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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New Genetic Laboratory Tests Face Complicated Hurdles to Win Reimbursement

Health insurers not eager to establish coverage for new molecular diagnostic assays

Navigating the pathway to successful commercialization of new genetic tests and molecular diagnostic assays has proven tricky. While scientists work quickly to bring new and better clinical laboratory testing tools to the market, health insurers work at a much slower pace to issue coverage guidelines and establish reimbursement for these new diagnostics tests.

“Successfully moving a genetic test from the research bench to the clinical laboratory takes much more than an understanding of the science,” stated Rina Wolf, Vice President of Commercialization Strategies for Consulting and Industry Affairs, XIFIN Inc., of San Diego, California. “Competition for coverage and reimbursement by health insurers is fierce. Often, the molecular diagnostic tests that win the best coverage decisions by payers are those proprietary tests backed by companies and laboratories with the most effective business plans.”


How Local Laboratories Can Make Money from Molecular Diagnostics

With each new advance in molecular diagnostics, local laboratories and pathology group practices find it easier to set up and offer molecular assays to their own clientele. That’s because newer generations of instruments automate steps and make it feasible to support this testing with a relatively small volume of specimens.

Challenges still remain, however. Payer coverage and reimbursement for many molecular assays remain inconsistent and unpredictable. In some cases, laboratories need technical skills which are either difficult to recruit or expensive to hire. Yet, where a molecular assay has clear clinical value, physicians want access to this test, particularly from a laboratory in their own community. It is this value added dimension to a molecular testing program which has helped a number of progressive pathology groups expand market share and revenue.

One such pathology group is ProPath of Dallas, Texas. With 30 pathologists, a cornerstone of its business strategy is to have subspecialist pathologists to serve its clients. Since the inception of molecular pathology, ProPath has reviewed new technologies and assays. It is willing to invest in three dimensions to bring up and offer specific molecular tests. It will acquire the instruments and equipment, it will hire or develop the technical expertise needed to run these tests and consult with physicians, and it will put money into a sales and marketing program to educate physicans and help them use these tests to the advantage of their patients. ProPath’s Executive Director, Krista Cruse, will present a case study at the upcoming Executive War College on Laboratory and Pathology Management and discuss ProPath’s success secrets in building a profitable molecular testing program.

To help both clinical laboratories and pathology group practices identify the best molecular testing opportunities for the marketplace they serve, Mary Steele Williams, COO & Director of Scientific Programs at the Association for Molecular Pathology, Bethesda, Maryland, will speak at the Executive War College specifically on the topic of which molecular assays are heading to market and likely to be both clinically useful to physicians and financially lucrative to the laboratories which offer such tests. In her role at the Association of Molecular Pathology, Williams gets a privileged look at emerging molecular assays, so her advice and insight can be invaluable for any laboratory wanting an insider’s view of today’s market for molecular testing.

Of course, The Dark Report has often written about the emerging business model in anatomic pathology that is now competing with local pathology groups for specimens. That is the specialty esoteric testing company. One of the most recent entrants into this category is RedPath Integrated Pathology of Pittsburgh, Pennsylvania. In the first 24 months of its business launch, it has grown to $5 million per year in revenues. RedPath’s innovation is patented technology that allows it to support both the diagnosis of cancer and the planning of treatment across multiple organ systems. The technology allows RedPath to work from a range of specimens, including traditional chemically-fixed slides, fluid aspirates, and cytology smears. Sydney F. Finkelstein, M.D., the pathologist who developed this technology and became RedPath’s founder, will be at the Executive War College to discuss how RedPath is giving community-hospital pathology groups additional molecular tools that they can use to add value to their client physicians.

As these examples demonstrate, molecular diagnostics and molecular pathology each can offer plenty of upside and opportunity for local laboratories and pathology groups. But there is also risk, because of unpredictable reimbursement and other factors. What is common to the laboratory case studies described above is that these pathology labs did careful market research. Lab directors and pathologists interested in developing a profitable, thriving molecular testing program should reserve a place at the upcoming Executive War College on May 10-11, 2007 in Miami. It’s an opportunity to meet Cruse, Williams, and Finkelstein and get first-hand access to their insights, advice, and recommendations.

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.

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