What makes hospital laboratory administrators and pathologists in Michigan so willing to be both innovative and collaborative in creating sophisticated and financially successful regional laboratory organizations?

As you will read on pages 2-6, Michigan Co-Tenancy Laboratory (MCL), founded in 1997, is owned by 17 competing hospitals and provides shared testing services to more than 30 participating hospitals. The Ann Arbor-based laboratory is organized in such a way that its hospital owners have powerful incentives to feed ever-growing volumes of specimens into the shared laboratory as a way to improve the quality of lab services while simultaneously lowering costs.

Michigan Co-Tenancy Laboratory runs in parallel with Joint Venture Hospital Laboratories (JVHL), based in Detroit. JVHL is a regional laboratory network that has as many as 150 Michigan hospital labs participating in specific managed care contracts. Few states can boast of even one sophisticated and successful regional laboratory collaboration between competing hospitals. That is why Michigan, with two such lab models, is noteworthy.

Commendations are in order for the hospital laboratory administrators and pathologists participating in both regional lab organizations. They've proved willing to move beyond the issues of control and mistrust which frequently prevent hospital lab leaders in other cities from moving discussions about regional laboratory networks into operational reality, even after years of meetings. MCL and JVHL provide persuasive evidence that collaboration among competing hospital laboratories can benefit patient care—the primary goal of laboratory medicine—while returning important financial benefits to the participating hospitals.

As clients and long-time readers of The Dark Report know, hospital laboratories in Michigan have used JVHL to become the dominant provider of physicians' office testing throughout Detroit and other cities in the state. Their willingness to collaborate is helping them roll back the inroads made by national laboratory competitors. I believe MCL reinforces the strategic market position of its participating laboratories in a similar way.

Both of Michigan's collaborative regional lab organizations provide hospital labs in every part of the country with an undeniable reminder that local lab testing services, delivered professionally to physicians' offices, are the match for any national lab competitor.

Hospitals in Michigan Build Unique Shared Lab

Use of "co-tenancy" business model benefits participating hospital owners

CEO SUMMARY: This operational model for a collaborative regional laboratory organization makes"profit" irrelevant. Serving 30 hospitals in four midwestern states, Michigan Co-Tenancy Laboratories is consistently expanding lab testing services, lowering costs, and emphasizing the laboratory's contribution to better patient care in participating hospitals.

MT/MLT Training Insights From Calif. University

MT training programs require additional resources to coordinate career placement

CEO SUMMARY: Laboratory administrators from 15 San Francisco Bay Area hospitals recently approached their CEOs and requested a five-year funding commitment of $1.5 million to train and expand the supply of CLSs and MTs. One key element in this effort was the enthusiastic support of those local colleges and universities willing to restart dormant laboratory training programs.

Major Changes at Dade Behring Soon to Be Visible In Lab Market

Its recent financial restructuring now complete, Dade Behring prepares a "brand building" campaign

CEO SUMMARY: Dade Behring is poised to become a tough and high-profile competitor in the laboratory diagnostics marketplace. Earlier this month, it finalized a major financial restructuring. Following two years of negotiations with its banks and bondholders, Dade filed a"pre-packaged" Chapter 11 bankruptcy in August. The goal was to swap $700 million of debt into equity, preserve valuable tax benefits, and, through the Chapter 11 filing, emerge, upon discharge, with publicly-tradable stock (without the need for a public offering). (See TDR, August 5, 2002.) That goal was met on October 3 when the judge discharged Dade's Chapter 11 filing. From this date forward, hospital lab administrators and pathologists will see a different Dade Behring. To understand these changes, The Dark Report recently traveled to Dade Behring's headquarters in Deerfield, Illinois to meet with President and CEO Jim Reid-Anderson. This interview was conducted by Editor-in-Chief Robert L. Michel.

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