Failing finances at technical pathology laboratories may be the most immediate concern for many pathology group practices
Many clinical laboratories and anatomic pathology groups now recognize the new reality of the American healthcare system: less reimbursement for laboratory testing. On one hand, the fee-for-service prices for lab tests paid by government and private payers have been aggressively slashed.
These trends have already brought a handful of medical laboratories and pathology practices to the point of bankruptcy, sale, or closure. This is definitely true for the technical laboratories owned by many local pathology groups, which have become unprofitable due to fee cuts. (See below.)
More Bad News for Medical Labs and Pathology Groups
The bad news for labs doesn’t stop there. Today, the majority of office-based physicians are now employees. Mostly hospitals and health systems now own their medical practices. These owners typically want their own clinical labs to do the testing in support of the office-based physician practices they own and operate.
Both Laboratory Corporation of America (NYSE: LH) and Quest Diagnostics Incorporated (NYSE: DGX) report their earnings quarterly and have long been considered financial bellwethers for the lab industry at large. In recent years, however, they have struggled to show organic growth in specimen volume and revenue, mostly due to the three trends mentioned above.
Clinical Laboratory Industry Needs New Business Models
These are the reasons why lab executives and administrators are rethinking their labs’ business strategies. As the era of fee-for-service medicine ends and is replaced by value-based reimbursement, how will labs be paid? As healthcare evolves into integrated care organizations—such as ACOs and medical homes—what different lab testing services will deliver the most value to these new users of lab tests?
The earliest innovators in lab medicine are already working to answer these questions. New lab business and service models are popping up and have at least two traits in common. First, they are stepping forward to engage referring physicians with a full range of information-rich lab testing services and consultations that help improve patient outcomes, while lowering the overall cost per healthcare encounter.
Second, these first-mover clinical labs and pathology groups recognize the value of collaboration and developing regional service networks. Yes, this is a strategy designed to mirror the creation of regionally based ACOs, medical homes, and integrated health systems in their communities.
On May 1, 2014, some of these lab innovators will present case studies about the successes and lessons learned by their clinical lab and pathology organizations at a full-day workshop, titled “Anticipating New Clinical and Business Models for Clinical Labs and Pathology Groups.”
More Sessions on Lab Management at Executive War College
This information-packed workshop will follow the 19th Annual Executive War College on Laboratory and Pathology Management, which takes place on April 29-30 at the Sheraton Hotel in New Orleans. Details of the agenda and how to register can be found at http://www.executivewarcollege.com.
Featured presentations will be delivered on May 1 by respected clinical laboratory and anatomic pathology organizations. Each presenter is evolving its existing business model into something new and aligned with the changing needs of physicians, patients and payers. This workshop will include presentations by:
- ProPath, Dallas, Texas: This regional pathology super-practice is expanding its service area and developing subspecialty expertise. Presented by Krista Crews, Executive Director.
- NeoGenomics Laboratories, Fort Meyers, Florida; This national pathology reference lab company is developing unique molecular and genetic testing services, as well as is launching new, collaborative relationships with community hospital-based pathology groups. Presented by Douglas Van Oort, President and CEO.
- University of Mississippi Medical Center, Jackson, Mississippi: This academic health center is creating a regional anatomic pathology network with community pathologists and expanding its interaction with local hospitals to help develop their clinical laboratory testing services. Presented by Janice M. Lage, M.D., Professor and Chair, Department of Pathology.
- Baystate Medical Center, Springfield, Massachusetts: This health system laboratory is developing dual strategies for supporting its community hospital laboratories and pathology groups throughout the region. Presented by Jason Newmark, Vice President of Baystate Medical Center and Chris Pomidoro, Managing Partner, The Healthcare Legacy Group.
- Claritas Genomics, LLC, Cambridge, Massachusetts: This is the molecular lab of Boston Children’s Hospital spun off as a separate company. It raised capital from professional investors and children’s hospitals participating in its molecular/genetic testing network. Now it mines its network labs for new molecular and genetic technology from which it develops new diagnostic services that can be used by network hospital labs. Presented by Patrice Milos, Ph.D., President.
- “Recognizing the Emerging Business Models in Clinical Laboratory and Anatomic Pathology Testing”: This presentation will provide an overview of how both medical labs and pathology groups across the nation are reshaping their diagnostic service mix and using different business models to support these initiatives. Presented by Chris Jahnle, Managing Director, Haverford Healthcare Advisors.
- “Assessing the Economic Future of Pathology Technical Labs: Finding Solutions and Opportunity During Lean Times”—The rapid decline in prices for key anatomic pathology TC CPT codes has forced pathology groups across the nation to react swiftly and decisively to the resulting cash-flow losses in their technical labs. A veteran attorney actively engaged in helping pathology groups restructure their technical laboratory business will provide special, up-to-the-minute insights into what’s working and what’s not in these restructuring initiatives. Presented by Richard S. Cooper, Esq., McDonald Hopkins.
Emerging Clinical Laboratory and Pathology Business Models
Chair and Moderator for this first-ever workshop on emerging lab business models is Khosrow Shotorbani, President & CEO of TriCore Reference Laboratories in Albuquerque, New Mexico. He has been one of the lab industry’s key strategic thinkers in recent decades and will contribute his deep experience to the topic of new business models in the clinical laboratory industry.
This year’s Executive War College has 60 sessions and almost 90 speakers that will address current issues for pathology business leaders and lab executives seeking insights on how to improve clinical services, cut lab costs, and maintain financial stability, These presentations will cover a full range of topics of interest to pathologists and medical laboratory professionals, including lab automation, laboratory informatics, managed care contracting, new developments in molecular/genetic testing, and how labs are serving ACOs.
Big Crowd Expected for Nation’s Largest Lab Management Conference
Attendance is approaching record numbers and hotel space is limited. Timely action to ensure your place is recommended. View the full program and agenda at http://www.executivewarcollege.com/agenda/. Visit http://www.executivewarcollege.com/register/ to register, or www.executivewarcollege.com to access the entire Executive War College website.