| R. Lewis Dark:
Competing Against Regional Laboratories
SINCE THE 1980S, THERE HAS BEEN COMPETITIVE TENSION between publicly
traded laboratory companies and their regional counterparts—both independent
labs and hospital laboratory outreach programs. It’s an understatement
to say that both sectors of the laboratory community often wish the
other was not around.
During the past 20 years, each class of laboratories has bedeviled the other—
in ways too numerous to mention. Long-time readers of THE DARK REPORT are
well-informed on these issues, as we have regularly analyzed how this competitive
tension has triggered all sorts of consequences for the entire lab industry.
I believe regional laboratories will soon face another challenge, one that
may threaten their access to managed care patients at reasonable reimbursement.
In fact, it is a threat that THE DARK REPORT was first to identify several
months ago. (See TDR, February 19, 2007.) At that time, we reported how
Laboratory Corporation of America is developing a strategy to use regional
“managed laboratory networks” as a managed care contracting vehicle to
improve its competitive position with national health insurance companies.
LabCorp’s inspiration for this strategy is the Oxford Health Plan laboratory
network developed by Quest Diagnostics Incorporated several years ago. After
UnitedHealth acquired Oxford, then granted LabCorp an exclusive national lab
testing contract, LabCorp assumed management of this lab network from Quest
Diagnostics. LabCorp and United Health are planning to replicate this “managed
laboratory network” model inmany communities across the United States. (See
pages 6-9.) Serious work to actualize this plan will take place in 2008.
Inspired by the original Quest/Oxford regional “managed lab network,”
United Health and LabCorp intend to use these networks as a way to bringmore
regional labs under contract. Will it be a win-win business arrangement for the
payer, the national labmanaging the network, and the regional labs and hospital
outreach programs in the network? Judging from the complaints that flowed
from the Oxford and Empire Blue Cross Blue Shield networks developed by
Quest Diagnostics, not likely. In those networks, local labs were offered reduced reimbursement, weren’t able to provide selected tests, and were excluded from
participating in all the health plans offered by that payer. However, time will tell
in the case of UnitedHealth. LabCorp’s new CEO has a different strategic
prospective and hemay have some surprises up his sleeve.
Siemens Acquires Dade,
Builds IVD Powerhouse
When deal closes, Siemens claims crown as
the global colossus in in vitro & in vivo diagnostics
CEO SUMMARY: In just 15 months, Siemens AG has pulled out
its checkbook three times to spend more than $14 billion to
acquire major in vitro diagnostics (IVD) companies.When it closes
the purchase of Dade Behring, Siemens will be in the first rank of
global IVD manufacturers. It has also declared that it is now the
world’s largest diagnostics company because of its combined
market share in imaging and clinical lab testing.
Quest, LabCorp Slug It Out
In Battle for Market Share
Executives from both companies discuss
strategies and tactics for winning more business
CEO SUMMARY: In reporting second quarter earnings, both
Laboratory Corporation of America and Quest Diagnostics
Incorporated discussed market developments. There were no surprises
in the comments made by executives of both companies.
Quest Diagnostics emphasized that it is hanging on to a significant
amount of the pull-through testing associated with UnitedHealth
business. LabCorp acknowledged that each managed care contract
creates its own opportunities and challenges.
PSA, MED3000 Merger
Creates Opportunities
Rapid evolution in billing and collection
is one factor in this consolidation action
CEO SUMMARY: Pathology Service Associates, LLC, has found
a merger partner that will allow it to offer more products to its
pathology clients and to expand into new service areas. By merging
with MED3000 of Pittsburgh, Pennsylvania, PSA also gains
access to enhanced informatics capabilities that it can roll out to
its pathology group clients. This merger is a sign that the cost of
sustaining an effective billing/collections programis skyrocketing.
Unprecedented Activity
Across Lab Medicine
Wow! Here are six sectors of lab medicine,
and each is undergoing major transformation
CEO SUMMARY: Laboratory medicine is now considered one
of the best opportunities to profit as the demand for healthcare
services skyrockets, both in the United States and throughout the
world. This is why a flood of investment capital is washing into
the laboratory industry. Loaded with capital and eager to profit in
the diagnostic gold rush, investors are paying ever higher prices
for laboratories and in vitro diagnostics firms.
Misys Health Restructures By Selling Two Divisions
Misys divests its LIS products and other ancillary systems as it shifts strategy
CEO SUMMARY: Misys Healthcare Systems of London,
England, has sold its diagnostic LIS systems to Vista Equity
Partners of San Francisco, California, for $381.5 million. The
deal raises several questions, particularly for those labs currently
running Misys laboratory information systems (LIS). Will
the new owner make the substantial investment required to
upgrade the LIS and to add a molecular diagnostics module?
INTELLIGENCE: Late & Latent
2 OF 10 DOC GROUPS
IN CMS P4P PROJECT
EARN REWARDSTRANSITIONS:
Laboratory Corporation of
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