"Lab Briefs"

LabCorp, Bio-Reference Labs, Epic, OHSU, Alberta Health

LABCORP, BRLI ISSUE REVISED GUIDANCE OF LOWER EARNINGS

IN RECENT WEEKS, at least two public lab companies have issued downward earnings guidance for 2014. These changes are based, in part, on expected reimbursement reductions from the Medicare program.

It was December 10 when Laboratory Corporation of America told investors that its full year 2013 earnings per share (EPS) guidance was expected to be $0.05 less. More notably, LabCorp’s EPS guidance for 2014 was $6.50. That was 14.2% less than the street consensus of $7.57. LabCorp does expect its revenue to grow 2% during 2014.

“We continue to operate in a very difficult environment,” stated David P. King, Chairman and CEO, in the company’s press release on this matter. LabCorp characterized the market as “challenging” and went on to say that “the operating environment will continue to negatively impact financial performance through 2014.” LabCorp listed four factors as contributing to this situation:

  • Ongoing muted utilization environment;
  • Continued increases in [the number of] Americans with high deductible and high co-insurance plans;
  • Ongoing government payment and reimbursement issues; and
  • Uncertainty related to the implementation of the Affordable Care Act.

Just 16 days earlier, on November 27, Bio-Reference Laboratories, Inc. (BRLI) issued its guidance for its fiscal fourth quarter and preliminary fiscal 2014 guidance. The fourth quarter guidance was for a lower EPS of $0.40 compared to the street consensus of $0.55.

During fiscal 2014, BRLI expects revenue to increase by 10% and to be entirely driven by increased specimen volume. Its net income guidance was growth of 15%. The street consensus for both numbers was 13% and 15%, respectively.

BRLI’s press release noted that: “…the Company believes there is an ongoing recalibration of reimbursement for the industry, which has resulted in substantial downward pressure from many payers regarding reimbursement.” BRLI went on to say that it “had to negotiate contract modifications to reimbursement rates and conditions of payment and/or eligibility with dozens of health plans representing a substantial number of lives nationwide.”

In reaction to these developments, the stock price for LabCorp dropped by about 11% following its announcement. Similarly, after posting revised guidance on November 27, Bio-Reference Lab’s shares declined by almost 21%.

EPIC, THE EHR FIRM, TO OPEN SOURCE CODE T0 OHSU IN PORTLAND

ONE OF THE NATION’S MOST SECRETIVE HEALTH INFORMATION COMPANIES will open its source code for education and research purposes with Oregon Health Sciences University (OHSU) in Portland, Oregon.

Based in Verona, Wisconsin, Epic Systems Corporation has one of the better-selling electronic health record (EHR) systems in the country. Healthcare IT News reported that Epic’s arrangement with OHSU will be its first partnership with an academic informatics program.

For its part, Epic will provide two EHR systems. OHSU will use one for research purposes. The other will be used in medical education.

OHSU already runs the Epic EHR in its hospitals and clinics. It has been using the VistA EHR in its teaching activities. This is the Veterans Health Information System and Technology Architecture (VistA) that is an open-source EHR.

In its press release announcing the partnership with Epic, OHSU wrote: “The EpicCare research environment—including access to Epic source code—will allow OHSU faculty and students to investigate usability, data analytics, simulation, interoperability, patient safety and other research topics. It also will enable the prototyping of solutions to real-world health care problems that can be addressed by informatics technology.”

For education purposes, OHSU wrote that the Epic EHR: “will provide students in OHSU’s graduate program in biomedical informatics access to EpicCare for learning purposes. Students in both OHSU’s on-campus and distance learning programs will pursue coursework based on Epic’s electronic health record system. Educational activities will include learning to configure screens, implementing clinical decision support, and generating reports as well as performing other frontend and back-end activities.”

Epic sees this partnership as a door opener to establish similar arrangements with other academic centers. In the OHSU press release, Bret Shillingstad, M.D., Epic clinical informatics physician, was quoted as saying: “We see this partnership with OHSU as a great way to accelerate the optimization of electronic health records. Once the environments are established, Epic and OHSU will assist other Epic academic customers in establishing similar laboratory environments for their programs.”

OHSU says it will offer classes and research projects using the live Epic EHR system by March 2014. That is the start of the spring term.

5 ILLINOIS HOSPITALS BAND TOGETHER TO TRAIN MEDICAL TECHNOLOGISTS

DISTANCE LEARNING UNDERPINS a collaboration by five hospitals in Northwest Illinois to increase the number of medical technologists (MTs) that graduate in their communities.

The project is called the Northwest Illinois Healthcare Collaborative. Participating are Rockford Memorial Hospital, OSF Saint Anthony Medical Center (all in Rockford), FHN Memorial Hospital (Freeport), Katherine Shaw Bethea Hospital (Dixon), and CGH Medical Center (Sterling).

The academic partner for this collaboration is Weber State University (WSU) of Ogden, Utah. Julie Mann is President of the collaborative and the Chief Administrative Officer of KSB. She stated that the goal is to provide “our client laboratories with an opportunity to educate laboratory personnel without taking them away from their work sites.”

The use of long distance training for medical technologists and clinical laboratory scientists has grown steadily over the past decade. Further, hospital administrators are waking up to the fact that support for MT training is necessary if there are to be enough properly-trained personnel in their communities to staff the clinical laboratories in their hospitals. (See TDRs, August 8, 2008; October 24, 2005; July 7, 2003.)

ALBERTA HEALTH ISSUES RFP FOR $3 BILLION 10-YEAR CLINICAL LAB DEAL

ITS OFFICIAL! On December 11, the Alberta Health Authority (AHS) in Edmonton issued a request for proposal (RFP) for what may be the world’s single biggest clinical laboratory testing contract.

Officials at AHS want to find a single private laboratory company that will build a new, state-of-the-art clinical laboratory facility in Edmonton and operate it for 15 years, through the year 2030.

The goal of the contract is to consolidate and rationalize all hospital-based lab services, outreach/community testing, and lab specimen processing. Officials at the Alberta Health System will establish key service standards and performance metrics for the contract, which takes effect on January 1, 2015.

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