EVERY NOW AND THEN, IT HELPS TO STAND BACK and look at the big picture. In this issue, you will read a unique assessment of the lab industry and pathology profession prepared by our Editor-In-Chief.
His analysis covers three points. First, he sorts the market for lab and pathology testing into four segments, then identifies the major competitors in each market. That alone is interesting reading, because many lab executives and pathologists may not realize that there have been fundamental and deep-reaching changes in competition.
Second, he “guess-timates” market shares for each market segment. That’s a tough challenge because, as most of us know, comprehensive and accurate numbers for total lab testing in the United States are tough to come by.
Three, our Editor offers observations and predictions about the future evolution of the competitive marketplace for clinical lab testing and anatomic pathology services. In particular, he notes that competition for physicians’ office testing is increasingly a battle between the two national labs and hospital/health system lab outreach programs in city after city around the country. Editor Michel believes that the era of the local, pathologist-owned independent commercial laboratory has ended.
But what I found most intriguing is his analysis of the anatomic pathology (AP) marketplace. He estimates that physicians’ office-originated AP specimens are a $3 billion market. Notably, the two blood brothers, AmeriPath, DIANON Systems, IMPATH, and UroCor, combined, have an estimated $914 million, almost one-third, of this market already.
This was certainly not the case as recently as 1995, when AmeriPath didn’t exist, DIANON was primarily a clinical lab company, and IMPATH was in the midst of its IPO (initial public offering). Of course, Quest Diagnostics Incorporated and Laboratory Corporation of America were certainly important competitors in this AP testing segment at that time.
I’d say the success of national AP companies at capturing ever-growing numbers of specimens from the docs’ offices in recent years is an important development. There’s a good argument that, at this moment, anatomic pathology is the “hot” market in diagnostic services. For local anatomic pathology groups, that spells both danger and opportunity. A “do-nothing” strategy may cause them to lose their local revenue base. A proactive marketing strategy can provide financial stability and growth.