American Healthcare At a New Crossroads

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IN SELECTING OUR “TOP TEN” BIGGEST STORIES of the lab industry for 2001, we’ve had some interesting discussions here at THE DARK REPORT about what’s happening in the American healthcare system and how it’s affecting laboratories and pathology group practices.

I believe that our healthcare system is at a crossroads. All the evidence says that, during the next four years, healthcare costs will increase at double digit rates. This means that employers and the government will be paying between 50% and 75% more to provide care to their employees and beneficiaries by the year 2005. We all know that corporations, faced with a 50%+ increase in healthcare premiums, will take direct action to reduce their costs and encourage healthcare providers to do more with less money.

The last time our corporations and government faced sustained double digit increases in healthcare—the late 1980s and early 1990s—they turned to managed care as solution. Managed care’s approach was to control and restrict access to care by patients, while squeezing down the money it paid providers. That worked for several years in the mid- to late-1990s. But those “gains” have been booked.

So, faced again with steeply rising healthcare costs, what solution will corporations and the government take this time? That closed-panel, capitated model of managed care has already shaken out the obvious savings and cut providers’ reimbursement down to the proverbial bone. Since we can’t go down that same road a second time, I believe this current cross- roads is going to take us in a different direction.

For hospitals, I think there will be lots of pain. Medicare won’t have adequate money to pay for care, particularly as baby boomers show up in ever-growing numbers. For physicians, it will be a mixed bag. Many will go with the flow and find themselves choked by bureaucratic and financial inadequacies. Another segment will be creative and find ways to offer value-added medical services to patients capable of paying for their own care.

As to clinical laboratories and pathology group practices, I think they will have an easier time of the 2000s than they did of the 1990s. The reason is simple. Most of the new diagnostic technology on the way will be seen as relatively cheap, even at several hundred dollars per test. It will be easier to maintain adequate reimbursement for an “inexpensive” lab test that determines whether a multi-thousand dollar drug therapy is warranted.


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