CEO SUMMARY: Biggest news for 2013 will the impact of significant price cuts for both clinical lab and anatomic pathology testing services. But the bad news doesn’t stop there. Employers and private payers will be more aggressive in taking steps to reduce what they spend on lab testing. This means every clinical lab and pathology group should be developing strategies to exploit the best business development opportunities. There will still be ways to profitably build specimen volume and revenue.
IF 2012 WAS A TROUBLING YEAR for the clinical lab testing industry, then 2013 holds the potential for more of the same. There is not likely to be much good news in coming months.
Both clinical laboratories and anatomic pathology group practices will see substantial reductions in overall reimbursement for testing services going forward. That is because of actions taken by Congress and federal health administrators during 2012, complemented also by the actions of private health insurers to reduce what they pay for lab testing services.
Of course, there are other trends actively reshaping healthcare and the laboratory testing industry that will influence events during 2013. These range from hospitals and insurers acquiring physician practices and the fast-growing number of accountable care organizations (ACO) to the increased physician use of electronic health records (EHR) and consolidation within the anatomic pathology profession.
Certainly there has been plenty of news about the reductions to the Medicare Part A Clinical Laboratory Test Fee Schedule that became effective during 2013. Equally significant are the deep cuts to Medicare reimbursement for 88305-TC that took effect on January 1, 2013. Pathologists are still pondering the consequences of that development.
What Comes Next in 2013?
However, what is off the radar screen of most pathologists and lab industry executives is the fact that all medical specialties and ancillary clinical services are seeing comparable reductions in what they are paid by government and private payers. This is an important point and is essential for lab executives and pathologists to keep in mind when they ask the question: “what comes next?”
My reading of the tea leaves causes me to answer by saying “more of the same.” In other words, there will be no short- term financial relief for clinical laboratories and anatomic pathology group practices during 2013. In fact, the odds are in favor of more cuts to the prices government and private payers are willing to pay for laboratory testing services.
Simply said, there is no more money. The federal government’s fiscal woes are getting daily headlines. From a strategic business perspective, it is rational to anticipate that Congress will need to take more money away from healthcare providers as it desperately attempts to fix the immediate budget gaps.
Employers Cutting Prices
At the same time, the nation’s employers are becoming more aggressive in taking steps to reduce what they spend on health benefits for their employees. On this point, managed care companies are willing accomplices to cut provider prices.
Despite these trends, there are still opportunities for nimble clinical labs and pathology groups to increase market share and bolster their financial stability. That is because each of the trends described earlier are disrupting the status quo and those laboratory organizations which don’t respond effectively will experience erosion in their market share and revenue.
All of these trends and opportunities will be the subject of numerous presentations at the upcoming 18th Annual Executive War College on Lab and Pathology Management, which takes place on April 30-May 1, 2013 at the Sheraton Hotel in New Orleans.
Speedier Pace of Change
It is also important to keep in mind that the pace of change in the American healthcare system is accelerating. By itself, this is a significant trend and should be fully recognized and acknowledged by your lab’s strategic planning team.
Because the pace of change is accelerating, that leaves clinical labs and pathology groups less time to react to the most important trends and changes in the marketplace. This will have major consequences, since traditionally, most lab organizations in the United States have been quite slow to change and respond proactively to new threats and opportunities.
I feel safe in predicting that we are likely to see an unexpectedly large amount of consolidation among private pathology groups during the next 12 to 24 months. This will happen because many smaller pathology groups are already financially weakened and lack needed capital. Merging or selling will thus be attractive to them.
Special Sessions Scheduled for Executive War College
TO PROVIDE CONCENTRATED LEARNING and useful business knowledge, several unique workshops and extended seminars will take place at this year’s Executive War College, scheduled for April 30-May 1, 2013, in New Orleans, Louisiana.
Offering specialized and proprietary tests is one opportunity labs have to build specimen volume and revenue. That will be the theme of a full, one-day workshop titled: LDT Boot Camp–Achieving Success with Molecular and Genetic Tests. It will feature experts for the areas of managed care contracting/reimbursement, validation/clinical documentation, legal/compliance, and market development/sales.
Adding profitable new clients is essential for success. In a lab industry first, we are offering: Powerful Sales Closing Secrets of Top-Performing Lab Sales Reps. This is also a one-day workshop and is designed to teach effective sales and closing techniques to beginning and intermediate lab sales reps. It is also useful for lab managers responsible for outreach marketing, sales, and business development.
Of course, we are again offering the always-popular, full-day workshop: Lean for Lab Leaders: The A-to-Z of Achieving Top Performance in Your Laboratory.
Full details about these special work-shops, along with the entireprogram, can be viewed at: www.executivewarcollege.com.