News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Shrinking Reimbursements and Increasingly Complex Regulations Will Squeeze Profits and Harm Valuations of Clinical Laboratories That Fail to Strengthen Their Strategic Positions

Operational efficiencies, strong management teams, and successful outreach business are key clinical laboratory success in today’s era of mergers and acquisitions

Fierce economic headwinds are taking aim at the entire pathology industry, as shrinking Medicare reimbursement rates, shifting federal regulations and compliance requirements, and changing care models squeeze profit margins and threaten valuations of most clinical laboratories and anatomic pathology groups.

The reimbursement rate changes mandated by the Protecting Access to Medicare Act of 2014 (PAMA), which took place January 1, 2018, loom as the most immediate danger to the long-term financial health and viability of medical diagnostic laboratories.

“Medicare reimbursement rates to labs providing essential testing services are estimated to drop by $670 million this year, and additional reductions scheduled for 2019 and 2020 will cut payments by nearly 30% for many tests critical to caring for Medicare beneficiaries,” noted Julie Khani, President of the American Clinical Laboratory Association (ACLA), in “Patient Care Is Put to the Test as Clinical Laboratory Services Are Hit With a One-Two Punch in Rate Cuts,” an article she penned for the ACLA website.

“For some labs, such as rural hospitals and labs serving patients in skilled nursing facilities—which already have significantly higher operating costs—this could be a death knell that would precede a devastating loss of patient access to necessary testing services,” she concluded.

Assessing Financial Solvency to Survive Impending Mergers and Acquisitions

The ACLA has filed a lawsuit against the U.S. Department of Health and Human Services (HHS) for what it called a “flawed and misguided” implementation of the law. For now, however, the roll out of reimbursement rates cuts will continue, an ACLA blog post reports.

As a result, post-PAMA pressures combined with other factors are forcing clinical laboratory leaders to consider their strategic options, including:

  • Reorganizing;
  • Restructuring;
  • Merging/consolidating with another laboratory; and,
  • Selling.

As GenomeWeb pointed out prior to PAMA’s implementation, “All clinical labs in the U.S.—from the largest reference labs to in-hospital labs to physician-practice labs—will be touched by the changes to varying degrees.”  The future, GenomeWeb predicts, “may be a market with fewer independently operated small and regional labs, as well as fewer outreach labs owned by hospitals. Instead, such operations could become part of [Quest Diagnostics’] and LabCorp’s networks.”

This changing landscape means laboratories need to be assessing their financial solvency and maximizing their valuation even if they are not currently candidates for either side of the merger and acquisition equation. Failing to anticipate and respond to unfolding changes could leave laboratory executives courting a financial reckoning.

Pathway to Driving Valuation for Your Laboratory

To help clinical laboratory owners, CEOs, administrators, and pathologists understand the forces driving today’s mergers, acquisitions, and joint ventures—and to guide their future decision-making—Dark Daily is presenting a new webinar at 1:30 p.m. EASTERN on Thursday, June 28, 2018, titled, “The Pathway to Driving Valuation for Your Laboratory: Your Roadmap to Achieving Success, and How to Sustain Growth Despite a Changing Lab Environment.”

One speaker is Vicki DiFrancesco, Chief Strategy Officer, XIFIN, San Diego. DiFrancesco has an insider’s understanding of mergers and acquisitions and 25 years of executive leadership experience. Prior to joining XIFIN, DiFrancesco served as President and CEO of Pathology Inc., the West Coast’s premier women’s health laboratory, which was acquired by LabCorp in March 2016.

The other speaker is David Nichols, Founder and President at Nichols Management Group (NMG) in York Harbor, Maine. NMG provides laboratory consulting services for healthcare organizations. Since its founding in 1988, NMG has provided expertise in improving overall effectiveness and in implementing such strategies as sales force development, market planning, compliance/financial auditing, and in selected cases, hands-on management responsibilities by working onsite with senior personnel in each area of need.

During their 90-minute presentation, you will learn:

  • Market factors creating financial challenges for your laboratory;
  • How revenue compression and compliance issues are driving merger and acquisition activity;
  • Steps to optimizing your lab’s reimbursements, a key to improving financial performance;
  • Revenue cycle management’s importance as a valuation driver;
  • Strategies to significantly improve your market position;
  • Components of an effective compliance program and why compliance is so important to laboratory valuation;
  • Value drivers that attract buyers, such as profitable growth, a strong compliance program, competent management teams, EBITDA, cash flow and gross margins; and,
  • Specific challenges that should be addressed in any merger or consolidation plan.

David Nichols (left), Founder and President at Nichols Management Group (NMG); and Vicki DiFrancesco, Chief Strategy Officer, XIFIN, will share vital insights and share critical strategies that clinical laboratories can immediately use to drive valuations and prepare for current and future financial challenges. (Photo copyright: Dark Daily.)

To register for this critical webinar, use this link  (or copy and paste this URL into your browser:

Despite the financial pressure on many existing laboratories, the medical laboratory industry continues to play a vital role in the healthcare system, with clinical laboratory tests guiding more than 70% of all medical decisions made by healthcare providers, according an ACLA fact sheet.

The industry also contributes more than $100 billion in annual economic impact and produces more than 622,400 jobs. While the role of diagnostic laboratories will continue to grow in an era of personalized medicine, only laboratories that optimize their strategic position in response to the changes taking place may be left standing when the predicted industry consolidation is complete.

—Andrea Downing Peck

Related Information:

The Pathway to Driving Valuation for Your Laboratory: Your Roadmap to Achieving Success, and How to Sustain Growth Despite a Changing Lab Environment

Patient Care Is Put to the Test as Clinical Laboratory Services Are Hit with a One-Two Punch in Rate Cuts

ACLA PAMA Lawsuit Complaint Against CMS

Recent NILA Report Highlights Harmful Impacts of Misguided PAMA Implementation on Labs and Seniors

The PAMA Effect: Consolidation of Clinical Labs Expected as Legislation Set to Take Effect

Conference Ends with Optimistic Outlook for Laboratories

Clinical Laboratory Testing: Life Saving Medicine Starts Here

With Reduced Reimbursement from Medicare, Anatomic Pathology Groups and Clinical Laboratories Must Learn to Optimize Collections from Managed Care Payers to Stabilize Financials and Survive the Industry Shift

As PAMA brings estimated Medicare reimbursement cuts of up to 30% over the next three years to a range of typically high-volume tests and diagnostics, medical laboratories that wish to stay competitive must understand the needs of managed care payers and learn how to optimize collections, reduce denials, and communicate value effectively or risk their financial health

In what experts have called the biggest financial upheaval for the healthcare industry in three decades, the onset of new Medicare Part B Clinical Laboratory Fee Schedule (CLFS) reductions based on the Protecting Access to Medicare Act (PAMA)—and their continued decrease over coming years—places the financial integrity of clinical laboratories and anatomic pathology groups of all sizes in peril.

Recent years have seen major shifts in consolidation, automation, and efficiency analysis to help streamline both workflows and cashflows. However, the threat from the current and coming cuts to Medicare lab test prices will be particularly acute for smaller independent laboratories and hospital/health system lab outreach programs. These labs will continue to feel added strain due to reduced reimbursement across 25 of the most common tests billed to Medicare.

The Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG) predict that the cuts enacted on January 1, 2018, alone will result in Medicare payments to labs falling by a total of $670 million just in 2018. This amount is almost 70% greater than the $400 million in fee cuts the federal agency had predicted in statements it published last year. (See Dark Daily, “For Top 20 Tests, CMS to Cut Payment by 28% in 2018-2020,” October 9, 2017.)

And, that doesn’t account for subsequent cuts, which are estimated to reach nearly 30% over the next three years.

Cost of Service Disparities/In-Network Status Further Impact Clinical Labs

If the CLFS reductions weren’t enough, labs face another threat—managed care and commercial payers aligning with big national laboratories and narrowing networks in an attempt to lower costs and provide maximum return for both patients and shareholders. For smaller and independent laboratories, this represents a double threat.

In the first situation, larger laboratories can offer services at lower costs due to increased automation, batch processing, and other scale advantages. This means that while the lower CLFS rates will impact the financial integrity of larger labs, the actual margin lost is less than that of smaller laboratories and facilities that face higher costs to perform tests and provide services.

Compounding the situation, commercial and managed care payers searching out the best value for their patients and shareholders tend to narrow their networks by excluding many independent clinical lab companies and hospital lab outreach programs, amplifying this inherent disparity and skewing the advantage away from independent providers yet again.

Higher cost providers without a clear understanding of promoting their value to payers could have trouble obtaining in-network status. Yet, failing to obtain in-network status may reduce overall test quantities, further raise prices, and make smaller labs less competitive with larger national laboratories—a dangerous cycle with today’s competitive laboratory landscape.

Shifting Focus and Optimizing Managed Care Reimbursements

As the financial stability of Medicare reimbursements wanes, it is imperative that laboratories look to new methods to further increase efficiency and stabilize cashflows. Once a smaller portion of laboratory revenue, managed care organizations and commercial payers will be of increased importance as overall reimbursement rates continue to shrink in the face of healthcare reform and value-based care.

Unfortunately, many laboratories assume that by simply providing requested services they are due reimbursement from commercial payers. In the age of value-based care this is no longer the case and considered an outdated mindset—one that can lead to endless audits, increased recoupment costs, and which could drastically impact successful collection from managed care and commercial payers. (See Dark Daily, “Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands,” October 16, 2015.)

Special June 26 Webinar: Improving Managed Care Reimbursement Efficiency

Understanding not just what these payers are attempting to achieve for their organization—but also how they structure requirements and processes to support their goals—is an essential element of succeeding in this previously smaller share of the marketplace.

For those interested in learning more about critical concerns regarding managed care payers in the post-2018 CLFS landscape, Pathology Webinars is hosting a 90-minute webinar on Tuesday, June 26, 2018, at 2:00 PM Eastern.

The webinar will include presentations from two experts on a range of topics including:

  • Actionable steps to absorb the loss of Medicare revenue due to the impact of the 2018 CLFS reductions;
  • How managed care payers process network status and payments;
  • Who in the managed care chain of command should receive your value proposition;
  • How to better align your value propositions, policies, and workflows with the requirements of managed care and commercial payers; and,
  • Understanding the roles managed care payers expect clinical laboratories and anatomic pathologists to play in managing and reducing unnecessary testing.

The first speaker, Frank Dookie, MBA, will provide an inside look at:

  • How managed care payers function;
  • Their requirements and workflows; and,
  • What they look for when considering network status for a laboratory.

Dookie is a laboratory professional who has worked on the payer side for 28 years. He is passionate about the role that diagnostics play or can play in healthcare, and has spent his career working for instrumentation providers, clinical laboratories, the intermediary space between laboratories and managed care companies, and managed care companies.

The second speaker, Michael Snyder, will bring the entire payment process into sharp focus. He will cover:

  • Optimizing the collection process;
  • Identifying the purpose of each step, each review, and each team member involved; and,
  • Critical points laboratories must address to ensure payment.

Snyder is the Senior Vice President of Network Operations for Avalon Healthcare Solutions, LLC, a firm that provides comprehensive benefit management services to the health plan industry and has more than 30 years’ experience in clinical laboratory management.

Frank R. Dookie, MBA (left), Contracting Executive with a major managed care company in Woodbridge, N.J.; and Michael Snyder (right), Senior Vice President with Avalon Healthcare Solutions in Flemington, N.J., will provide critical insights and actionable details for clinical laboratory and anatomic pathology group leaders who want to ensure future revenues.

An Essential Opportunity to Improve Your Reimbursements

This critical webinar offers anatomic pathology groups and medical laboratory managers essential information and actionable next steps to immediately leverage the potential of managed care payers. Additionally, it provides insider insight to laboratories straining to retain financial integrity as reduced reimbursements and increased regulatory burdens strain budgets and cashflows.

To register for the webinar and see further details about discussion topics, use this link  (or copy and paste the URL into your browser:

As further Medicare payment reductions over the next three years drive reimbursements even lower, understanding how to capture the positive attention of payers—while working within the rules and policies driving their reimbursement decisions—will be an essential element of successful laboratory management and growth. Register now!

—Jon Stone

Related Information:

Continued ‘Aggressive Audit Tactics’ by Private Payers and Government Regulators Following 2018 Medicare Part B Price Cuts Will Strain Profitability of Clinical Laboratories, Pathology Groups

Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands

Tougher Lab Regulations and New Legal Issues in 2018: More Frequent Payer Audits, Problems with Contract Sales Reps, Increased Liability for CLIA Lab Directors, Proficiency Testing Violations, and More

Coming PAMA Price Cuts to Medicare Clinical Lab Fees Expected to Be Heavy Financial Blow to Hospital Laboratory Outreach Programs

What Every Lab Needs to Know about the Medicare Part B Clinical Laboratory Price Cuts That Take Effect in Just 157 Days, on Jan. 1, 2018

Medicare Clinical Laboratory Price Cuts and Cost-cutting Predicted to be 2018’s Two Biggest Trends for Medical Laboratories in the United States

Harnessing the Power of Real-Time Analytics: How to Optimize Your Lab Operations and Improve Service Levels in Measurable Ways

Harnessing the Power of Real-Time Analytics: How to Optimize Your Lab Operations and Improve Service Levels in Measurable Ways

Webinar was held Wednesday,
February 24, 2017 at 1PM EDST

Order DVD now

Clinical diagnostic laboratories are an indispensable component of modern healthcare. Yet labs, which often operate as separate business units or even as separate businesses, are facing increased competition from within the industry as well as a push for increased efficiency with lower levels of reimbursement. Without having reliable, concrete business metrics at their fingertips, laboratory managers like you are finding it increasingly difficult to make the most effective operational decisions and efficiently troubleshoot problems.

As a clinical laboratory manager or director, are you, too, recognizing the need to do things differently in order to more quickly identify performance issues, improve TATs, ensure accurate resulting, boost your lab’s productivity, and speed customer inquiry responses? If the answer is “yes,” you’ll want to register now for this all-new webinar, “Harnessing the Power of Real-Time Analytics: How to Optimize Your Lab Operations and Improve Service Levels in Measurable Ways,” taking place Wednesday, February 24, 2016, at 1PM EST.

During this information-packed 90-minute session, you will learn about the crucial role that a healthcare-specific business intelligence system can play in your lab and how, combined with specific smart workflow redesigns, the right tools can lead to significant and measurable improvements in both your laboratory’s productivity, and client satisfaction.

Your presenters for this webinar, Donna Cooper, MS, MBA, Manager for Laboratory Client Services and Test Utilization for Cleveland Clinic Laboratories, and Heather Hargis, BS, MT(ASCP), Laboratory Quality and Performance Improvement Manager at the University of Cincinnati Medical Center, have rich combined experience and understanding of the range of issues facing today’s laboratory client services teams, and how workflow redesign methods combined with a robust CRM can help you get more done in your lab, with more accuracy, and with far less expense.


Learn all this and more:

  • Challenges involved with adopting new business intelligence tools and how to overcome these challenges
  • Identifying deficiencies in your present system and processes, and how to best adapt your current technology
  • The value of being able to access the data you need, when you need it, and on your own
  • Why the benefits of timely and reliable metrics cannot be overstated
  • Essential elements of best practice performance, and how other respected laboratories are achieving their goals
  • Capabilities, and constraints of software solutions, how to evaluate your options, and choosing the solution that’s right for your lab
  • Understanding why integrating the lab’s information systems with other sources of data in the organization is necessary to support continuous improvement
  • Effective techniques to gain staff support of improvements as they are implemented
  • How a good business intelligence solution can expedite planning for business expansion, results translated to positive patient outcomes, and much more!

    Order DVD now

    If your clinical diagnostic laboratory is faced with increasing economic challenges and you are under pressure to maximize the value of your lab’s budget, this webinar is for you

    As healthcare in the U.S. continues to challenge our ability to provide a top-notch level of service while preserving our labs’ financial health—clinical laboratories will need to implement the business intelligence tools necessary in order remain competitive, increase efficiency, and maximize profitability, all the while continuing to provide world-class quality services.

Donna D. Cooper, MS, MBA, Manager, Laboratory Client Services and Test Utilization, Cleveland Clinic, Cleveland, OH
Donna D. Cooper, MS, MBA is the Manager for Laboratory Client Services and Test Utilization for Cleveland Clinic Laboratories. At CCL Cooper has led the effort to implement a CRM and consolidate client services across nine regional hospitals and main campus. Prior to working at Cleveland Clinic, she worked at ARUP Laboratories for ten years. During her tenure there, she helped develop and later manage the Marketing Analytics team. She earned both her MS in Oncological Science and her MBA with an emphasis in Healthcare Administration from the University of Utah. She began her career in laboratory science making media for microbiology classes while earning a BA in English from the University of Oregon.
Heather Hargis, BS, MT(ASCP), Laboratory Quality and Performance Improvement Manager, University of Cincinnati Medical Center, Cincinnati, OH
Heather Hargis is a proud graduate of the University of Cincinnati with a BS in both Biology and Medical Technology, and trained as a Lean Six Sigma Black Belt at Villanova. During her 20-year career, she has worked in both Hospital and Reference Laboratories focusing in the areas of Lean and Six Sigma improvements. Heather has worked on numerous process improvement initiatives including Lean In the Lab, 5S, and creating Standard Work and work cells within the lab setting. She is currently focusing on data mining for test utilization initiatives and productivity analysis as well as hospital wide Patient Safety Initiatives.
Your Clinical Lab’s Opportunity to Capture $100K-$500K in Wasted Spending: Proven Steps to Improve Inventory Management, Free Up Cash, and Increase Lab Performance

Your Clinical Lab’s Opportunity to Capture $100K-$500K in Wasted Spending: Proven Steps to Improve Inventory Management, Free Up Cash, and Increase Lab Performance

Webinar was held Wednesday,
January 13, 2016 at 1PM EST

Order DVD now

Would a quick infusion of $100,000 to $500,000 in cash within 30 days of implementing a simple process improvement project make a big difference for your clinical laboratory or pathology group—particularly at a time when your parent hospital is cutting your lab’s budget?

Should you answer that question with a “yes,” then read further to learn how two of the nation’s most respected laboratory organizations harvested that much cash and more with existing staff and resources, and how your lab can do this, too.

These two labs saw the opportunity to convert inventory—reagents and consumables—to cash by initiating simple and speedy process improvement projects. In only weeks, each lab successfully reduced expensive inventory levels while eliminating stock-outs and the problem of expired reagents, to name just two benefits.

Best of all, your lab—whether small, medium, large, or multi-site—has the same opportunity to free up $100,000 to $500,000 or more in spendable cash! The methods used by the lab teams at Henry Ford Health System and Saint Francis Health System will work just as well in your lab.

To give you and your lab team a fast start on your own project to obtain cash through better inventory management, DarkDaily has arranged a special webinar titled, “Your Clinical Lab’s Opportunity to Capture $100K-$500K in Wasted Spending: Proven Steps to Improve Inventory Management, Free Up Cash, and Increase Lab Performance.” This all-new, 90-minute webinar will take place Wednesday, January 13, at 1PM EST.

Your faculty for the webinar, Sharon Cox, MT(ASCP)SC, Core Laboratory Supervisor with Saint Francis Hospital in Tulsa, OK, and Rita D’Angelo, MS, ASQ, CQE, LSSBB, President and CEO of D’Angelo Advantage in Gibraltar, MI, formerly with Henry Ford Health System in Detroit, have tremendous combined successful experience at applying unique approaches to laboratory inventory management—resulting in astonishing cost savings and productivity improvements, within weeks following the labs’ implementation!

Cox and D’Angelo bring to this webinar powerful cost-cutting tools! Tools that are also easy and fast, achievable by your existing lab team in just a few weeks. These simple but powerful secrets come with another key benefit: your lab is cutting costs without the need to lay off staff or reduce services. Think of how excited your staff will be to learn that they can unlock all this cash without the pain of reduction in hours or other unpopular cost-cutting options.

Order DVD now

Learn how your lab can improve its inventory management and thereby:

  • Reduce costly inventory errors through the supply chain
  • Prevent stock outages—no more late night calls about an item being out of stock
  • Cut labor costs, including those of lab personnel and others
  • Reduce the amount of inventory held on hand
  • Clear inventory space for repurposing and more efficient use
  • Slash shipping costs, both overnight costs and overall costs
  • Increase the productivity of lab staff, freeing them for more meaningful work than inventory management
  • And many more time- and money-saving results!

This is your ideal opportunity to get the inside scoop on new and impactful ways to free up your lab’s cash and increase lab performance!  You will come away with an essential toolkit of money-saving, productivity-boosting information, designed to be actionable by you and your staff immediately. Register your entire team today—you have nothing to lose, and everything to gain!




Sharon Cox
Sharon Cox, MT(ASCP)SC, Core Laboratory Supervisor, Saint Francis Hospital, Tulsa, OK

Sharon Cox is the Core Laboratory Supervisor at Saint Francis Hospital in Tulsa, OK. A key member of the Saint Francis team with over 20 years of experience within the facility, during Cox’s tenure as Core Laboratory Supervisor, the yearly testing volume has increased from 1.8MM to >8MM tests. This was accomplished through automation and informatics without the addition of additional staff in the Core Laboratory. Also under her leadership, Saint Francis installed a RFID inventory management system in 2013 and has realized significant cost savings and labor savings since implementation.


Rita D'Angelo
Rita D’Angelo, MS, ASQ, CQE, Lean Six Sigma Black Belt, President and CEO, D’Angelo Advantage, Gibraltar, MI

Rita D’Angelo has been a regulatory quality assurance specialist and served as Quality Manager at the American Red Cross in California.  She is a trained ISO 9000 auditor, an ASQ Six Sigma Black Belt, and a Quality Engineer.  Prior to returning to healthcare, she was a quality manager in charge of FDA regulation in the chemical manufacturing industry.  For the past eight years, she served as the quality manager in the Department of Pathology and Laboratory Medicine in the Henry Ford Health System, where she co-created the successful culture of the Henry Ford Production System for nearly 800 laboratorians. She was instrumental in guiding the Henry Ford laboratories to achieve ISO15189 accreditation as an integrated system.