Clinical laboratories should take a proactive approach to ensure compliance with current price transparency regulations
Price transparency in healthcare continues to be a focus of the Centers for Medicare and Medicaid Services (CMS). As of this ebrief, the agency has cited nearly a dozen hospitals this year that failed to, wholly or in part, follow through with federal legislation due to technical issues.
The citations, paired with President Trump’s executive order from February on price transparency, demonstrates a growing trend toward costly enforcement.
It’s not clear from the documentation posted by CMS if any of this involves price transparency with clinical laboratory tests. Labs that operate within hospitals or health systems are subject to the executive order; thus, diagnostic test pricing estimates are subject to transparency mandates.
Based on enforcement actions posted online by CMS, it’s clear that the agency is looking into technical issues of price transparency requirements that have little to do with diagnostic medicine. From that perspective, clinical laboratory teams may want to pass this Dark Daily ebrief along to their IT department and business analysts, whose work is drawing criticism from CMS at some hospitals.
The entire lab team should be proactive on the issue of price transparency.
“Imagine how a one-on-one conversation with a patient would go if a physician explained that a routine cholesterol test sent to Lab A would cost five times that of Lab B. Anyone think the patient would choose Lab A?” wrote Bryan Vaughn, senior vice president, health systems and mid-America division, Labcorp, in an article he penned for the lab company’s website. (Photo copyright: Labcorp.)
Hefty Fines and Warnings from CMS
According to CMS, already in 2025, 10 hospitals have received civil monetary penalty (CMP) notices of hefty fines for non-compliance. They include:
Arkansas Methodist Medical Center, Paragould, Ark. $309,738
Northlake Behavioral Health System, Mandeville, La. $257,180
Lawrence Rehabilitation Hospital, Brick, N.J. $120,120
Community Care Hospital, New Orleans, La. $93,214
Hill Hospital of Sumter County, York, Ala. $84,216
Bucktail Medical Center, Renovo, Pa. $75,582
D.W. McMillan Memorial Hospital, Brewton, Ala. $71,852
First Surgical Hospital, Bellaire, Texas $62,016
CCM Health, Montevideo, Minn. $55,611
Southeast Regional Medical Center, Kentwood, La. $32,301
Payments for citations are due 60 days after receiving the CMP notice.
Trump’s Executive Order
CMS’ price transparency focus comes alongside President Trump’s Executive Order 14221, “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information,” which the administration put out in February of this year, CMS noted.
As covered in the March 31 issue of The Dark Report, a sister publication to Dark Daily, Trump’s order is an expansion of his previous price transparency ruling, which went into effect at the start of 2021.
At that time, hospitals were required to “provide clear, accessible pricing information online about the items and services they provide” that was easy understand and to use, and machine-readable files listing all services and items available, CMS noted.
Impact on Clinical Laboratories
CMS’ updated requirements and refreshed reinforcement against healthcare organizations remain pertinent to hospital laboratories mostly due to extreme variations in test pricing.
“Reports continue to point out wide differences in the prices of routine laboratory testing across settings. Yet, routine lab testing may be some of the most comparable procedures in healthcare, with minimal differences in methods or quality,” wrote Bryan Vaughn, senior vice president of health systems and the mid-America division at Labcorp, in an article he penned for the lab company’s website.
Vaughn cited as much as a $600 difference found between metabolic or lipid panels and other standard lab tests.
It behooves clinical labs to verify that the information they provide to consumers online about test prices is indeed easy to understand and meets the spirit of the executive order and CMS. Failure to do so could be costly to a health system or hospital.
Move comes two-years post-acquisition and is the second such unionization of Labcorp hospital lab workers
In February, clinical laboratory staff at Providence Portland Hospital in Oregon landed a 77% vote to unionize, with its 114 members joining the Oregon Federation of Nurses and Health Professionals (OFNHP). The laboratory scientists had been employees of Providence before the Catholic Health chain outsourced its medical laboratory operations to Labcorp in 2023.
“We decided to unionize because we want to ensure a stable, well-trained, well-staffed medical laboratory is available to our community. By unionizing we can have a strong voice for our patients and ourselves, ensuring a positive future for healthcare in this region,” said medical laboratory scientist Allister Brister-Smith, laboratory services team lead, in an OFNHP news release.
“Since the transition with Labcorp, we’ve noticed an increase in workload, an increase in expectations, and more of a focus on volume and throughput. Providence was more focused on quality,” Brister-Smith told Northwest Labor Press.
“That lab performs the blood, stool, and tissue testing that doctors at Providence’s Portland hospital rely on to make treatment decisions,” Willamette Week noted, adding that both staff and patients have been bemoaning test result delays that have occurred since the May 2023 transition. “Several blamed short-staffing for the lines and delays.”
Labcorp has not commented on the news, Labor Press reported.
One of the 114 Labcorp clinical laboratory workers at Providence Portland Hospital in Oregon who voted in February to unionize. “We are tasked with running so many tests and serving so many patients that we are concerned over the future of the care and services we offer, and we know that a change is necessary,” the workers stated in an OFNHP news release. (Photo copyright: OFNHP.)
Lab Workers Taken by Surprise
The 2023 news of the Labcorp outsourcing damaged morale, Northwest Labor Press reported.
“Lab, typically, is a fairly profitable section for a healthcare system, so when they pulled us into a big meeting and our lab director who had been with us since that lab was created announced to us that Providence had elected to sell off some of the assets, we were all really taken by surprise,” Brister-Smith told Northwest Labor Press.
He noted that many employees were committed to Providence’s corporate values and had forged ahead through the COVID-19 pandemic. “Most people who’d been working there and stuck around through COVID were pretty committed to the mission of Providence. It was quite a shock, honestly, to be told that our jobs would be outsourced to a for-profit company,” Brister-Smith added.
The Providence lab is comprised of employees with two- or four-year degrees, all certified from the American Society for Clinical Pathology (ASCP). Brister-Smith told Northwest Labor Press that lack of pay raises paired with diminishing quality of benefits has discouraged additional talented staff from joining there and instead saw them headed to Oregon Health and Science University and Kaiser Permanente.
The lab workers decided that unionizing was the way to be heard. “We believe that our voice and our input on workflow and the amount of work and staffing can have a positive impact on the long-term future of patient care,” Brister-Smith said. “It’s very inspiring to see people be on the same page, wanting to have some degree of control in their lives.”
Prior Labcorp Worker Unionization
This latest unionization movement is the second local hospital system that saw a merger with Labcorp result in a union. Prior to this, Legacy Health lab workers from 12 locations in Oregon and Washington state joined the union, 435 employees strong. That group is in the midst of contract bargaining, Northwest Labor Press added.
The timing of the unionization comes at a tender time for Providence as they have just wrapped up a 46-day strike comprised of 5,000 of their staff, including doctors and nurses. The strike began on January 10 but followed more than a year’s worth of bargaining. The end result impacted staffing, patient safety, and wages, the Oregon Nurses Association reported.
While businesses generally have an aversion to unions, response from Labcorp has been nonexistent. Willamette Week reported that “Labcorp’s media office did not immediately respond to a request for comment. Nor did Providence spokespeople,” and at this time, no press releases exist from Labcorp on the matter.
“Previously … CDC developed tests for emerging pathogens and then shared those tests with others, and then after that, commercial labs would develop their own tests,” Shah told CNN. “That process took time. Now with these new arrangements, commercial labs will be developing new tests for public health responses alongside CDC, not after CDC.”
In a news release announcing the contract, ARUP Laboratories also characterized the move as a shift for the agency.
“The new contract formalizes ARUP’s relationship with the CDC,” said Benjamin Bradley, MD, PhD, medical director of the ARUP Institute for Research and Innovation in Infectious Disease Genomic Technologies, High Consequence Pathogen Response, Virology, and Molecular Infectious Diseases. “We continue to expand our capabilities to address public health crises and are prepared to scale up testing for H5N1, or develop other tests quickly, should the need arise.”
“To be clear, we have no evidence so far that this [bird flu] virus can easily infect human beings or that it can spread between human beings easily in a sustained fashion,” Jennifer Nuzzo, DrPH (above), Director of the Pandemic Center and Professor of Epidemiology at Brown University School of Public Health, told CNN. “If it did have those abilities, we would be in a pandemic.” Clinical laboratory leaders will recall the challenges at the CDC as it developed its SARS-CoV-2 test early in the COVID-19 pandemic. (Photo copyright: Brown University.)
Missouri Case Raises Concerns
The first human infection of HPAI was reported in late March following a farmer’s “exposure to dairy cows presumably infected with bird flu,” the CDC stated in its June 3, 2024, bird flu Situation Summary. That followed confirmation by the USDA’s Animal and Plant Health Inspection Service (APHIS) of an HPAI outbreak in commercial poultry flocks in February 2022, and the CDC’s confirmation of the first known infections in dairy herds reported on March 25, 2024.
Concerns about the outbreak were heightened in September following news that a person in Missouri had been infected with the virus despite having no known contact with infected animals. CNN reported that it was the 14th human case in the US this year, but all previous cases were in farm workers known to be exposed to infected dairy cattle or poultry.
In a news release, the Missouri Department of Health and Senior Services (DHSS) revealed that the patient, who was not identified, was hospitalized on Aug. 22. This person had “underlying medical conditions,” DHSS reported, and has since recovered and was sent home. Both DHSS and the CDC conducted tests to determine that the virus was the H5 subtype, the news release states.
At present, the CDC states that the public health risk from the virus is low. However, public health experts are concerned that risks could rise as the weather gets cooler, creating opportunities for the virus to mutate “since both cows and other flu viruses will be on the move,” CNN reported.
Concerns over CDC Testing and FDA Oversight
In the months immediately following the first human case of the bird flu virus, Nuzzo was among several public health experts sounding an alarm about the country’s ability to ramp up testing in the face of new pathogens.
“We’re flying blind,” she told KFF Health News in June, due to an inability to track infections in farmworkers. At that time, tests had been distributed to approximately 100 public health labs, but Nuzzo and other experts noted that doctors typically order tests from commercial laboratories and universities.
KFF reported that one diagnostics company, Neelyx Labs, ran into obstacles as it tried to license the CDC’s bird flu test. Founder, CEO, and lead scientist Shyam Saladi, PhD, told KFF that the federal agency had promised to cooperate by facilitating a license and a “right to reference” CDC data when applying for FDA authorization but was slow to come through.
While acknowledging the need for testing accuracy, Greninger contended that the CDC was prioritizing caution over speed, as it did in the early days of the COVID-19 pandemic. “The CDC should be trying to open this up to labs with national reach and a good reputation,” he told KFF.
Another problem, KFF reported, related to the FDA’s new oversight of laboratory developed tests (LDTs), which is causing labs to move cautiously in developing their own tests.
Jennifer Nuzzo, DrPH (above), Director of the Pandemic Center and Professor of Epidemiology at the Brown University School of Public Health co-authored a June 2024 analysis in Health Affairs that called on the CDC to develop “a better testing playbook for biological emergencies.” The authors’ analysis cited earlier problems with the responses to the COVID-19 and mpox (formerly known as monkeypox) outbreaks.
If global surveillance networks have detected a novel pathogen, the authors advise, the US should gather information and “begin examining the existing testing landscape” within the first 48 hours.
Once the pathogen is detected in the US, they continued, FDA-authorized tests should be distributed to public health laboratories and the CDC’s Laboratory Response Network (LRN) laboratories within 48 hours.
Advocates of this approach suggest that within the first week diagnostics manufacturers should begin developing their own tests and the federal government should begin working with commercial labs. Then, within the first month, commercial laboratories should be using FDA-authorized tests to provide “high throughput capacity.”
This may be good advice. Experts in the clinical laboratory and healthcare professions believe there needs to be improvement in how novel tests are developed and made available as novel infectious agents are identified.
As a result, health system-based clinical laboratories likely saw a decline in test orders as well a decrease in outreach revenue
Bad financial news continues in the hospital industry. According to an August 2023 National Hospital Flash Report from consulting firm Kaufman Hall, hospitals’ financial performance deteriorated in July, partly due to declines in inpatient and outpatient volumes and rising bad debt and charity care.
The implication from these findings is that hospital-based clinical laboratories saw a drop in test volume and any lab revenue associated with inpatient testing.
In an analysis of data from more than 1,300 hospitals, Kaufman Hall noted a dip in hospitals’ median calendar year-to-date operating margin from 1.4% in June down to 1.3% in July. The data also showed “a greater pullback in volume on the outpatient side, which may be attributed to patients choosing not to pursue elective procedures during the summer,” a Kaufman Hall news release stated.
Kaufman Hall’s National Hospital Flash Report by Erik Swanson, Senior Vice President, Data and Analytics, and Brian Pisarsky, Senior Vice President, Strategic and Financial Planning, is an analysis of actual and budget data—sampled from Syntellis Performance Solutions—which is representative of hospitals of various sizes and areas in the US.
“It’s clear that today’s challenging financial environment is here to stay, and hospital leaders must be proactive in seeking out opportunities to refine their operations and remain competitive,” said Erik Swanson, Senior Vice President, Data and Analytics, Kaufman Hall, in a news release. Clinical laboratory leaders would be wise to follow the same advice. (Photo copyright: Kaufman Hall.)
Expenses Declined, Bad Debt and Charity Care Rose
Here are other national data Kaufman Hall reported for July 2023 as compared to June 2023:
Adjusted discharges per calendar day dropped 7%.
Operating room minutes per calendar day declined 13%.
Emergency department visits per calendar day fell 1%.
Bad debt and charity care as a percentage of hospitals’ gross operating revenue was up 7%.
Purchased service expense per adjusted discharge was down 3%.
Labor expense per adjusted discharge also fell 3%.
Even though expenses slightly declined during July, patient volume decreases “pulled down” the margins, Healthcare Innovation reported, which called the report “a gloomy one.”
Also, the uptick in bad debt and charity care while volumes decreased created a “difficult situation for hospitals,” Medical Economics observed.
Here are the report’s “key takeaways,” according to Kaufman Hall:
All volume indicators were down, but operating margins were still better than 2022.
Outpatient volume decreased more than inpatient, possibly due to patients choosing not to have elective procedures during the summer.
The decline in expenses was “not enough to offset revenue losses,” and inflation will continue to take its toll on labor expenses.
Medicaid has been “disenrolling” members in 30 states during June and July, and bad debt and charity care have increased.
The report also called out need for improvement in providers’ discharge of patients to skilled nursing facilities. “Hospitals that prioritize care transitions to skilled nursing facilities are performing better than institutions [that] do not,” Swanson said in the news release.
“Identifying steps that can ensure a smooth transition, such as obtaining pre-authorizations and planning discharge early, will help organizations reduce expenses and improve patients’ experience,” he continued.
For Hospitals, 2023 Not as Bad as 2022
MedCity News pointed out that though July’s operating margin index decline followed four months of growth, hospitals are still way ahead of 2022 performance when median operating margins were -0.98% in July 2022.
Still, it appears hospitals are struggling to secure financial footing after 2022, an overall bad financial year for the hospital industry.
More recently, a 2023 Becker’s Hospital CFO Report compiled a list of 81 hospitals that had cut jobs since the start of the year in response to “financial and operational challenges.”
Included was Tufts Medicine in Burlington, Massachusetts. In August, the hospital “eliminated hundreds of jobs” in an outsourcing of lab outreach services to Labcorp. The Becker’s report noted that “[Tufts] said it will work with Labcorp to have the majority of affected employees transition to a similar position with Labcorp.”
Tips for Clinical Lab Financial Viability
Medical laboratory leaders need to help ensure financial health of their labs as well as quality and efficiency of services. Advice from Kaufman Hall may be applicable.
The report writers advised providers to secure payer authorizations before a “patient comes in the door.” For clinical labs, this is comparable to the need to secure insurance company authorizations for expensive genetic tests before samples are taken and tests performed.
Another tip from Kaufman Hall is to “collect and use data to inform process improvement” and “make change.” Along those lines, medical laboratories could leverage patient data to guide launch of new services, entry to markets, workflow improvement, and costs reduction.
Expect there to be more clinical laboratory testing at pharmacies as retail pharmacy chains expand their primary care offerings
Walgreens Boots Alliance (NASDAQ:WBA) of Deerfield, Illinois, continues to expand its primary care footprint with VillageMD’s latest acquisition of Starling Physicians, a multi-specialty physicians group with 30 locations in Connecticut, according to a VillageMD news release. Walgreens is the majority owner of VillageMD, which now has more than 700 medical centers, Healthcare Dive noted.
This deal continues the trend of corporations acquiring physician practices. Already, the majority of physicians are employees, not partners in a private practice physician group. Under corporate ownership, these physician groups often decide to change their clinical laboratory providers. For that reason, managers and pathologists at local medical laboratories will want to explore how they might provide daily lab testing services to the corporate owners of these primary care clinics.
The Hartford Business Journal called VillageMD’s acquisition of Starling Physicians—which is subject to a state investigation for possible certificate-of-need requirement—one of Connecticut’s “more high-profile healthcare merger and acquisition deals in Connecticut in recent years.”
The Starling Physicians group acquisition comes just a few months after
VillageMD paid $8.9 billion for Summit Health-CityMD of Berkeley Heights, New Jersey, with primary care services in the Northeast and Oregon. Walgreens invested $3.5 billion in that transaction, a Summit Health news release noted.
These acquisitions by Walgreens/VillageMD provide opportunities for local clinical laboratories to serve the physicians in these practices, though the operations may have a different patient flow and work process than traditional family practice clinics located in medical offices around community hospitals.
“Starling shares our vision of being a physician-led model and they provide care in a compassionate and exceptional way to all the patients they serve. By integrating primary care with specialty care, we are able to optimize access to high-quality care for our patients,” said Tim Barry (above), CEO and Chair of VillageMD in the news release. “This is a natural extension of our growth in the Northeast, including our recent acquisition of Summit Health-CityMD. Together, we are transforming the way healthcare is delivered in the United States.” Clinical laboratories in these areas will want to develop a strategy for serving the physicians practicing at these non-traditional locations. (Photo copyright: The Business Journals.)
Primary Care at Retail Locations a Growing Trend
Dark Daily and its sister publication The Dark Report have reported extensively on the growing trend by pharmacy chains and other retail superstores to add primary care services to their footprint.
In “By 2027, Walgreens Wants 1,000 Primary Care Clinics,” The Dark Report covered how Walgreens had disclosed that it would spend $5.2 billion to acquire a 63% interest to become the majority owner of VillageMD. Fierce Healthcare reported that “[Walgreens] planned to open at least 600 Village Medical at Walgreens primary-care practices across the country by 2025 and 1,000 by 2027.”
VillageMD is a primary care provider with same-day appointments, telehealth virtual visits, in-home care, and clinical laboratory diagnostic testing such as blood tests and urinalysis. Many VillageMD practices are located in buildings next door to Walgreens sites throughout the United States. (Photo copyright: Walgreens.)
Other Retailers Investing in Primary Care
Other retailers have recently taken deeper dives into healthcare as well.
According to Forbes, “The acquisition comes amid a flurry of acquisitions across the US for doctor practices, which are being purchased at an unprecedented pace by large retailers like Walgreens Boots Alliance, CVS Health, Amazon, and Walmart. Meanwhile, medical care providers owned by health insurers like UnitedHealth Group’s Optum and Cigna’s Evernorth are also in the doctor practice bidding war.”
And in February, CVS announced plans to acquire for $10.6 billion Oak Street Health, a Chicago-based primary care company with 169 medical centers across 21 states that plans to have more than 300 centers by 2026.
Do Clinical Laboratories Want Retail Customers?
The question of whether clinical laboratories should pursue retail customers is at this point academic. Consumer demand is driving the change and labs that don’t keep up may be left behind.
“The trend of putting full-service primary care clinics in retail pharmacies is a significant development for the clinical laboratory industry,” wrote Robert Michel, Editor-in-Chief of Dark Daily and The Dark Report. “These clinics will need clinical lab tests and can be expected to shift patients away from traditional medical clinic sites for two reasons—lower price and convenience—since this new generation of primary care clinics will be located around the corner from where people live and work.”
Thus, healthcare system laboratories or large reference labs may want to reach out to Walgreens, CVS, Amazon, and Walmart for test referrals. These and other large retailers are investing heavily in the belief that consumers will continue to seek convenience in their healthcare.
