Helping lab professionals GoMolecular.

Success Story 1: William Beaumont


In this article:

  • Move from Southern blotting procedure to amplification
  • Six management tactics for molecular success

By Frederick L. Kiechle, M.D., Ph.D.


Part I: Turn Up the Testing Volume

In 1991, the Clinical Pathology Laboratories of William Beaumont Hospital in Royal Oak, Mich., initiated a molecular diagnostics section.1,2 The Beaumont molecular lab was in a large suburban hospital complex with one 1,000- and one 200-bed hospital.

Although the test menu grew each year, the first three to five years relied on Edwin Southern’s DNA blotting technique to perform assays like bcr/Abl, BCL-2 gene rearrangement, B- and T-cell gene rearrangements, herpes simplex virus and cytomegalovirus (CMV).1 These assays were selected through discussions with clinicians, clinical pathology and hospital administration. Southern blotting assays required three working days to complete, and an additional three working days to repeat if necessary. Testing volume increased slowly as the primary technique moved from the three-day Southern blotting procedure to amplification methods like ligand chain reaction and polymerase chain reaction.

A royalty agreement for the clinical use of the polymerase chain reaction (PCR) was signed in late 1992. PCR assays were introduced in 1993, which reduced molecular diagnostics assay complexity and turnaround time. In 2000, the Beaumont lab offered five southern blot assays, 12 PCR assays and two ligase chain reaction assays. The total test volumes increased from 84 assays in January 1994, to 20,953 assays in 2000 (Table 1). The molecular laboratory operation budget became profitable in 1998.

By 2005, the molecular lab performed 33 different billable procedures, which generated 47,450 molecular test results.

The Beaumont molecular lab was located in two different locations; the second was 1,500 square feet larger than the first. It became possible to introduce a new molecular assay every month by scheduling a validation medical technologist every day, five days a week. This success was prompted by the use of the six management tactics outlined by P. McLeod2 in 2005.

Six Management Tactics for Molecular Success

McLeod2 summarized six management tactics that Beaumont used to create a successful molecular program. These strategies utilized regulatory4 and laboratory management principles3 that are well documented.

1. Know market share potential for molecular testing services.

This investigation begins in the early planning phases for a new molecular laboratory. Meetings between practicing clinicians with an interest in the faster turnaround time in-house testing provides compared to the three- to four-day turnaround time for reference laboratory performance. Key contacts can be quickly determined by identifying the physician(s) who are ordering molecular assays as send outs. A review of the advantages/disadvantages of your new molecular lab planned tests and the method used by the reference lab will provide talking points for planning. If the hospital lab had an outreach program, specific assay white papers and potential client lists for potential future sales of the new assays or upselling are useful for increased sales efforts. The hospitals in a 50-plus mile radius that do not provide molecular testing are another potential fertile marketplace.

2. Selecting the right molecular tests to offer.

The priority list for molecular test development tends to be in constant flux, and is attributable to new technology/assay developments in the field. Introduction of new programs within the hospital system may require rapid test development to support a new solid organ transplant program and FDA recalls or redefinitions of RUO, ASR and LDTs. The best strategy is to develop a three-year plan for the development, validation and introduction of new tests. Review this list every month and modify as necessary. Stumbling blocks you may encounter along the way include budget short falls, inadequate space and, most common, lack of adequate personnel to provide 1 FTE every day dedicated to validation of new assays.

3. Develop an effective marketing plan.

This tactic applies to issues discussed in Tactic 1 for an outreach program marketing plan for hospital, nursing home and physician office clients. It also applies for hospital system registered inpatient and registered outpatient services. The plan, like outreach, includes health care staff education to illustrate the value-added to the efficiency the new test(s) will introduce, like MRSA screening to reduce hospital associated infections.

4. Assure a qualified workplace.

This important issue is described in detail in Building Your Staff.

5. Anticipate technology benchmarks.

In the near future, we anticipate the introduction of: molecular assays using next generation sequencing techniques5; miniaturized lab-on-a-chip approach to developing near-patient (point-of-care testing) molecular assay equipment; and DNA-based sequencing or protein-based MADI-TOF mass spectrometry methods for infections agent identification.7,8 What can you do? Learn as much as possible about these and other emerging techniques. Think about its potential application in your lab. What would it cost if a plan were approved? How much space and how many new personnel would be needed? The hospital should have a developing technologies committee to present the value added, if any, and generate a consensus for rejection or acceptance at this time.

6. Secure appropriate space.

A molecular testing program not only needs appropriate equipment and qualified personnel to do the work, but also must have an appropriate space plan. Space is the last frontier. If it is located in the hospital, patient care speed requirements will always trump laboratory space needs. For that reason, it is wise to locate a central core laboratory facility that will include the molecular lab, within pneumatic tube system distance from the hospital in a separate rented or owned building. The cost per square foot will be less when compared to building new patient care space. This proposition is easier to support if the core lab will also support the growth of the hospitals’ outreach program.

The synergy between the molecular lab and hospital outreach program growth is described in Part II.


Table 1

Molecular Test Growth
1992 to 2005

 Year  Total Molecular
  Test Volume
 1992  307
 1993  550
 1994  1,747
 1995  3,604
 1996  4,472
 1997  9,376
 1998  10,821
 1999  13,292
 2000  20,953
 2001  23,392
 2002  28,531
 2003  38,792
 2004  48,824
 2005  47,450

Part II

In Part I of this case study, we looked at the development and growth of a core molecular diagnostics lab supporting two hospitals (1,000 bed and 200 bed) in the William Beaumont hospital system in Royal Oak, Mich. In part II of this case study, we discuss how the symbiotic, synergistic relationship between this molecular lab that supported the growth and success of the hospitals’ outreach program, which was initiated in 1993.1,2

As background, Table 2 illustrates the growth in all reference lab clients from 2000 to 2004 and the impact this test volume had on total clinical laboratory testing. Table 3 demonstrates the reference business line breakdown in 2004. The top two client categories were physician offices and nursing homes.1 Compared to other sections of the reference laboratory services, molecular test revenue was 7.9 percent for 2004 and the fifth largest compared to other lab sections (Table 4). This data also reveals that the molecular test average net revenue per test is greater ($36.84) compared to the six lab sections studied (Table 4). Molecular diagnostics is a revenue generating activity with imminent clinical relevance for improved patient care.

Molecular Diagnostics Augments Outreach Growth

In late 1992, a royalty agreement was signed for the clinical use of polymerase chain reaction (PCR). In 2002, the assay for Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (NG) in urine was moved from ligase chain reaction to PCR. Reference Lab (RL) clients were greater than 95 percent of the requests for CT/NG assays. In late 2001, human papilloma virus (HPV) DNA detection by hybrid capture was introduced, and 2,477 identifications of HPV types with a low and high risk for cervical cancer was completed in 2002. The majority of these specimens also came from RL clients.

Table 5 illustrates the increase in liquid-based cervical cytology compared to the conventional Papanicolau method from 2000 to 2004. This change in ordering pattern was accompanied by a steady increase in molecular testing for HPV.

To help plan for RL growth, the RL monitors the volume generated by nine different clinical practice specialties and annually calculates the number of requisitions per physician, the number of procedures ordered per physician and the number of procedures per requisitions.1 This information is useful when targeting specific physician categories for growth by the sales group. The laboratory sections will require further analysis of the data before they can project their capital equipment and personnel needs to support the projected additional test volume from the RL.

Table 6 illustrates the average number of molecular tests/physician/month in internal medicine (135 total ordering physicians) and obstetrics and gynecology (68 total ordering physicians). This information would help the molecular laboratory to prepare for the volume of specimens from two new OB/Gyn practice groups with a total of 20 ordering physicians. The monthly increase would be 20 times the average number of tests ordered/physician/month: CT and NG 98 specimens since the two tests are performed on the same run; HPV= 24 additional specimens/mth; and Factor V Leidens equals approximately one additional specimen per month. Outreach client growth will directly influence increased molecular test volume dependent on the new clients and number of physicians in the group.  

A Puzzler

Table 7 illustrates annual volumes for molecular tests from three sites in a two-hospital system: Hospital A (1,000 beds), Hospital B (200 beds) and RL clients. First, the table shows the impact the RL has on each of the four molecular tests. All three specimen sources make a similar contribution for Factor V Leiden, however, RL contributes a significantly larger number of HPV, CT and NG specimens compared to Hospital A or B. Therefore, the impact a hospital outreach program will have on molecular lab volume are test dependent.

There is an interesting apparent error in Table 7. Note that the volumes of CT/NG are similar for Hospital A and the RL. However, Hospital B has 709 CT ad 184 NG specimens. Investigation revealed that the leadership of the clinical laboratory at Hospital B believed the myth that NG was unstable during carrier car transportation to Hospital A. They also had unrealistic growth expectations from administrative leadership that resulted in molecular NG to be performed as culture NG at Hospital B to increase revenue. The medical staff desired both assays to be performed by the more sensitive molecular assays, which was implemented.

Table 2
Reference Lab (RL) Client Numbers and
Clinical Pathology Procedures
 Years  Client Number  RL Clin. Lab Procedures   RL Procedures as a
  % of Total Clin. Lab
 2000  998  2,081,245  44.8%
 2001  1,085  2,258,252  41.1%
 2002  1,175  2,292,672  46.2%
 2003  1,383  2,921,135  50.0%
 2004  1,423  3,058,599  47.0%
*Total clinical lab procedures include registered inpatients, registered outpatients and RL clients.

Table 3
Reference Lab Business Line
Breakout: 2004
 Client  % of Total Clients
 Physician office  55%
 Clinics  8%
 LTC* (nursing homes)  27%
 Home care  4%
 Hospital reference and other  6%
 Total  100%
*LTC = Long Term Care

Table 4
Reference Laboratory 2004 Department Revenue
 Department  Percent of Total Tests  Percent of Total Revenue  Avg. Net Revenue
 Per Test
 Chemistry  62.0%  41.3%  $5.35
 Special testing  7.1%  14.1%  $15.96
 Hematology  9.8%  12.3%  $10.13
 Microbiology  6.3%  7.9%  $9.96
 Molecular Diagnostics  1.6%  7.3%  $36.84
 Send outs  0.8%  1.8%  $18.01
 Analytical Cytometry  6.3%  0.7%  $13.56

Table 5
RL Cervical Cytology Volume
 Year  Conventional Papanicolau  Liquid-Based Cytology  Annual Total
 2000  54,524  14,359  68,883
 2001  39,375  33,795  73,170
 2002  17,009  63,973  80,982
 2003  7,836  81,860  89,696
 2004  4,098  86,319  90,417



Table 6
RL Molecular Tests Ordered by Internal Medicine and OB/GYN in 2002
Average Number of Specific Tests/ Physician/ Month
 Internal Medicine    (t=135)  OB/GYN    (t=68)
 C. Trachomatis    0.38  C. Trachomatis    4.90
 N. Gonorrhoeae    0.38  N. Gonorrhoeae    4.90
   HPV    1.20
   Factor V Leiden    0.03
t = total number of ordering physicians in subspecialty group


Table 7
Molecular Test Volume from 2004
 Location  Factor V Leiden  HPV  CT  NG  Total from Location
 Hospital A (1,000 beds)   797  52  1,881  1,613  4,343
 Hospital B (200 beds)  453  33  709  184  1,379
 RL  304  2,663  13,514  13,226  29,707
 Test Volume Totals  1,554  2,748  16,104  15,023  35,429


Part I:

  1. Kiechle FL, Main RI. The Hitchhiker’s Guide to Improving Efficiency in the Clinical Laboratory. AACC Press: Washington D.C. 2002, pp 27-43
        • 2.    McLeod PS. Gauge clinical effectiveness against costs. Molecular diagnostics: How Beaumont built a successful program. The Dark Report 2005; 12(11): 9-17.
        • 3.    Rennert H, Leonard DGB. Molecular pathology laboratory management. In: Molecular Pathology in Clinical Pathology. (Ed: Leonard DGB). Springer: New York, NY 2007: pp 553-575.
        • 4.    Grody WW. Regulatory issues in molecular diagnostics. In: Molecular Diagnostics: Techniques and Applications for the Clinical Laboratory. (Eds. Grody WW, Nakamura RM, Strom CM, Kiechle FL). Academic Press, Inc: Boston, MA. 2010: pp 121-124.
        • 5.    ten Bosch JR, Grody WW. Next generation sequencing in molecular diagnostics. In: Molecular Diagnostics: Techniques and Applications for the Clinical Laboratory: (Eds. Grody WW, Nakamura RM, Strom CM, Kiechle, FL), Academic Press, Inc: Boston, MA. 2010: pp 59-67.
        • 6.    Mao X, Huang TJ, HO C-M, The lab-on-a-chip approach for molecular diagnostics. In: Molecular Diagnostic: Techniques and Applications for the Clinical Laboratory. (Eds. Grody WW, Nakamura RM, Strom CM, Kiechle FL). Academic Press, Inc.: Boston, M. 2010: pp 21-34.
        • 7.    Check W. Infectious disease meets mass spectrometry. CAP Today 2011; 25(5): 1, 56-60, 62.
        • 8.    Cherkaoui A, Hibbs J, Emonet S. et al. Comparison of two matrix-assisted desorption ionization-time of flight mass spectrometry methods with conventional phenotype identification for routine identification of bacteria to the species. J. Clin Microbiol 2010; 48: 1169-1175.

          Part II:

    1.    Kiechle FL, Skrisson JE. Outreach implementation requirements: a case study. In: Clinical Laboratory Management. (Ed. Garcia LS). American Society Microbiology Press: Washington DC. 2004: pp 654-671.
    2.    Kiechle FL, Main RI. The Hitchhiker’s Guide to Improving Efficiency in the Clinical Laboratory. AACC Press: Washington D.C. 2002: pp 27-37.