained, certifiedmanner, you're wasting your time because people are just not going into thesefields.

^{Stan Schofield}: After four years of college and amassive bill for student loans and tuition, they're gonna go after differentkind of job formats. That's the history.

^{Stan Schofield}: We've talked about the five rules forthe laboratory, and I've given you four questions that you need to answer forpeople to really do business with you and for you to have your daily operationscompetitive and help you with the transition PA post pandemic. But reallythere's only three elements now I wanna leave you with, and there's threeelements that are absolutely key to success. The first one, you gotta have someimagination. You can't do it the same old way. You can't do it the way we'vealways done it. You gotta listen to new ideas. You gotta try new ideas. Youhave to have information to feed and fuel your imagination.

^{Stan Schofield}: Now you can have the greatest idea,the greatest concept, and the greatest imagination in the whole world. But ifyou don't do something with it, you put it in a drawer. All hope is lost. You mustexecute. The execution on your imagination is the critical factor. And thenfinally, how do you do that? That's what leadership is.

^{Stan Schofield}: That's why you're on this conferencetoday. You're a leader. Without leadership, you can't execute. You can't havean imagination. And you can't prevail, you can't succeed. Anybody standing onthe sideline hoping that somebody's gonna take care of them usually gets leftbehind. So with that, I'd like to thank you for your time today, your attentiontoday.

^{Stan Schofield}: I appreciate the opportunity to sharemy thoughts with you today, and thank you. LigoLab.

_{Michael Kalinowski}: Thank you, Stan. That that was verywell done and a lot of information, a lot of things to unpack. If anyone in ouraudience attending this webinar would like to have a question answered by Stan,go ahead and use the chat option that we have in this Zoom webinar call.

_{Michael Kalinowski}: A couple of things that reallyresonated with me, Stan. The need for communication skills really came out loudand clear to me. This is a business where if you want to be successful, It'shands-on and it's communication. It's talking to all the differentstakeholders.

^{Stan Schofield}: Absolutely. People don't like to beexcluded and it's hard to cover all the bases, the things that I've had in mycareer that I wish I could do over are areas around where communication was notas strong as it should have been, or as effective as it should have been. Andpeople say, I don't know anything.

^{Stan Schofield}: Nobody tells me anything. You can'tallow that to continue and you can't allow that to happen. As they say, you cannever over communicate and it really is true. And when times are tough, thebetter communication you have, the more success you'll have

_{Michael Kalinowski}: for you personally.

_{Michael Kalinowski:} Wasthat a skill that you acquired over time or was that something that kind ofcame easy to you?

^{Stan Schofield}: I think by hard knocks. One of thethings that happened when I was really young in the lab business, there was anorganization called the Clinical Laboratory Management Association. And I wasat a lab, at a children's hospital, and on the Friday afternoon I was calledin. I was very young and called in and by the pathologist.

^{Stan Schofield}: He said on Monday, you're in charge.And it was like, I had no idea about management. I had no idea. Here I am at afairly sizable children's hospital, 25 years old, being told I'm in charge. Andway back then it was like, oh my God, what do I do? And there was anassociation, C L M A. That I quickly found out about and I went to theirmeetings and for years I would go to the meetings and you'd learn a lot ofthese things.

^{Stan Schofield}: They were management subjects andcommunication subjects and operational excellence kind of programs and processimprovement. And over time I eventually became the president of C L M A and itwas a wonderful experience in shaping and helping me become a better managerand a better leader. But it wasn't natural.

^{Stan Schofield}: It took work and it took resources.And I was fortunate enough that I've been given a lot of opportunities. And youknow what they say? It's all about execution and you take advantage of it andso far I've had a pretty successful career and as leadership goes. I considermyself very fortunate because of the teams that I've worked with and all thegreat people I've been able to be associated with.

_{Michael Kalinowski}: A couple of questions have come infrom the audience. The first one is can you be more specific about how tocompete with large national labs?

^{Stan Schofield}: Sure. Service. Now,I don't know your geography. I don't know what your services are, but they willcut you, slice you, and dice you. So you have to give the service aspect, whichthey normally don't do a very good job. A major emphasis, for us as a regionallab, we have to compete against Quest and LabCorp and ours is around most ofour work.

^{Stan Schofield}: If we get it in by noon, the resultsare out by five, and so it's almost same day service. We have sales andmarketing and support teams that call on clients, build relationships, and alsoa very key factor is, the pathology relationship with the local providers. Thelarge labs cannot and do not have that. If you wanna talk to a pathologist withone of those guys, good luck.

^{Stan Schofield}: If you have a real question about atest and you need to talk to somebody, good luck. So you differentiate yourselfas I am here for you. Can I wax your car? Can I floss your teeth for you?Whatever it takes. It's service to make 'em feel special, because at the end ofthe day, it won't be about price.

^{Stan Schofield}: You have to have competitive pricing.You gotta be able to compete on price and you cannot expect it. I'm special andI'm gonna charge 10% more because we're special. They'll cut you off in aheartbeat. So those are my quick off the top of my head suggestions, notknowing your exact circumstance, but it's all about service.

_{Michael Kalinowski}: Okay. Next question and once again,we still have a few minutes if anybody else would like to try to chime in witha question for Stan to answer. We have a question here. How can a lab obtaindata to demonstrate value when there is no feedback from results provided tothe hospitals?

_{Michael Kalinowski}: What value parameters can labsdirectly measure?

^{Stan Schofield}: I don't know your exact relationship.Are you just serving as a reference lab or are you providing all lab services?If you're a single reference lab or limited services, then chances are you'regoing to get paid from the hospital and they will have the value-basedcontract, and you'll have to meet their reporting criteria.

^{Stan Schofield}: The one thing that's reallyinteresting is everybody talks about value-based medicine and the risk, butnobody wants to do anything about it. Nobody has really good laboratory toolsyet. You gotta get the patient through the health system. But the idea is whatservice do you provide and how can you get the patient into the services andout of healthcare services as fast as possible?

^{Stan Schofield}: So if you only do the test once aweek and that's slowing things down, you gotta figure out how to do it morethan once a week. You know when you're talking about the kind of data thatyou've just asked, you have a great question. I don't know enough about yourorganization and what you're doing to understand your abilities andcapabilities, but let me give you a great example.

^{Stan Schofield}: Tri-Core Regional Labs inAlbuquerque, New Mexico. My really good friends and members of the CompassGroup. They did a study that talked about acute kidney injury based on thedifference in creatinines, on patients on admission and serially for two orthree days when they were in the hospital to see if there was an injury. Andthat the creatinine level went up. And that was along the lines of, okay, wasthe patient dehydrated?

^{Stan Schofield}: Did they become septic? Did they havea drug interference? Did it do something to screw up the kidneys? And they didthe study with the hospital around value base of the lab, and they were able todemonstrate that some of the protocols there did not minimize the risk of acutekidney injury to patients in the I C U and based on the lab data, they wereable to go back and say, if we did this and we changed that we'd have patientswith fewer kidney injuries coming out of the I C U.

^{Stan Schofield}: It was a very sophisticated, veryelegant, value-based, but it was a partnership. So what happened was the labhas ability to measure things the hospital wasn't looking at it, the medicalstaff wasn't looking at it, and the lab stepped up and said, this could be anissue, and they took the leadership of that and they executed that.

^{Stan Schofield}: And the result was the hospital madea ton of money. And the reason they made a ton of money is they changed theprotocol and patients were less injured. And when they were injured, it waslegitimate and they could bill for a higher level of acuity of care, and theygot paid more.

^{Stan Schofield}: So from a value base, the patient didbetter. The hospital did better. I'm not sure the insurance companies didbetter, but that's a quick example, not knowing a lot about your history andyour operational abilities.

_{Michael Kalinowski}: Okay. Very well said. Good example.I have two more questions, but they're both related, so I'll connect them.

_{Michael Kalinowski}: One is how do you think AI willimpact lab operations and services and is it worth it to invest in AI with theexpectation that it will increase automation?

^{Stan Schofield}: That's a very big question. AI isthis big term and everybody on Wall Street's going crazy. Everybody's goingcrazy.

^{Stan Schofield}: I don't know what AI is. Okay. Theidea is can they do things smarter? Can they fill out the forms? For the insurancecompanies on your laboratory billing and revenue cycle management RCM easierand faster without having 10 clerks. Maybe. You have to build the program justbecause it's running around and everybody says it does this and does that.

^{Stan Schofield}: I don't know if you've ever submitteda question to ChatGPT, but the stuff I wanna know, it comes back pretty blandand pretty benign and doesn't tell you a lot of good stuff. So I think numberone, AI in its most sophisticated interpretation, would take those creatininevalues at the lab in Albuquerque and say, Hey, by the way, look guys, we gotkidney injuries here.

^{Stan Schofield}: Did you know what's going on? Andthey would notify you, but that's years away. Okay? Because they're not intothe LIS systems that labs run. It will beembedded. This past week, Epic, the computer company, just said they're gonnastart putting chat G P T capabilities in emergency medicine modules athospitals.

^{Stan Schofield}: And one of the great things I sawabout chat G P T was a clinician trying to describe a complex medical conditionto a patient's family. They were not very sophisticated, and it put it in alanguage that everybody got on board in the family, they understood it and theycarried on the therapy at home.

^{Stan Schofield}: So back to what I think is gonnahappen in lab, could it be pattern recognition and pathology screening? Wealready have some of that with Pap smears and the Hologic Cytech combinationmachines and stuff, but, Could it be really diagnostic? I think we're yearsaway from that. Could it be, flagging of abnormal results or quality control?Probably there'll be the first applications, but it'll be clerical applicationsand redundant paperwork kind of things first and quality control management andalerting and flagging and intervention, second, and then by the time we getdown to diagnostics, I don't know the timeframe because I don't know the FDAand all that kind of stuff, we're not seeing anything here that we're gonna beable to put our hands on and make a big difference in our workload here in thenext two or three years for sure. After that, all bets are off because maybethey'll get chat G P T to design something for the lab that we haven't askedthe right question yet. Good question. I don't have that big a crystal ball.

_{Michael Kalinowski}: We're at the top of the hour now.Stan tremendous presentation and we really appreciate the time and effort thatyou put into it. For the audience, great questions. We really appreciate thatinteractivity and that feedback. Certainly if there are any follow up questionsafter this LigoLab webinar is over you can reach me directly and I certainlycan pass along more questions to Stan if they come in to me.

_{Michael Kalinowski}: With that, I think we will conclude.Stan. Thank you very much. Soon we’ll have this LigoLab webinar available atLigoLab.com for people that want to watch it again or share it with theircolleagues.

_{Michael Kalinowski}: With that, I'll say goodbye andthank you once again.