In selecting our "Top Ten" biggest stories of the lab industry for 2001, we've had some interesting discussions here at The Dark Report about what's happening in the American healthcare system and how it's affecting laboratories and pathology group practices.

I believe that our healthcare system is at a crossroads. All the evidence says that, during the next four years, healthcare costs will increase at double-digit rates. This means that employers and the government will be paying between 50% and 75% more to provide care to their employees and beneficiaries by the year 2005. We all know that corporations, faced with a 50%+ increase in health premiums, will take direct action to reduce their costs and encourage healthcare providers to do more with less money.

The last time our corporation and government faced sustained double digit increase in healthcare-the late 1980s and 1990s-they turned to managed care as a solution. Managed care's approach was to control and restrict access to care by patients, while squeezing down the money it paid providers. That worked for several years in the mid- to late-1990's. But those gains have been booked.

So, faced again with steeply rising healthcare costs, what solution will corporations and the government take this time? That closet-panel, capitated model of managed care has already shaken out the obvious savings and cut providers' reimbursement down to the proverbial bone. Since we can't go down that same road a second time, I believe this current crossroads in going to take us in a different direction.

For hospitals, I think there will be lots of pain. Medicare won't have adequate money to pay for care, particularly as baby boomers show up in evergrowing numbers. For physicians, it will be a mixed bag. Many will go with the flow and find themselves choked by bureaucratic and financial inadequacies. Another segment will be creative and find ways to offer value-added medical services to patients capable of paying for their own care.

As to clinical laboratories and pathology group practices, I think they will have an easier time of the 2000s than they did in the 1990s. The reason is simple. Most of the new diagnostic technology on the way will be seen as relatively cheap, even at several hundred dollars per test. It will be easier to maintain adequate reimbursement for an "inexpensive" lab test that determine whether a multi-thousand dollar drug therapy is warranted.

2001's Ten Big Stories Presage Future Direction

Radical change in the laboratory industry was not evident over the course of the year

CEO Summary:  During 2001, few labs found themselves under intense pressure to change or react to dramatic events in the healthcare marketplace. Like 2000, this past year was marked by evolutionary progress, not revolutionary change. However, continuing signs indicate that consumers will play a greater role in decisions involving lab tests. One surprise: slow growth of e-healthcare services.

Tripath Imaging Ready to Roil Pap Test Market

It can now offer an integrated solution that automates both liquid prep and Pap screening

CEO Summary: Single-handedly, Cytyc Corporation has built the market for thin-layer Pap smear testing. Executives at TriPath Imaging are now ready to challenge Cytyc's dominance by offering what they believe is a different value proposition to labs: an automated liquid preparation system married to an automated Pap smear screening system that can read both thin-layer and conventional Pap smears.

New Lab Company Ready to Open in Orlando, FL

The next generation of lab entrepreneurs has a very different vision of lab testing