IT IS UNCHARTED TERRITORY FOR CLINICAL LABS AND PATHOLOGY GROUPS.A recession now officially exists in the United States. The last time this nation experienced an extended and painful economic recession was between July 1981 and November 1982, according to www.wikipedia.org.

That means it has been more than 26 years since anyone has managed a clinical laboratory during an economic recession! Few of us old-timers are still around to share the experience and wisdom gained during those challenging years. That means an entire new crop of laboratory managers and pathologists are about to undergo their trial by fire. To cope with the poor business environment, they will need good business strategies to keep their laboratories financially solvent and profitable.

Of course, the immediate pressure is to reduce operational costs in the face of slackening test volume, payer reluctance to settle claims in a timely fashion (since they want to hang on to the money), and the inability or unwillingness of larger numbers of patients to promptly and fully pay their bills to their lab test and pathology providers. Fortunately, clients and longtime readers of THE DARK REPORT know that quality management methods, including Lean and Six Sigma, are highly-effective tools to eliminate unnecessary costs while improving productivity and quality.

That covers the cost/operations side of the ledger. The other way to sustain financial stability is to grow the laboratory business in a cost-effective manner. This means expanding lab outreach market share. In speaking to laboratory executives across the country, there is a consistent message: in most regions, well-managed laboratories continue to see strong rates of growth in new client accounts, additional specimen referrals, and net revenue.

Two public laboratory companies offer proof that a well-executed sales strategy still produces good results. Bio-Reference Laboratories, Inc. (BRLI) reported its first quarter of fiscal year 2009 on March 5. It enjoyed a net revenue increase of 13%. Specialty test provider Clarient, Inc. reported its fourth quarter 2008 earnings on March 11. Clarient saw a net revenue increase of 76.4%, along with an increase in specimen volume of 39%.

These two examples should inspire hospital lab outreach programs and pathology groups. Even in a tough economy, a well-executed sales/marketing program can produce growth, along with increased profits!

Attorney General Brown Sues Seven Calif. Labs

He joins whistleblower lawsuit, claims labs did not give Medi-Cal program their lowest prices

CEO SUMMARY: California Attorney General Jerry Brown made a big splash last month by accusing seven lab firms of committing "massive fraud and kickbacks" under state Medicaid laws. However, he is relying on a legal theory that has not prevailed in some prior court cases involving discounted billing for laboratory testing. Nonetheless, it appears that a multi-year legal battle is now under way, with the substantial resources of the California Attorney General arrayed against the seven defendant lab companies.

Patient Safety Update: Diagnostic Errors Get Attention As Next Patient Safety Goal

Errors in diagnosis estimated to be responsible for between 40,000 and 90,000 deaths yearly

Warning: Three-Fold Rise In EMR Adoption Predicted

Stimulus plan sets aside $20 billion for physicians who install certified EMRs

CEO SUMMARY: Doctors are responding to news that up to $20 billion in federal funding is now available to help pay for their adoption of electronic medical record (EMR) systems. Demand for EMRs is expected to increase three-fold in the coming years. That means clinical labs and pathology groups must step up their EMR interface capabilities—or lose clients as physicians move their business to laboratories who do a better job of interfacing with physicians' EMRs.

LABORATORY BRIEFS: INVERNESS ACQUIRES TEST BUSINESS FROM ACON: MAKING LAB DATA “LIQUID” FOR ALL USERS

Resollved 10-Year Issue off Hemolyzed ED Specimens!!

Gene Testing: Navigenics Buys Clinical Lab From Affymetrix Last Month

Direct-to-consumer genetics testing vendor now has in-house laboratory testing capabilities

Hey Doc! How Do You Rate With Zagat Health Survey?

Zagat Health Survey designed to help WellPoint's patients select their physicians

CEO SUMMARY: Once patients become involved in managing their healthcare, they actively seek information that can help them make informed decisions. Health insurers are providing tools to helpmake this job easier. WellPoint teamed up with Zagat Survey to create the Zagat Health Survey. This unique tool offers consumers a snapshot of a physician from the patient point of view. It is available exclusively to members of WellPoint's affiliated plans and other participating Blues Plan members.

Medically Unlikely Edits Are Back and a Problem!

CMS instituted 100 new MUEs on January 1, then carriers began rejecting laboratory claims

CEO SUMMARY: On January 1, 2009, CMS implemented Phase VIII of its policy on medically unlikely edits (MUEs) involving about 100 laboratory CPT Codes. It also began to deny whole claims, not just the "medically unlikely" parts of claims. After hearing of the problem in early March, ACLA, CAP, and other lab groups stepped in to work closely with CMS officials to resolve the problem. Claims are expected to be paid in full until new revisions to MUE rules are implemented.

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CLARIENT LINES UP NEW INVESTOR IN A $50 MILLION DEAL

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