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R.
Lewis Dark: Lab Regionalization Creates New Business Models
Regionalization of laboratory testing services continues to be a dominant
trend within the lab industry. That's not news to our members and regular readers, because The Dark Report tracks this important trend.
What always surprises me, however, is the variety of new business models
which emerge from efforts to regionalize lab services. These experiments and innovations spring directly from the unique needs of the healthcare
markets served by laboratories. I don't think it is a coincidence that The Dark Report, in just this issue, provides intelligence
briefing on three specific, but very different, business models of laboratory regulation.
The first briefing involves Houston's Memorial Health System. (Pages
2-4.) When tropical storm Allison dropped 36 inches of rain, Memorial Health System was overwhelmed by flood waters, and its core laboratory
was totally destroyed. Because of earlier efforts to consolidate and regionalize the lab testing resources within the health system, other Memorial
hospital labs have helped to fill the loss of the core lab at Hermann Hospital.
The next briefing discusses how the Connecticut Hospital Laboratory Network
(CHLN) developed an effective managed care contracting program (Pages 5-8). There are two "twists" in this story. One, CHLN involves
100% of the state's hospital labs, giving it credibility and greater clout with payers. Two, CHLN actively partners with Quest Diagnostics Incorporated
to provide services under several managed care contracts.
Third, in British Columbia, the two dominant commercial laboratories overcame issues
of trust to jointly design and implement a "universal physician portal" (Pages 9-14). BC Biomedical Laboratories
and MDS Metro Laboratory Services created PathNET, a system which allows physicians to gain access to patient lab data, regardless of which
lab performed the test. Both labs, along with the provincial health system administration, want other labs in the province to participate in PathNET.
I believe these three business models represent a greater truth about lab regionalization:
We have yet to see the "perfect" business model of lab regionalization. In cities and rural areas throughout the United States and Canada, laboratories
and integrated health networks (IHNs) are regionalizing lab test services in innovative ways. Taken collectively, this is evidence that labs are still
under strong pressure to reduce costs and boost service.
Memorial Hermann Lab Launches Crash Rebuild
Total loss of core laboratory facility triggers
major management challenges
CEO
Summary: This 600-bed hospital and core laboratory are in a crash rebuilding program as a result of flooding from tropical storm Allison. One important
management lesson learned is the value of consolidating and integrating laboratory services within a health system. Previous lab integration efforts
within the Memorial Hermann Health System are now contributing to the restoration of laboratory testing services.
Connecticut Hosp. Labs Win HMO Test
Contracts
Statewide regional laboratory
network enjoys growing managed care business
CEO
Summary: Connecticut Hospital Laboratory Network, LLC was formed in 1996 with the specific goal of winning managed care lab testing contracts. During the past
five years it has steadily increased the number of patients covered by such contracts. Along the way, it has learned important lessons on how to price
laboratory testing services and how to effectively negotiate managed care lab testing contracts.
Lab Competitors Form Common Test
Data Repository for Docs
Different test catalogs mapped
using LOINC
CEO
Summary: Integrated hospital systems, government health plans and private insurers can frequently threaten the status quo for commercial laboratories in both
the United States and Canada. Motivated by the desire to offer greater value, two commercial lab companies in British Columbia collaborated to pool their
lab test data in a system called "PathNET." The goal of PathNET is to give physicians "universal access" to lab results, regardless
of which lab actually performed the test.
Lab Industry Briefs
Bio-reference labs
report strong growth in revenue & earnings
Sunquest Info Systems acquired by British
software company
Beckman Coulter announces $200
million bond sale-then pulls plug on offering
Vysis closes in on DNA-based
test for bladder cancer
Intelligence:
Late-Breaking Lab News
Hospitals Must Now Disclose
Medical Mistakes to Families:
This should increase the importance of laboratories to overall hospital operations.
McKesson HBOC Renames Itself Again: Maybe a long-running identity crisis is about to end.
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