TOO OFTEN THESE DAYS, labs are asked to accept less money. This is true in the United States and in many developed countries around the world.

Many of you know that the latest version of the Senate health reform bill recently released by Max Baucus (D-Montana) calls for all providers to pay a "fee" as one source of revenue to fund the proposed expansion of healthcare services. In the case of laboratory testing, the Senate bill pencils in laboratory testing for $750 million in annual fees. That would be a unique new source of government revenue and would be assessed even as the same Senate bill mandates a reduction in fees paid for lab testing services. It presents clinical labs and anatomic pathology groups in this country with a revenue double-whammy. (See pages 7-8.)

However, compared to what's happening to private laboratory testing companies in New Zealand, U.S. pathologists and laboratory executives should consider themselves fortunate that they still have the opportunity to provide laboratory testing services to patients and physicians. In New Zealand, the government health service, at both the national and local levels, is acting as if "profit" is an element that saps money out of available funding for health services.

Beginning early in this decade, at a regional level, district health boards in some regions began awarding exclusive, multi-year contracts. In these communities, to bid andwin, competing private pathology labs had to join together and forma single lab provider company. In return, the government granted the new lab joint venture a monopoly in that market for the term of the contract.

Where it gets interesting is at the end of thesemonopoly contracts. In the case of Auckland, as that first lab testing contract ended, under questionable bidding circumstances the district health boards awarded the next eight-year contract to a brand new lab company-which had no laboratory and no staff in Auckland to service this contract! This new lab company offered a bid that was 20% lower than what was offered by the existing contract holder. (See Pages 3-6.)

As you read this, the patients and physicians in greater Auckland are experiencing the first consequences of this new money-saving lab testing contract, which became effective September 7. Critics will be watching to learn if the district health boardswill truly realize the projected reduction in the cost of lab testing, without causing a serious decline in the quality of lab testing services.

Lab Test Fiasco Unfolding In Auckland, New Zealand

District Health Boards scramble to address deficiencies in performance of the new lab provider

CEO SUMMARY: This may be the shortest lab testing contract honeymoon ever. Just ten days after LabTests became responsible for an exclusive, eight-year lab testing contract covering the Auckland area, problems with its service and operation caused District Health Board (DHB) officials to put the lab on notice. DHB employees are also now working inside LabTests to oversee safety and quality assurance. Meanwhile, the press is airing the complaints of patients and physicians.

Audacious Lab Contract Shows Downside Risks

Auckland patients and physicians now coping with the "lowest cost" laboratory testing company

CEO SUMMARY: In Auckland, New Zealand, unfolding events may soon reveal the answer to a long-standing question in pathology: is there a point where deep cuts to payment for lab testing causes such a decline in quality and service that other health services undergo disruption? District Health Boards, to save about 20% of their lab budget, replaced a highly-rated lab testing company with a new entrant to Auckland. Since the changeover on September 7, patients and doctors have voiced their complaints.

$750 Million Lab Test Tax Proposed in Senate Bill

Latest Senate health reform bill includes tax on lab tests, along with reduction in reimbursement

CEO SUMMARY: A bill that may be the U.S. Senate's framework for reforming the U.S. healthcare system calls for a tax of $750 million per year to be paid by lab testing companies. The proposed bill also calls for a reduction in Medicare reimbursement for lab testing. One positive element was that reinstatement of the Medicare lab test co-pay was dropped from this version of the health reform bill. THE DARK REPORT provides details of how the Senate bill would determine the amount of tax each lab testing company would pay annually.

Textbook Marketing Fuels Demand for BRCA Test

Direct-to-consumer advertising is one tool Myriad uses to drive sales of cancer risk testing

CEO SUMMARY: In today's lab testing marketplace, the hot ticket is to introduce a proprietary or patent-protected molecular test for cancer. The sales and marketing model inspiring many of these new lab testing companies is that used by Myriad Genetics, Inc. since it introduced its BRACAnalysis test for breast cancer back in 1996. A new report by William Blair & Company, LLC, analyzes Myriad's successes. Pathologists and lab administrators will find useful insights about techniques they can use to market their own specialized lab testing services.

Clinical Study Update: Some Docs Fail to Tell Patients About Critical Results 25% of Time

Medicare Pays Doctors To Switch to E-Prescribing

Medicare incentive adds 2% for e-prescribing in 2009 and 2010, then changes to 1% for 2011

CEO SUMMARY: It's a major step on the road to integration of healthcare informatics. During the next few years, the Medicare program is offering financial incentives to encourage office-based physicians to adopt e-prescribing. This is a positive development for local laboratories and hospital lab outreach programs. Early-adopter labs are already taking steps to enable e-prescribing as part of the electronic lab test order/results reporting systems they offer to client physicians.

Informatics Update:
E-Prescribing Functions that Labs Can Offer Office-Based Physicians

E-prescribing Is Example of Need For Labs to Support Connectivity

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