Invest in the Future

When it comes to laboratory upgrades, departmental needs and ambitions can often be thwarted by a lack of funds. Hospitals are reluctant to support the introduction of new technologies, such as digital pathology and AI, because there is no reimbursement for these services. In other cases, budget limitations do not allow the department staff to explore best practices or bring in outside consultants to improve efficiency. So, what is the route forward to improved workflows and expanded services?

Well, when external funding is not forthcoming, it might be prudent to look for an internal solution. I would advise establishing a department fund.

A department fund is a special purpose account within a nonprofit hospital, which has been established to allow tax-deductible contributions that are earmarked for the benefit of the pathology and laboratory department.

In nonprofit hospital departments, department funds offer a mechanism for pathologists – who have an exclusive contract – and patients, who have benefited from their services, to contribute to the department. The funds can then be used to sponsor innovation and make upgrades that are not within the normal operating or capital budget.

The first step in setting up a department fund is for the hospital to establish a separate account for this purpose. The contributors – usually pathologist partners in the private practice group – determine how much each will contribute to the fund and, together with the hospital’s C-suite, they decide how the monies will be used. In many cases, the hospital is willing to match physician contributions or provide a portion of performance-based incentive payments, which both parties agree to reinvest in the department. Other funding sources include outside donors, strategic partnerships, and foundations.

It is important to remember that, in a nonprofit hospital setting, financial contributions can be classified as charitable contributions, which are tax exempt. Contributions might also be in the form of expertise – including serving on hospital committees/boards and charitable organizations.

Patients may also donate to the fund, on the basis of positive outcomes from diagnoses/treatments they received. In one instance, a patient who had significant laboratory work made a donation which was used to update blood bank automation. In another case, a friend of the Department Chair left money in their will which funded equipment purchases in Chemistry and Microbiology.

So, what are the potential benefits of dividend reinvestment in the pathology department? Let’s consider the advantages of investing in digital pathology and AI. The department might be able to offer external subspecialty expertise, generating an additional income stream for the hospital. Metrics suggesting improved turnaround times and diagnostic accuracy could lead to “world class” community hospitals integrating with regional centers of excellence. That, in turn, might lead to big cost savings on courier services, as samples are transferred digitally.

Finally, it’s worth considering the benefits to department members. Recently graduated pathologists prefer to work in a setting with cutting-edge technology and greater efficiency, and they will be drawn to hospital settings that have these. This is essential for successful recruitment and retention. Additionally, the pathologists’ work-life balance can be greatly improved with digital pathology and AI. In Toronto, one pathologist who did not live near the hospital saved two hours of commuting time a day because they were able to work from home. In another example, a pathologist did not need a six-month medical leave to care for a family member.

Beyond technology upgrades, department funds might enable access to a host of other expenditures: department promotion and public relations initiatives, website development, outreach projects, non-funded clinical research, staff training, hosting a distinguished lecture series, or strategic planning.

For more information, see my Micro Highlight on setting up a department fund for dividend reinvestment here.