|
Click the article title to show summary — Hide
the summary here
Complete Issue > Volume XVII, Number 8, Monday, June 1, 2010
(June 1st, 2010
— $ 36.00)
Add
to cart
R.
Lewis Dark:
California's Legal Challenge to Discount Pricing
PROBABLY NO
TOPIC IN THE LAB TESTING INDUSTRY generatesmore controversy than
discounted pricing for physicians, managed care companies, and IPAs
(independent
physician associations). Almost every pathologist and laboratory
executive
decries the corrosive effects of below-cost pricing.
Yet, many of these same lab executives quietly continue to solicit new
clients
by dangling deeply discounted, and often money-losing-prices to
physicians
and health insurers. Competing labs recognize that often the prices are
at marginal
cost which means that the lab doesn't recoup its fully loaded cost of
performing
the test. Sometimes a lab company will even offer prices that are less
than
the lab's marginal cost to perform the test.
The only way the lab can offer these money-losing prices is because it
"pulls
through" enough Medicare and other fee-for-service specimens to offset
the
losses incurred for testing the discount priced tests. Typically it is
national lab companies or investor-owned labswhich aremostwilling to
play this price game.
Local labs, hospital lab outreach programs, and pathology groups
continously
grumble about these business practices. Among these laboratory
professionals,
price discounting particularly if the lab test price is less than the
offering lab's
marginal cost to perform the test is seen as a form of inducement or
kickback.
The lab gives the discount for one part of the client's test referrals,
and gains
access to the Medicare and other fee-for-service specimens in exchange.
At the federal level, there has never been enforcement action that draws
a clear
boundary as to where a deeply-discounted lab test price falls on the
wrong side
of the law. That allows a number of laboratory companies to operate in
the grey
area, while labs with conservative compliance policies lose a
competitive edge in
the market. I point all this out because the deeply-discounted lab test
pricing
game might soon get a new set of rules in California.
Last year, Attorney General Jerry Brown unsealed the whistleblower
lawsuit
that alleges seven lab companies in California defrauded theMedi-Cal
program.
Now there is news that one laboratory has signed a settlement, and two
others
may have also settled. Brown argues that California state law requires a
lab to bill
Medi-Cal at the same lowest price for a test that the lab offers its
other clients. If
Brown gets the other four to six labs to settle and agree to bill
Medi-Cal in this
manner, then hemay disrupt a long-standing lab industry practice in
California.
For that reason, the progress of this whistleblower suit bears watching.
Not getting The
Dark Report in your mailbox every 3 weeks?
Westcliff Labs Announces
BK and Sale to LabCorp
Chapter 11 bankruptcy reveals huge
losses
at what was once a profitable independent lab
CEO SUMMARY: Subject to court approval, Laboratory
Corporation of America is poised to acquire the assets of
California-based Westcliff Medical Laboratories, Inc., which
just filed a Chapter 11 bankruptcy action in federal court on
May 19. In a separate transaction, LabCorp has an agreement
to acquire Diamond Reference Laboratory of Diamond Bar,
California. The two acquisitions will build LabCorp's share of
the market for laboratory testing in California.
AG Jerry Brown Settles With Westcliff Med Labs
First look at the settlement agreement
reveals
how the AG may want labs to price tests to Medi-Cal
CEO SUMMARY: In California, Attorney
General Jerry Brown
is making progress in the whistleblower lawsuit alleging that
seven lab companies in California violated state law by not giving
Medi-Cal, the state's Medicaid program, the same lowest
lab test prices they extend to physicians, managed care plans,
and IPAs. Westcliff Medical Laboratories, Inc., is the first of the
seven defendants to publicly acknowledge that it finalized a
settlement agreement with the State of California.
Did Wrong Strategy Sink Westcliff Medical Labs?
California's third-largest commercial
lab firm
took just 46 months to slide into bankruptcy court
CEO SUMMARY: All sorts of people will
argue all sorts of opinions
about the financial demise of BioLabs, Inc., and its subsidiary,
Westcliff Medical Laboratories, Inc., and why it ended up in a
California bankruptcy court. Documents filed in the case indicate
that, from the birth of the new company in June, 2006, it never produced
an annual profit. During the 46 months of BioLabs/Westcliff's
business life, its owners worked with two different management
teams, each of which had a different strategy for growth.
Taming the Blood Beast
With Better Utilization
Rapid yearly increases in blood product
cost
motivates hospital labs to educate physicians
CEO SUMMARY: For hospital labs, explosive
increases in the
cost of blood products is a budget buster. At St. Vincent
Indianapolis Hospital, a multi-year blood management program is
paying big dividends. Patient safety has improved, even as utilization
of blood dropped by 7,000 units per year. Annual savings
from this innovative blood management program now total $4
million. One key element behind this succes was for the lab to
engage and educate physicians in a multi-disciplinary approach..
INTELLIGENCE:
Late & Latent
BIO-REFERENCE
GROWS 27% IN ITS
SECOND QUARTER MORE ON: Kaiser
Complete Issue > Volume XVII, Number 7, Monday, May 10, 2010
(May 10th, 2010
— $ 36.00)
Add
to cart
R.
Lewis Dark:
Irish Labs Are at an Important Crossroads
GLOBAL
OUTSOURCING OF CLINICAL LABORATORY TESTING IN IRELAND has entered its
second
phase. The Irish Health
Service Executive (HSE) granted Quest Diagnostics
Incorporated a contract for an additional two-years of cervical
cancer screening
tests while awarding 25% of the nation'' annual Pap testing to Sonic
Healthcare
Ltd. in a similar two-year contract.
These developments are significant, because as long as the Irish
outsourcing
experience is favorable, it makes it easier for other nations to
outsource laboratory testing to lab testing companies located in other
countries.
But there is another dimension to the lab testing story in Ireland which
fascinates me even more. As clients and regular readers of THE DARK
REPORT know, the
Irish HSE has announced a complete restructuring of laboratory services
throughout the country. (See pages 6-8 and The
Dark Report, January 25, 2010).
I'd like to make two observations about this ambitious project, which is
a typical government health official approach to saving money. First,
veteran pathologists and lab managers know all too well that, over the
past 25 years, there are more disasters than successes when a government
health system decides that it can take out costs by consolidating
pathology testing, laying off medical technologists, and
reducing the number of labs and blood collection centers serving a
community.
Certainly the cost of lab testing did go down in the short term in these
cases. But
it was physicians and patients in these communities who often endured
service deficiencies,
glitches in the process of consolidating lab testing, and even serious
problems
in the accuracy and trustworthiness of lab test results.
Second, I'll guess that the Irish Health Service Executive, in
developing its "total
laboratory consolidation" plan with a consulting company from England
back in
the years 2004-2007, did not spend much money sending a team of
experienced
pathologists, laboratory scientists, and healthcare policy makers on a
tour to several
countries to do first-hand investigations of successful, innovative
regional laboratories,
along with an on-the-ground visit to some of the larger-and often
not-sosuccessful-
laboratory consolidation projects.
If this assumption is true, it is an interesting comment on the due
diligence of
Ireland's healthcare leaders that they would embark on a major makeover
of the
nation's pathology service without having invested a rather modest
amount of time
and money to send their laboratory profession's best and brightest out
on a factfinding
tour of the world's best examples of lab testing. To the contrary, might
it be
true that the HSE, for the cost of a consulting fee to an English
company, has gotten
the answer it wanted and is proceeding with a laboratory restructuring
and consolidation
plan that was likely pre-ordained as early as 2004?
Not getting The
Dark Report in your mailbox every 3 weeks?
Optimism & Opportunity
at Executive War College
This year's gathering was high-energy
and marked by a positive outlook for lab testing
CEO SUMMARY: Instead of our annual review
of key
speakers as a source of emerging trends and common themes,
this year we assess the attitudes, opinions, and activities of the
pathologists, laboratory administrators, managers, and industry
executives in attendance at the 15th Annual
Executive War
College. These people are the grass roots of laboratory medicine
and they are ready to tackle all the coming challenges in
healthcare and the laboratory testing marketplace. ALL SESSION AUDIO RECORDINGS ARE AVAILABLE NOW!
Sonic Health Wins Irish
Contract for Pap Testing
First nation in the world to outsource
100%
of its Pap testing also renews contract with Quest
CEO SUMMARY: Evidently the Irish Health Service
is satisfied
with its decision to outsource all the nation�s cervical cancer
screening tests. In recent weeks, it announced that two international
laboratory companies would handle Pap testing for the next
two years. Sonic
Healthcare, Ltd., won a contract to perform 25%
of Ireland's 300,000 Pap tests annually. Quest Diagnostics
renewed its contract and will perform the balance. Both lab companies
indicate they will build laboratory facilities in Ireland.
Pathologists Can Still Earn
Medicare PQRI Incentives
Federal program offers pathologists a
2% bonus
during 2010 for reporting required quality measures
CEO SUMMARY: During 2010, the Medicare Physician
Quality Reporting Initiative (PQRI) will pay a 2% bonus to
pathologists who register and report data on 80% of their
cases for the specified CPT codes. However, independent
pathology laboratories still cannot participate in the PQRI program.
Also, PSA, LLC, reports it can be challenging to audit the
Medicare PQRI bonus amount paid at year's end against the
actual amount that was billed to Medicare by individual pathologists
for the CPT codes included in the PQRI program.
French Company Buys
Pittsburgh-Based RedPath
ExonHit Therapeutics acquires Redpath�s
proprietary molecular test and its CLIA laboratory
CEO SUMMARY: Here's a deal that is all
about proprietary
molecular assays and access to new markets. With
its purchase of RedPath Integrated Pathology, ExonHit Therapeutics,
S.A., of Paris, France, gains a CLIA laboratory
and access to the U.S. market, even as the new owner opens
the door to the European market for RedPath. As announced
by the two companies, ExonHit will spend $22.5 million to
acquire RedPath Innovative Pathology and will pay an additional
$9.5 million if RedPath achieves certain sales targets.
LETTER TO THE EDITOR: Letter to Editor on EMR
Donations,
Deeply-Discounted Client Prices
Starting 10 years ago, physicians in
Bristol, England
alerted NHS officials about problems in lab test accuracy
EMR Donations, Client Bill
Issues in Anatomic Path
Federal law has lots to say on EHR
donations
and discounted client bill pricing to referring docs
CEO SUMMARY: In today's market for
anatomic pathology
services, local pathology practices are facing tough
competition from national pathology companies that are
quite aggressive at using EHR donations and discounted
client bill arrangements to win new clients. Attorney Jane
Pine Wood of McDonald
Hopkins identifies federal safe harbor
requirements governing EHR donations involving laboratories
and referring physicians, then discusses compliance
issues triggered by discounted client billing arrangements.
INTELLIGENCE:
Late & Latent
PERKIN ELMER PAYS
$90 MILLION TO BUY
SIGNATURE GENOMICS MORE ON: Aurora
Complete Issue > Volume XVII, Number 6, Monday, April 19, 2010
(May 7th, 2010
— $ 36.00)
Add
to cart
R.
Lewis Dark:
Is Laboratory Industry Ready for Facebook and MySpace?
WHO COULD
HAVE IMAGINED, JUST A FEW YEARS AGO, that social networking sites
such as Facebook.com,
MySpace.com, and YouTube.com would
become a useful
platform that allows clinical laboratories, pathology groups, and in
vitro diagnostics
(IVD) companies to engage in two-way conversations with patients and
customers?
After all, in those days, the preponderance of active users of these
social networking
services were young people. There were no obvious business reasons
why a clinical laboratory might want to establish its own page on any of
these
sites. If that was the popular wisdom then, it is not accurate today.
In my neighborhood, even the retired ladies now maintain Facebook or
MySpace pages and regularly communicate with each other via this medium.
Of
course, since elderly folks tend to have a variety of health problems,
there is plenty
of conversation taking place about these topics. I suspect that is why
certain lab
companies, like Myriad Genetics with its predictive genetic test
for breast cancer,
have established a presence on these social networking sites and find
themuseful
for communicating with women concerned about breast cancer.
On pages 3-6, THE
DARK REPORT provides the lab industry's first briefing about
why IVD companies and certain clinical laboratories are consciously
incorporating
social networking activities into their marketing and business
development
programs. I suspect it will surprise many pathologists and lab managers
at how
rapidly social networking has become a useful conduit for organizations
to
directly conduct two-way conversations with patients, customers, and
prospects.
In fact, it might be smart for clinical labs and pathology groups to
invite their
Generation Y pathologists and medical technologists to enlighten the
marketing
and sales teams at their labs about how social networking works. An even
bolder
move would be to empower themost enthusiastic of these Gen Y laboratory
professionals
to help design social networking programs in tandem with the lab's
sales and marketing team.
By way of full disclosure, this aging curmudgeon acknowledges that he
doesn't
surf such social networking sites as FaceBook.com and MySpace.com.
However,
he has learned that he can go to YouTube.com and easily find
entertaining clips of
musical performers popular during his youth. With just a couple of mouse
clicks,
performances by Mitch Miller and Patti Page can be accessed!
Not getting The
Dark Report in your mailbox every 3 weeks?
Social Networking Is New Laboratory Marketing
Channel
Clinical labs and IVD companies
encourage
customer dialogue at Facebook, YouTube, Twitter
CEO SUMMARY: Using social marketing sites
on the Web
allows labs and IVD manufacturers to interact with customers
in ways that were not possible years ago. Marketers use these
interactive web sites to supplement traditional methods of
advertising. Inviting customers to discuss your company and
products on a Facebook site can result in powerful word-ofmouth
testimonials. But proceed with caution! Negative comments
about your company or laboratory can pop up as well.
Pre-authorization Coming
For Pricey Molecular Tests
Health insurers ready to control
utilization
of expensive genetic and molecular tests
CEO SUMMARY: In response to the steep
ramp-up in the
utilization of genetic and molecular testing, the nation's largest
health insurers are preparing to institute new guidelines for
coverage and reimbursement. These will include pre-authorization
by physicians, a more effective genetic test coding
arrangement for claims submission by laboratories, and implementation
of evidence-based medicine (EBM) guidelines. All of
these developments create opportunities for clinical laboratories
to step up and add value in new ways to payers.
ISO 15189 Accreditation
Requires Specific Steps
For Global Recognition
CEO SUMMARY: This intelligence briefing is
the third in an ongoing series
about quality management systems (QMS) and their role in advancing the
performance
of clinical laboratories and improving the quality of the testing
services
they provide. ISO 15189 is a set of standards for medical laboratories
based
on the ISO 9001 quality management system. It provides a way for medical
laboratories
to demonstrate to outside examiners both conformance to the QMS
and competence in the performance of laboratory testing services.
Competitive Bidding Update: Two Years Later,
CMS Still Holds
Labs' Competitive Bid Documents
LAB QUALITY: Errors in Surgical Pathology
Surface in the United Kingdom
Starting 10 years ago, physicians in
Bristol, England
alerted NHS officials about problems in lab test accuracy
INTELLIGENCE:
Late & Latent
FIRE DESTROYS
TACOMA FACILITY
OF STERLING LABS HBO BIOPIC ABOUT
JACK KEVORKIAN
TO AIR ON APRIL 24
Call us today if you
have Charter Membership questions at 800-560-6363 or 512-264-7103 The Dark Report
intelligence briefing is delivered to your mailbox every 3 weeks!
Complete Issue > Volume XVII, Number 5, Monday, March 29, 2010
(March 29th, 2010
— $ 36.00)
Add
to cart
R.
Lewis Dark:
For Better or for Worse: Nation Has New Health Law
CONGRESS AND
THE CURRENT ADMINISTRATION HAVE THEIR HEALTH LAW. Whether
this new law serves the citizens of this country for the better or for
the worse will
not be known for several years into the future.
I suspect that many of our elected officials in the House and Senate do
not
fully understand the major elements of the health bill that has just
become law.
I believe I amalso on safe ground to state the opinion that few of these
"servants
of the people" actually took the 2,700+ pages of the bill and perused
themcarefully
before deciding how to cast their vote.
Therein lies the rub. First, these legislators have exempted themselves
and
their Congressional staffs from the health mandates that they are
imposing on
the remainder of the country. They know this insulates themselves and
their
families from whatever negative consequences develop fromthe parts of
the new
law which prove detrimental to the healthcare system. As an American
citizen of
good standing, I find it sad that our political leaders deliberately
take themselves
out of the legislative solution they consider best for the nation.
Second, in coming years, none of us should be surprised when various
unintended
consequences of this health law become obvious and troublesome.
Expect these same senators and representatives to tell news reporters
that "I didn't
know that was in the bill," or "I didn't understand how this specific
mandate
would cause health providers to change the way they practiced medicine."
Forgive me for being skeptical about these developments. Like many of
you,
early last year I was hopeful that the goal of improving our nation's
health system
would include a robust exploration of innovative ways to organize
healthcare.
Healthcare's "best practices" examples, such as Mayo Clinic, Cleveland Clinic, Kaiser
Permanente, and Geisinger Health,
would be studied by policymakers
and legislators. As part of the health bill, seed funding to encourage
similar
"health innovation incubators" would be authorized with the goal of
covering more people at lower cost while achieving improved health
outcomes.
On this point, I am not aware of any provision in the new law that
financially
encourages a health system, hospital, or physician group to experiment
with innovative
ways to organize and deliver healthcare. I amwilling to be proven wrong
on
this point. If you know of such a provision, contact me at our editorial
offices. In the meantime, like most of you, I am reserving judgement
about whether this health law
is good for our country. Like the residents of Missouri, I say "Show
me."
2.3% Medical Device Tax Hits Clinical Labs in
2013
Newly-enacted health reform bill
requires
medical device companies to pay excise tax
CEO SUMMARY: One aspect of the massive new
health bill
is that medical device companies will pay a 2.3% tax, effective
January 1, 2013. Students of economics know that it is customers
who invariably end up paying such direct taxes. Thus,
clinical laboratories in the United States should prepare to see
this 2.3% tax show up as a line item on sales contracts and in
the form of higher prices for in vitro diagnostics analyzers, lab
equipment, reagents, consumables, and even medical software.
Business Advantages From Whole Slide Imaging
* WSI creates ways to significantly
improve
collaboration between pathologists and physicians
CEO SUMMARY: Whole slide
imaging (WSI) is a niche product
today, but it offers the potential to redefine the practice of
pathology.
That's the opinion of pathologists presenting at a digital
pathology workshop last month. One pathologist explained how
WSI significantly improves collaboration between pathologists and
referring physicians. Another pathologist explained how regulators
soon may require standards for WSI and why such standards are
likely to result in a call for standards for light microscopes as well.
Use of Point-of-Care Testing
Reduces Mortality by 50%
In a thinly-populated region
the size of Texas and New Mexico combined, an
integrated clinical care program based on point-of-care
testing (POCT) has delivered impressive gains
in health outcomes. For rural residents, mortality
rates from cardiovascular disease have fallen by
50%. There were comparable declines in hospital
length of stay and the rate of readmissions. A reliable
test result and speed to answer fromPOC testing
is a major factor in these improved outcomes.
Serious Problems Plague
Newfoundland Laboratory
Inaccurate
cyclosporine test results trigger
lab director resignations and more media scrutiny
Newfoundland's St. John laboratory was
rocked by revelations in February that its cyclosporine testing
was flawed, exposing patients to the harmful affects from
inappropriately high doses of the immunosuppressant drug.
Within weeks of this news, the Chief of Laboratory Medicine
resigned. Now a team from Toronto's University
Health
Network (UHN) is at the laboratory to conduct a review of operations
and make recommendations to the health authority.
INTELLIGENCE:
Late & Latent
JUAN ROSAI, MD'S
CASES TO BE PUT
IN DIGITAL ARCHIVE
PHLEBOTOMIST
GETS
LUCKY,
WINS $111,250
Call us today if you
have Charter Membership questions at 800-560-6363 or 512-264-7103 The Dark Report
intelligence briefing is delivered to your mailbox every 3 weeks!
Complete Issue > Volume XVII, Number 4, Monday, March 8, 2010
(March 8th, 2010
— $ 36.00)
Add
to cart
R.
Lewis Dark:
Oncologists Cut Into Pathologists' Revenue Pie
EVENTS NOW
UNFOLDING IN DALLAS, TEXAS, SIGNAL A DIFFERENT DIRECTION for
pathology and clinical laboratory testing. As you will read on pages
3-9, in May,
just weeks from now, a new laboratory company, funded with $40 million
from
an unlikely combination of four partners, is about to become
operational.
The primary business objective of the new partnership between
Pathologists Bio-Medical Laboratories, Baylor Health Care, Texas
Oncology, and US Oncology is to build a state-of-the-art reference and
esoteric
laboratory, to be known as MedFusion. First the partnership will offer
this testing to hospitals and other clients in the Dallas area, before
expanding
across Texas and into other parts of the United States.
I want to focus on another intriguing aspect of the new business
relationship
among these four unexpected bedfellows. Within the same building
where MedFusion's
laboratory is located, US Oncology is building its own
laboratory that will focus on providing oncology testing for its 1,300
oncologists
who practice in Texas and in 38 other states across the country.
Because it currently serves about 720,000 cancer patients per year in
this
country,US Oncology has the ability to refer a huge volume of biopsies
and cancer
tests to its new laboratory, currently under construction in Dallas. At
the same
time, the pathologist-owners of Pathologists Biomedical Laboratories (PBL) in
Dallas have positioned themselves to become the primary and preferred
source
of pathology subspecialty expertise to analyze and diagnose these
specimens.
The obvious conclusion is that US Oncology represents the first wave of
oncologists ready to cut into the pathologists' revenue pie, just as
dermatologists,
urologists, and gastroenterologists have done during the past two
decades. I think that conclusion�even if true�is rather simplistic and
misses a more subtle and important insight.
Personalized medicine and companion diagnostics are making the diagnosis
and treatment of cancer and other diseases more complex. I believe the
Dallas
pathologists at PBL have their sights on amuchmore valuable prize. They
are positioning themselves to become an essential part of the cancer
care team. In coming
years, this means that they evolve into necessary consultants on every
case of cancer,
from diagnosis to selection of therapies and monitoring the patients'
progress. As
that happens, I predict these Dallas pathologists will earn more
compensation by
providing services that have significant value to patients and their
care teams.
Not getting The
Dark Report in your mailbox every 3 weeks?
Baylor Pathologists Form
Lab with US Oncology
Four partners prepare to open two
sizable
new laboratory businesses to be based in Dallas
CEO SUMMARY: In Dallas, Pathologists
Bio-Medical
Laboratories is part of a new laboratory partnership that includes
Baylor Health Care System, Texas Oncology,
and US Oncology. The
four partners ponied up a total of $40 million in cash and debt to
build a state-of-the art laboratory in a 172,000 square foot building.
To be called "MedFusion," the laboratory partnership expects
to provide reference and esoteric testing to Baylor Health, hospitals,
other clients, and to clinical trial service organizations.
Two New Pathology Models
Will Soon Be Tried in Dallas
Goal is to deeply integrate laboratory
testing
into healthcare continuum in ways that add value
CEO SUMMARY: There are notable aspects to
how and why
four unlikely partners are banding together to invest $40 million
and create the nation's newest reference and esoteric testing
laboratory. It was the pathologists at Baylor University Hospital
in Dallas, Texas, who originated the vision and initiated conversations
with the other three partners. This new business shows
how pathologists can leverage their knowledge and play a
greater role in advancing personalized medicine.
Multispectral Tests Use "Smart" Systems To
Analyze Tissue
Pathology Updates: Pathology Errors in
Canada
Make National News Once Again
Mastectomy on a patient who didn't have
cancer
triggers suspension of one pathologist, review of cases
Preparing for New Lab Role
In Personalized Medicine
Multiple
disruptive forces are actively reshaping
clinical laboratory testing and anatomic pathology
Laboratory medicine is about to find
itself
between the two jaws of a powerful vise. One jaw is pending
major legislative overhaul of the entire healthcare system, along
with dwindling reimbursement as Medicare and Medicaid runs
out of money. The other jaw is personalized medicine, companion
diagnostics, and expensive molecular testing. As these jaws
squeeze tighter, clinical laboratories and anatomic pathology
groups will need effective response strategies.
DARK
INDEX: Assessing the Year-End Financials
For Nation's Biggest Lab Companies
Quest
Diagnostics, LabCorp, Sonic Health,
and Bio-Reference Labs report performance
INTELLIGENCE:
Late & Latent
DLS IN HONOLULU
BUILDS NEW LAB
LENETIX
LAB SELLS
TO BIO-REFERENCE
Call us today if you
have Charter Membership questions at 800-560-6363 or 512-264-7103 The Dark Report
intelligence briefing is delivered to your mailbox every 3 weeks!
|