Theranos implosion was the first Big Story of 2016

PAMA price reporting is the top story, with big cuts to Medicare Part B fees to be the result

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This is an excerpt from a 3,200-word article in the December 19 issue of THE DARK REPORT. The complete article is available for a limited time to all readers, and available at all times to paid members of the Dark Intelligence Group.

Screenshot 2016-12-23 14.18.00CEO SUMMARY: THE DARK REPORT’S annual list of the Lab Industry’s Top 10 stories for 2016 is an essential strategic planning tool for labs wanting to refine their clinical and operational activities. The top 10 stories reveal the most significant developments in healthcare and across the clinical laboratory industry. And this year, the Big Two were Theranos and the PAMA final rule — but there’s much more that lab stakeholders must consider as they plan their operations in 2017. 

IT WAS A YEAR DOMINATED BY TWO BIG LAB INDUSTRY STORIES! One was about Theranos, Inc., the now-discredited lab testing company that said it wanted to disrupt the clinical laboratory industry.

The other big story was about the PAMA 2014 final rule that the Centers for Medicare & Medicaid Services published on June 17, 2016. Implementation of this final rule is expected to lead to a significant reduction in Medicare Part B lab test fees in 2018 and will thus be financially disruptive to most of the nation’s clinical laboratories.

How are you preparing for 2017, based on the developments highlighted below? Please share your thoughts with us in the comments below.

Theranos is one of the big stories on THE DARK REPORT’S list of the Top 10 Lab Industry Stories for 2016 because this was the year when the much-vaunted lab company found itself in deep trouble on multiple fronts. Consequently, it will not be disruptive to the clinical lab industry as it regularly predicted during the years 2013 through 2015.

One reason Theranos was a top 10 story among lab administrators and clinical pathologists is that it was a high-interest story for their hospital and health system CEOs from 2013 through 2015. During that time, Theranos caught the attention of nearly every hospital CEO with its claims that it could perform clinical laboratory tests at half the price of Medicare fees, use a capillary blood specimen collected by finger stick, and return results in four hours.

Hearing these benefits, hospital CEOs regularly asked their lab administrators and clinical pathologists about Theranos and, in some cases, asked these lab professionals to identify ways the hospital could do business with Theranos to lower the cost of clinical lab testing.

Most lab administrators and pathologists were skeptical that Theranos had the technology and capability to deliver on its claims. They pointed to the fact that Theranos had not shared its scientific data nor published its data in peer-reviewed journals.

PAMA market price reporting

The other big story on this year’s top list is about the final rule for PAMA price reporting. Every laboratory that does testing for Medicare patients will see a substantial reduction in the prices of Medicare Part B lab test fees in 2018. THE DARK REPORT concurs with a number of lab industry experts that these Medicare fee cuts may be the single most disruptive event to hit the clinical laboratory industry in 40 years.

Each of the other eight stories on this year’s list of the major lab industry stories represents a significant development that influences how lab executives and pathologists will operate their clinical labs and pathology groups.

The outcome of this year’s federal elections and Republican control of the presidency, the Senate and the House is one of this year’ big stories, for a simple reason. The electorate has sent a message to both political parties that the political processes of the last 30 years must be left behind and a new sense of purpose and public service should be the hallmark of the new Congress.

Why this matters for the lab industry is that Congress will consider repeal of the Affordable Care Act and additional reforms to healthcare. The new administration gives the clinical laboratory industry an opportunity to educate this new crop of lawmakers about the value of lab testing and the importance of allowing community labs and hospital labs to have access to patients.

The election outcome is also an important element in our number three biggest story of 2016.


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