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
Sign In

Senators Baucus and Grassley Want Documents from Quest Diagnostics and LabCorp Relating to Discounted Medical Lab Test Pricing Practices

Two Senate committees seem interested in how certain medical laboratories offer discounted laboratory test prices to selected health insurers

Is it a coincidence that discounted medical laboratory test pricing offered by the nation’s two largest clinical laboratory companies appears to now be the subject of interest for the Senate Judiciary and Senate Finance Committees? Last Tuesday, Senator Max Baucus (D-Montana) and Senator Chuck Grassley (R-Iowa) issued a press release titled “Grassley, Baucus Scrutinize Practice by Health Insurers and Testing Labs.”

Baucus is Chairman of the Senate Finance Committee and Grassley is the Ranking Member of the Senate Judiciary Committee. Together, these two Senators sent letters last week to two clinical laboratory companies and three big health insurance firms: (more…)

LabCorp’s King and Ventana Medical Systems’ Grogan to Assess Clinical Laboratory Industry’s Future

Pathologists and clinical lab executives will hear perspectives from 80 speakers at the upcoming Executive War College on Lab and Pathology Management

For any pathologist or clinical laboratory executive interested in the future of the lab testing industry, there will be plenty of insights at the upcoming 15th Annual Executive War College on Laboratory and Pathology Management April 27-28 at the New Orleans Sheraton Hotel.  Leading a line-up of 80 speakers are David King, CEO of Laboratory Corporation of America (NYSE: LH) and Thomas Grogan, M.D., Founder and Chief Scientific Advisor of Roche Ventana Medical Systems.

There’s lots of optimism about the future of laboratory testing. That’s because genetic and molecular testing is giving pathologists new tools to more precisely diagnose disease and determine appropriate therapies. LabCorp’s David King, will speak to how lab test data is the linchpin in the drive to more tightly integrate clinical care in ways to lift patient outcomes.


Cuts in Health Budgets Are Threat and Opportunity for Clinical Pathology Laboratories

Some clinical labs use new pathology lab test technologies to deliver added value to physicians, patients, and payers

Clinical pathology laboratories in the United States and other developed countries across the globe face an unprecedented double-whammy. On one hand, the ongoing explosion of genetic and molecular knowledge gives pathologists and clinical laboratories incredible new tools for diagnosing disease and guiding therapy.

On the other hand, funding for government health programs in the United States and other developed countries is failing to keep pace with demand for health services and the need to pay for all the sophisticated molecular diagnostics and complex therapies now coming to market.


LabCorp CEO Speaks About Managed Care Contracting at Executive War College

For Dark Daily readers who didn’t make it to the Executive War College in Miami, Florida last week, you missed the first public appearance to the laboratory community by David King, now CEO of Laboratory Corporation of America. King took over as LabCorp’s new CEO on January 1, 2007. In his presentation, King spoke about a number of important trends unfolding across the American healthcare system, along with several insights about changes occurring within the managed care industry and how these changes are likely to alter contracting practices for laboratory testing services.

King stated that, if laboratories wanted to be innovative in creating value, it was time for them to recognize the specific ways that laboratory services in today’s marketplace are a commodity. High volume, routine testing is treated by purchasers as a commodity because, among other reasons, each laboratory’s testing services can be quite similar because of regulatory mandates and accreditation requirements. In fact, this is one reason why King argued that it is detrimental to the laboratory industry for smaller labs to badmouth the largest ones.

The only way that laboratories can differentiate themselves to physicians, to payers, and to patients, according to King, is by providing a superior level of service. Local and outreach labs, he continued, are often the better choice for local patients. One reason this is true is because local laboratories can often provide a continuous record of laboratory test data over the years. This enables physicians to see trends in a patient’s test results over time. By contrast, national laboratories, which are unlikely to perform laboratory tests on the same individuals year after year, have a more difficult time providing the cumulative record of test results on individual patients that allow physicians to identify trends that may indicate a developing problem with that patient.

Dark Daily notes that regional health information organizations (RHIOs) have the potential to close the gaps in the individual patient’s cumulative record of test results. That would help fix this weakness of national laboratories over time. As each individual in the United States has an electronic health record (EHR) that follows him or her around from state to state and through the years of his or her lifes, laboratory results from year to year will be readily available, regardless of which lab performed the tests. Indeed, laboratory test results are generally targeted to be among the first types of information stored in RHIOs and EHRs.

One suggestion that emerged from King’s presentation at the Executive War College was that, as a strategy to counter the commoditization of laboratory testing, small and large laboratories could work together to develop the types of value propositions that would encourage higher reimbursement from managed care companies. In a not-so-distant future, King hints, the large, national laboratories in the United States may call upon small and outreach laboratories for help with their workload, as well as develop new ways of adding value to laboratory testing services.

More substantial details about David King’s presentation at the Executive War College last Friday will be in today’s issue of The Dark Report, now at the printer. As a speaker, King came prepared and engaged the audience in a positive manner. If one of King’s goals in making a major address at the Executive War College was to open the door to further dialogue between his company and regional laboratories, then he certainly succeeded in catching the interest of a significant number of lab directors and pathologists sitting in the audience last Friday.

One thing was obvious about King’s participation at the Executive War College. He was most willing to spend time at the social events to meet people and hear their comments. He may be the type of leader who ends the long-standing isolation of the national commercial lab industry executives from their hospital laboratory counterparts. If he does, that can only have positive consequences for the entire laboratory profession.

Related Articles:

LabCorp Announces Succession Plan; David P. King To Succeed Thomas P. Mac Mahon As CEO On January 1, 2007

LabCorp Ousted from Aetnas National Contract

In the heavyweight championship fight taking place between the two blood brothers, Quest Diagnostics Incorporated  has just won the next round. Earlier today, Laboratory Corporation of America issued a terse press release titled: “LabCorp Notified by Aetna of Contract Termination.”

LabCorp acknowledged that “it will no longer be a contracted laboratory provider for Aetna Inc. (NYSE:AET), effective July 1, 2007.” LabCorp further disclosed that it expects the loss of its contract relationship with Aetna to be the primary reason why it expects earnings per share in 2007 will decline from a projected $0.16 to $0.12 in 2007. That’s a 25% reduction.

This breaking development is not a total surprise. Quest Diagnostics found itself excluded from almost all UnitedHealth contracts last October (United Health Disrupts the National Contract Status Quo Between the Two Blood Brothers) and from New Jersey-based Horizon Blue Cross Blue Shield in January. In both cases, LabCorp had negotiated an exclusive relationship.

Now it’s tit for tat. Quest Diagnostics is likely to announce that it has an exclusive national contract with Aetna, effectively denying LabCorp access to Aetna’s 16 million members. Aetna is one of the five largest health insurance companies in the United States.

Each of these national managed care contracts has implications for clinical laboratory management. That’s because both of the blood brothers want to negotiate a national contract with insurer that include terms designed to exclude regional independent laboratories and hospital laboratory outreach programs. To help lab directors and pathologists stay on top of this emerging trend, this year’s Executive War College on Laboratory and Pathology Management has several sessions devoted exclusively to the latest developments in managed care contracting.

In particular, LabCorp’s new CEO, David P. King, will be discussing how managed care companies are altering their strategies for contracting laboratory testing services. This will be a unique opportunity to hear, first hand, what is likely to unfold in the next 24 months. That’s particularly important, since the developments of the past five months are pointing to a managed care contracting environment which is increasingly excludes independent lab companies and hospital laboratory outreach program in favor of the national laboratories.

Stay tuned to Dark Daily for more updates on both this story and this rapidly unfolding trend. Once LabCorp used its exclusive pact with UnitedHealth to break the managed carecontracting status quo between it and Quest Diagnostics, it set in motion forces which are already propelling the laboratory industry into uncharted territory.

PS: To get the latest news and effective strategies dealing with new trends, join us in Miami on May 10-11, 2007 for the 12th Annual Executive War College. You can access the full details using the links below. Take action today to reserve your place.

Early-Bird Discount Registration now available online


Download Full Program Agenda

Four Easy Ways to Register:
1. Register ONLINE
2. Call 800-560-6363. Our friendly staff can register you quickly and easily, as well as answer any questions you may have.
3. Fax this complete registration form PDF to 512-264-0969
4. Mail the one page form with payment to:

21806 Briarcliff Dr.
Spicewood, TX 78669
© 2007 The Dark Group, Inc