Developing Technology Expected To Fuel Boom In Anatomic Pathology

IMPATH Foresees Growth Opportunity

CEO SUMMARY: Established demographic trends point to a coming boom in the demand for anatomic pathology services. Greater number s of senior citizens, living longer lives, will raise the number of cancer cases diagnosed annually in the United States. New diagnostic technology will increase the value of the pathologist to clinicians. But before a pathology practice can benefit from this expected “bonanza,” it will have to develop appropriate clinical and business strategies for partnering with clinicians, HMOs, and integrated healthcare systems.

FOLLOW-UP AND CONCLUSION TO OUR IMPATH PROFILE

MANY PATHOLOGISTS are intuitively aware of a premise we believe true about the future of anatomic pathology: early diagnosis and improved therapeutic options drive ever-growing volumes of business to anatomic pathologists.

Accept this premise, and the pathology profession has a bright future. The capability of detecting cancer earlier and with more accuracy, combined with targeted therapies that cure patients who meet criteria for that therapy, will result in a steady growth in demand for anatomic pathology services.

This premise should be equally true for clinical laboratories. Early detection of disease, supported by targeted therapeutic technologies, will generate increased volumes of specimens to clinical laboratories.

Profitable Company

Earlier this year, THE DARK REPORT profiled IMPATH Inc., with major facilities in New York and Los Angeles. It’s a fast-growing, profitable company which provides diagnostic and prognostic services primarily to community hospital– based pathologists throughout the United States.

IMPATH is a company benefiting from the development of new diagnostic technology which supports specific therapeutic options. Its business plan is built around our premise: early detection of disease, matched with effective therapeutic options, generates more demand for clinical services.

In this follow-up story to our earlier coverage of IMPATH, we’ve asked its President and CEO, Anu Saad, Ph.D., to share her vision of pathology’s future. As CEO of IMPATH, Dr. Saad interacts regularly with hospital-based pathologists, oncologists, academic center researchers, pharmaceutical firms, clinical trials companies, and managed care plans.

“Pathologists and laboratorians should look at the relationship between two dynamics in the healthcare marketplace,” said Dr. Saad. “First is the market phenomenon where early detection of disease encourages the development of new therapies for that disease.

“Second is the fact that pathologists sit on a wealth of clinical data which has great value to clinicians, patients, and payers,” continued Dr. Saad. “As integrated medicine becomes more widespread, pathologists who incorporate this clinical data into their services will have a competitive advantage over pathologists who don’t.”

Steady Growth In Testing

IMPATH, along with UroCor, Inc. and DIANON SYSTEMS, Inc., are three public companies which benefited during the 1990s from the steady growth in testing for breast cancer and prostate cancer. Their sustained multi-year growth in revenues and earnings provide real-world validation of Dr. Saad’s first market dynamic.

“Drug companies have the incentive to develop new cancer therapies only when diagnosis occurs early enough for intervention to be successful,” commented Dr. Saad. “Compare, say, breast cancer with lung cancer. Right now, technology that supports early detection of lung cancer does not exist. As a result, therapeutic choices are limited.”

Developing Specific Therapies

“Such is not the case with breast cancer,” she continued. “First, it’s now recognized that ‘breast cancer’ is actually a set of different cancers which occur at that site. Second, we can detect breast cancer at an early stage.

“Once diagnostic tools demonstrated the ability to detect different types of cancer at an early stage, drug companies responded by developing specific therapies to attack distinct types of breast cancer,” Dr. Saad stated. “This technology curve of diagnostics and therapeutics for breast cancer is now occurring to prostate cancer,” she added.

“PSA testing launched this process. Diagnosis of prostate cancer can occur earlier. Emerging technology is capable of identifying different types of prostate cancer. In response, a number of new therapeutic drugs and techniques for prostate cancer are arriving in the clinical marketplace.”

Decision About Therapy

“These things drive one another in the market,” she noted. “As we understand more about the biology of prostate cancer, we provide more information to physicians about their patient’s prostate cancer. Thus, the oncologist’s decision about which therapy to select is more closely tied to the information received from pathologists.”

According to Dr. Saad, lymphoma is a disease which perfectly illustrates this relationship between early detection, multiple therapeutic options, and improved recovery rates. “Only 20 years ago, lymphomas were a much worse disease than today,” explained Dr. Saad. “Why? Because we could not distinguish between Hodgkin’s, non-Hodgkin’s, B-cell, T-cell and other types of lymphoma.

“Today, a lymphoma patient presents with biological specificity. Treatment is targeted to to that specific patient,” Dr. Saad said. “Such is not the case with other types of cancer, such as lung cancer or pancreatic cancer. They are commonly diagnosed at a relatively late stage. By the time these cancers are visible, the patient is past the point of being just symptomatic.”

Early Detection

Dr. Saad believes that, as new diagnostic technology makes early detection for lung cancers, stomach cancers, and other cancer types possible, pharmaceutical companies will invest more money to develop therapies which are effective when applied during earlier stages of these diseases.

“Early diagnosis and better therapeutic options drive more cancer business toward pathologists,” she stated. “IMPATH recognizes this market dynamic and is prepared to grow with that coming increase in referrals. Pathologists should do likewise.”

Here is where Dr. Saad believes the intersection of market dynamic one and market dynamic two provides great opportunity for the profession of anatomic pathology.

“Pathologists really need to empower themselves,” she declared. “It is pathologists who collect and accumulate data about patients and their cancers. It is pathologists who can combine this information with other patient demographics to build a registry database. Oncologists must have this registry data before they can develop treatment protocols.”

Here is where Dr. Saad makes a very sophisticated point about the healthcare community. “Probably the main source of treatment protocols today are clinical trials. The primary purpose of clinical trials is generally not to develop protocols, but to evaluate the effectiveness of new therapies and identify actual side effects.”

Demand For Protocols

“Yet, there is a genuine demand, by oncologists and managed care plans, for effective protocols to guide diagnosis, therapy, and follow-up,” noted Dr. Saad. “Because pathologists sit atop this flow of data, they have the opportunity to convert simple data into information which adds clinical value.”

THE DARK REPORT seized this opportunity to ask Dr. Saad to share her view on how anatomic pathology will evolve in the future. Her response was insightful.

“My sense of everything unfolding in healthcare tells me that pathology, as a profession, will not move toward greater consolidation. I don’t believe there will be huge “companies” operating pathologists from coast to coast.

“Instead, pathologists will continue to function in local settings, probably doing more outpatient work, anchored near the hospital,” said Dr. Saad. “Maybe there will be some regionalization of group practices, but the critical need will be for pathologists to access advanced technology and consult with centers of excellence, like IMPATH.

“The challenge for pathologists is to involve themselves more deeply into the treatment decision-making process,” she continued. “That requires a fundamental shift in thinking. Pathologists should cease to say ‘I diagnosed this cancer and that’s the end of it’ and begin to say ‘how do I become an ongoing partner with the clinician to support the diagnosis, decide on the right therapy, and monitor the patient’s progress.’ Pathologists who answer the second question should have a secure future.”

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Potential For Pathology

Dr. Saad’s conviction about the potential for pathology to be an integral partner with the clinician is unshakable. “Pathologists are very powerful. They hold the tissue. They hold the key to patient biology. The more information they can capture and present to oncologists, pharmaceutical companies, and managed care plans, the more important they become to the entire healthcare system.”

Virtual Information Networks

“That is why I believe the more critical challenge to pathologists right now is not how to consolidate into big groups, but to link themselves with others to form virtual information-based networks, thereby empowering themselves to play a more critical role in the patient management process. That includes everything from diagnosis and treatment to the development of new drugs.”

When asked why consolidation of pathology was less of an option, Dr. Saad replied, “when a patient goes in for a biopsy, the typical surgeon or oncologist doesn’t want to send that specimen out-of-state. They prefer that a pathologist literally in the room next door use the microscope and advise them on whether they should proceed to surgery or stop and pursue another therapy.”

This assumes a duality of pathology services. Dr. Saad’s experience tells her that a clinician wants personal access to a locally-based pathologist. But it is the pathologist who will then refer certain specimens to “centers of excellence” as necessary to insure an appropriate diagnosis is performed.

Supporting this prediction of a coming boom in the demand for anatomic pathology services are two demographic trends in the United States.

Supporting this prediction of a coming boom in the demand for anatomic pathology services are two demographic trends in the United States.

First, the absolute numbers of people reaching 60+ years old will climb steadily through the coming decades as Baby Boomers hit their retirement years.

Second, it is expected that senior citizens will live longer than earlier generations. This increases their odds of developing cancer.

As the sidebar on the opposite page demonstrates, one in two men, and one in three women, will contract cancer in their life times. The majority of these cancers appear after the age of 60.

Anatomic pathologists should carefully consider the implications of these demographic trends against the financial successes during the 1990s of IMPATH, DIANON, and UroCor.

Sophisticated Expertise

All three companies offer clinicians sophisticated expertise in the detection of certain types of cancer. Lab tests are supported by specialized anatomic pathology resources. Each company has a steadily-growing number of client physicians.

This is early evidence that this business strategy meets a need in the integrated clinical healthcare world toward which we are evolving.

More importantly, each of these three companies publicly states that their future success depends on their ability to convert today’s test data into tomorrow’s value-added clinical information.

Dr. Saad spoke to this issue. “IMPATH is investing considerable resources to develop information collection and management capability. Currently we have nearly 500,000 cancer cases in our data base.

“This is not simple data, like age, weight, and sex,” she continued. “These are full biological profiles on almost 500,000 patients. We are starting to link this data with treatment decisions made about these patients, and their outcomes.

“As this develops, it permits us to participate in helping clinicians and managed care plans develop protocols. Oncologists are under increased pressure to show the value of what they do.”

Better Patient Outcomes

“Our database, built around the original cases referred to us by local pathologists,” noted Dr. Saad, “will play a key role in helping oncologists demonstrate they are achieving better patient out- comes and managing costs appropriately.

“This database and the information it generates has important value to pharmaceutical companies,” continued Dr. Saad. “For example, we can help drug companies rapidly identify large numbers of patients who have the appropriate biological profile to participate in drug studies. This accelerates the collection of data necessary for FDA approval of the new drug.”

“I should also point out the doctors are highly motivated to participate in clinical trials,” added Dr. Saad. “Patients request it, drug firms solicit their participation, and it helps physicians stay current on new technology. IMPATH is creating the ability to help them identify patients for such clinical trials.”

Dr. Saad’s comments throughout this interview support the oft-stated belief of THE DARK REPORT that anatomic pathology has a bright future. But it is a future which requires pathologists to em- brace the value of information over basic test results.

It also requires pathologists to build ongoing clinical relationships with physicians. Eventually, like radiologists, pathologists can play a role in diagnosis, selection of therapies, and monitoring the patient’s
progress.

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