"Lab Industry Briefs"

Sunquest, Towers Perrin, Aetna, Quest Diagnostics, Roche Diagnostics, Careside

SUNQUEST REAFFIRMS LONG-TERM COMMITMENT TO COPATHPLUS PRODUCT

EXPECT A FASCINATING competitive battle in the market for anatomic pathology software now that Cerner Corporation is acquiring Dynamic Healthcare Technologies, Inc. (DHT)

DHT is the developer and owner of CoPathPlus™ , used by many pathology group practices around the country. One authorized reseller of CoPathPlus is Sunquest Information Systems.

In the last issue of THE DARK REPORT it was speculated that it would be “unlikely that Sunquest will decide to continue offering a software product now owned by one of its competitors.”

Sunquest President Mark Emkjer responded quickly to this statement. “Cerner’s plan to acquire Dynamic was not a surprise to Sunquest,” he told THE DARK REPORT. “We expected it for some time and we prepared for all contingencies.”

Emkjer noted that, on March 5, 2001, Sunquest and DHT had announced an amended agreement. It allows Sunquest to continue to “distribute, implement, and support Dynamic’s CoPathPlus System.” Sunquest has the “ability to enhance and further integrate the system into future versions of Sunquest’s laboratory information system (LIS) independent of Dynamic or Cerner.”

Emkjer noted that “CoPath integration with our industry-leading LIS is well underway and will continue as originally planned.” He further observed that, during third quarter 2001, Sunquest enjoyed its best-ever sales of CoPathPlus, with 20 healthcare institutions signing contracts to implement CoPathPlus.

Because Sunquest has rights to the source code for CoPathPlus, it will be able to add features and capabilities independent of Cerner and Dynamic Healthcare Technologies. That should benefit anatomic pathology groups, because it means more innovation and competition.

Pathologists are aware that healthcare systems want to integrate both clinical and financial data. The fact that both Sunquest and Cerner want to integrate CoPathPlus into their existing information systems shows how important this trend has become.

Sunquest’s willingness to go on the record as being firmly committed to further development and integration of CoPathPlus means that the marketing battle for pathology information systems should be quite intense during the next few years. Pathology groups may find themselves with the pleasant option of choosing among three increasingly robust versions of Co-PathPlus.

HEALTH PREMIUMS OUTPACE INCREASES IN PROVIDER COSTS

DURING 2002, MANAGED CARE FIRMS should report healthy profits. Towers Perrin reports that HMOs negotiated increases in premiums that were higher than the increased costs experienced by providers.

With most health insurance contracts for 2002 now signed, Towers Perrin calculates that the average increase was 14%. This is the highest year-to-year increase in over a decade. Experts predict that employers will respond to the stiff increases in healthcare benefits costs by switching to plans with less lavish benefits and requiring more co-pays, deductibles, and out-of-pocket payments by beneficiaries.

For the third quarter, almost every major health insurer reported profits. The exception was Aetna, Inc., which posted a loss of $54.4 million. Although it is predicted that most managed care companies will do well financially in 2002, few observers believe that provider reimbursement will be increased by much, if at all.

TWO BLOOD BROTHERS TO PARTNER MORE WITH DIAGNOSTICS FIRMS

Being biggest brings opportunities not available to competitors. Quest Diagnostics Incorporated and Laboratory Corporation of America are now leveraging their sizable presence in the commercial marketplace to do more partnering deals with diagnostic manufacturers.

THE DARK REPORT is first to identify and alert lab administrators and pathologists to this trend. It means the two blood brothers will often have first access to new diagnostic technologies. As part of these partnering deals, they will generally have more favorable pricing or “profit sharing” opportunities than what are offered to hospital labs and regional independent labs.

Of the two blood brothers, Quest Diagnostics has been fastest to realize the financial potential from partnering with diagnostics manufacturers. Its latest such partnership is Roche Diagnostics. Announced last month, the two companies will combine forces to develop and commercialize genetic tests based on Roche’s PCR technology. Their target is pharmacogenomics and predictive medicine.

One partnering agreement that’s paid handsomely for Quest Diagnostics is its agreement with Cytyc Corporation. Almost two years ago, Quest Diagnostics agreed to use and market only Cytyc’s ThinPrep™ test as a thin layer Pap test option. In return, it received preferred pricing for ThinPrep instruments and test kits, along with warrants for Cytyc stock.

Not only has the value of Cytyc’s stock zoomed in the last 24 months, but financial analysts tell THE DARK REPORT that profits from the higher margins of ThinPrep tests versus conventional Pap smears have boosted Quest’s net earnings by a significant amount.

The large size and presence in regional markets throughout the United States make the two blood brothers attractive partners for any diagnostics company ready to roll out new test technology. It remains to be seen whether this gives the two lab testing giants long-term competitive advantage in the laboratory marketplace.

POINT-OF-CARE CHEMISTRY PRODUCTS SOON TO BE MARKETED TO PHYSICIANS

THERE’S BEEN MUCH TALK about whether or not new technology is ready to support moving routine chemistry and hematology out of the core lab and into physicians’ offices.

The clinical marketplace may soon answer this question. Careside, Inc., has developed a point-of-care (POC) testing system capable of performing 41 FDA-cleared or exempt tests in the areas of chemistry, electrochemistry, and coagulation with a 15-minute turnaround time. (See TDR, November 29, 1999.)

Careside now has a marketing agreement with Physician Sales and Service (PSS) to distribute its products nationally to solo and small group practices. PSS employs 750 sales people who call on nearly 100,000 customers. As this sales team introduces Careside’s POCT solutions to physicians’ offices, it will provide the first opportunity to learn whether physicians’ are willing to do these types of tests in-house.

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