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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Developing Industry Trends Promise to Upend Some Labs and Pathology Groups

I have just finished confirming 49 speakers for this year’s Executive War College on Laboratory and Pathology Management and there is disturbing news to share. It is the collective opinion of these distinguished individuals that a cycle of rapid change has already begun to engulf the laboratory profession in the United States.

In general, most of this year’s speakers can identify at least one trend which threatens the financial security and operational stability of their laboratory organization. Their comments to me reflect a noteworthy difference compared to earlier years. Here is a quick list of the most significant trends which have the potential to be a threat to established laboratories:

• Rapid shift in managed care contracting practices that are likely end up excluding most local and regional laboratories from provider panels, with the new UnitedHealth contract as the leading edge

• Fast-growing numbers of urologists and gastroenterologists taking active steps to create their own in-house anatomic pathology laboratory, also described as the “TC/PC” trend

• Demands by office-based physicians for their laboratory to create interface gateways that support electronic test ordering from the physicians’ EMR (electronic medical record) system and deliver lab test results direction into the patient record in the EMR

• Expectations that imaging giants Siemens and GE, after spending billions to buy Bayer Diagnostics, DPC, and Abbott Diagnostics, are preparing to muscle into laboratory testing and molecular pathology

• Growing acceptance of Lean and Six Sigma quality management methods in laboratories and pathology groups, thus giving these lab organizations competitive advantage over labs which have yet to adopt such management systems

I’m going to stop with these five trends. Most of you can recognize how each can threaten existing lab organizations. Many of you are already implementing strategies within your laboratory to respond to these threats and convert them into opportunities for growth, enhanced profits, and long term financial stability.

Armed with this knowledge, we’ve crafted a total package of insights and solutions at the upcoming Executive War College on May 10-11 to help you with this multiplicity of trends in the lab services marketplace. For example, David P. King, the new CEO of Laboratory Corporation of America  will make a major address on “Managed Care Contract for Laboratory Services: Important Changes Lie Ahead.”

In future e-briefings, I will comment on those other important trends identified above. For those of you who would like to see all 49 topics and speakers, visit for the complete program.

Yours truly,

Robert L. Michel
Dark Daily Editor

Download the Full Executive War College Agenda (PDF)

Four Easy Ways to Register:
1. Register for the Executive War College Online (Early-bird discount still applies)

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 the Executive War College Registration Form to 512-264-0969

4. Mail the Executive War College Registration Form with payment to:

21806 Briarcliff Dr.
Spicewood, TX 78669

PS: In the latest issue of The Dark Report, now in the mail to you, our lead stories deal with the rapid turnover of UnitedHealth business from Quest Diagnostics Incorporated and LabCorp’s three-stage strategy for using the UnitedHealth contract to boost its long-term presence in local markets throughout the country. It’s not only interesting reading, but gives regional laboratories a head start in understanding the next competitive cycle that will soon be launched.

United Health Disrupts the National Contract Status Quo Between the Two Blood Brothers

It was major news yesterday when the public learned that UnitedHealth Group Incorporated had awarded an exclusive, 10-year national contract for laboratory testing services to Laboratory Corporation of America. UnitedHealth is the nation’s second largest health insurance company, with approximately 26 million beneficiaries. LabCorp says it should see an additional $3 billion in revenue during the 10-year term of its pact with UnitedHealth.

This new contract takes effect on January 1, 2007. After that date, Quest Diagnostics Incorporated ceases to be a contract provider of laboratory services to UnitedHealth beneficiaries, with a few exceptions. Quest Diagnostics acknowledges that its UnitedHealth book of business represents 7% of total revenues, or about $385 million per year. That business is now at risk, for a number of reasons.

What is big news for LabCorp and Quest Diagnostics is likely to be a “ho hum” for most other laboratories. That’s because they are already excluded from lab testing contracts with UnitedHealth. What may be of more immediate impact to hospital lab outreach programs and independent laboratory companies is the fact that LabCorp will be developing contract networks for UnitedHealth in selected regions around the United States. Depending on the prices and terms of such contract networks, local labs may find it advantageous to participate to gain access to UnitedHealth beneficiaries.

As to the two blood brothers, Dark Daily predicts the capture of UnitedHealth’s business by LabCorp will intensify competition between the two billion-dollar behemoths. Quest Diagnostics will not lie down and cede the UnitedHealth business to LabCorp. Nor will LabCorp be anything but aggressive about exploiting this opportunity. From this perspective, news that LabCorp has been granted an exclusive, 10-year lab testing services contract with UnitedHealth Group is just the first round. Stay tuned, because the battle is about to get nasty. Check out coming issues of The Dark Report for additional intelligence about this tectonic shift in national lab contracts.