Role of Digital Pathology in a Changing World

Keith J Kaplan MD

Pathologist and Laboratory Medical Director, Charlotte, NC

Chief Medical Officer, Corista

Publisher, tissuepathology.com

Global Engage Digital Pathology Congress USA June 22-23, 2015

“Change is inevitable, except from a vending

machine.”

There have been more changes in the past two

years (three) years than in the past 20

Labs 1990s

• Independent lab sector with many local independent labs, about 10 major national laboratory companies

• Most hospitals were independent and operated single-site laboratories

• Anatomic pathology services were provided primarily by private pathology group practices

• Even publicly traded commercial lab companies outsourced all AP and much cytology to local pathology groups

Labs 2000s

• Handful of independent local commercial lab companies

• Quest Diagnostics and LabCorp now multibillion-dollar behemoths

• Increasing number of large sub-specialty labs with national presence

• In-office laboratories increasing

• Consolidation of hospital ownership triggered creation of a large number of consolidated hospital lab organizations serving multiple hospitals

• Hospital lab outreach programs relatively limited in number

Labs 2010• Dominance by the two blood brothers in national market

for clinical lab testing.

• Entry of new billion dollar competitor, eg. Sonic Healthcare, Ltd.

• Number of local independent commercial lab companies continues to dwindle.

• Since 2000, steady growth in the number of hospital laboratory outreach programs providing services to office based physicians in surrounding communities.

Death of 88342 - Obituary

Grim Predictions

• For most of the 15,000 pathologists who run

America’s 8,100 cancer testing labs, and for most of

the firms that sell to them, 2013 has been the worst

year ever. For many, 2014 will be worse than 2013

• Reimbursement rates reduced by 30% here, 50%

there, and worse in other places

• Impact of molecular oncology and redundancy of

anatomic pathologists (replaced by gene chip)

Grim Predictions• Between 2000 and 2500 of country’s AP labs to be driven out

of business by 2017

– Declining reimbursements

– Slow-footed marketing

– Prognosis for any practice less than 5 pathologists is worse

(40% of pathology groups/hospital-based)

• http://www.mcevoyandfarmer-pathology.com/index.php/category/blog

• January 29, 2014; Last accessed August 25, 2014

Mark Wick, MD - Problems

• G0461 & G0462

• Reasons multifactorial

– CMS Administrators little or no knowledge of what anatomic pathologists do

– Easy targets as charges more black and white than other clinical procedures

– Generational changes – diagnostic tentativeness & dependency of reflexive procedures

– Medicare & Medicaid are badly-flawed systems, and they do not work any longer –

doubts either can survive another decade

– Unscrupulous practitioners in the ranks of pathologists have brought upon self-inflicted

cuts

• Initial response to use more histochemical stains (88312 and 88313) in lieu of

88342/G0462

• ”Routine special stains” in GI pathology

Mark Wick, MD - ResponsesInform clinical colleagues health system administrators and patients that we will no

longer have the wherewithal to perform the breadth and depth of tests to which they

have become accustomed in anatomic pathology. Adapt to the “brave ‘new’ world” of

medical practice together.

Pursue a “back from the future” approach to practice – liberal use of collegial

consultations between members of practice groups.

Traditional histochemistry & electron microscopy.

Stronger emphasis on evidence-based practice and cost-effectiveness of adjunctive

testing in anatomic pathology. We must not continue to do things that do not really

work.

What Does Digital Pathology HaveTo Do With This?

• Three main value propositions for digital

pathology:

– Distance from slide with desired/immediate need

– Image analysis

– Molecular pathology

What Does Digital Pathology Have To Do With This?

• Everything

• Since inception of WSI more than a decade ago – No “Killer

App” for Digital Pathology

• Histology/colleagues/experts/clients under one roof

• Intangible benefits – “interesting cases”, tumor boards,

archives, conferences, QA

• No business model that would generate revenue and make

the case for digital pathology

What Does Digital Pathology Have To Do With This?

• Pathologists are increasingly doing more for less

• Associated costs increasing with running a lab with unfavorable/uncertain

reimbursements

• Laboratory consolidation of technical services is becoming more prominent,

whether through mergers, acquisitions or partnerships among several labs

• In an effort to maximize efficiency, laboratories and pathology groups are

increasingly combining in some way, shape or form to leverage existing resources

to survive and thrive

• The traditional growth models of acquiring more work and more pathologists over

time are no longer valid

Distance from Slide/Laboratory

• The days of the independent solo pathologist or small hospital-based

groups and pathologist owned laboratories appear to be numbered/in-

house histology services.

• No longer will many of us enjoy histology labs we own, operate or use

within our laboratories or hospitals.

• Consolidation of laboratories will create new business models that will

require technical services performed off-site while recognizing that care is

best practiced locally

• New paradigms for workflow and namely, digital pathology to enable

“local” pathologists to serve their markets.

Distance from Slide/Laboratory

• Pathology groups will need to be large enough to serve

a broad geographic area, likely multiple hospital

systems or as part of an integrated health care delivery

system that can consolidate redundant testing,

facilities, personnel and recognize economies of scale

for reagents, personnel, couriers, transcription, billing

management and physical overhead.

Distance from Slide/Laboratory

• The business model for digital pathology is now here largely due to

external pressures and government/regulatory issues. The “killer

app” has been identified

• Centralized technical services with decentralized professional

services and image analysis algorithms designed to analyze a whole

slide image and guide the pathologist to a more accurate and

reproducible analysis of the case.

Distance from Slide/Laboratory

• Add to this ACOs, larger and larger integrated health care

delivery systems/networks and pay-for-performance rather

than fee-for-service models

• One of many solutions pathology groups and laboratories

will need in the very near future to meet their needs and

the needs of their patients/clients/customers/partners is

digital pathology

• All components of the workflow – hardware, software,

informatics, LIS interfaces and reporting

Image Analysis

• Image analysis for quantitative IHC stains

– Machines are good at counting

– They are not very good at thinking

– Better reproducibility

– Associated increase in billing codes relative to manual

IHC

Good News

• Digital Pathology TC Rates to Rise 7.9% in 2015

• CPT 88361 TC - $106.32

• CPT 88361 26 decline slightly (-0.7%) - $59.07

• Global reimbursement by 4.7% - $165.39

• Small boost to the digital pathology market which has

actually been shrinking in size for the past two years.

LESSONS LEARNED FROM RADIOLOGY

Thank You