Anatomic Pathology’s Likely Path of Transformation

RECENT DEALS INVOLVING PRIVATE EQUITY FIRMS and several of the nation’s larger pathology groups hint at a major transformation soon to come to the pathology profession. No one should be surprised that pathologists of the baby boomer generation will be an important trigger in this transformation.

It is the coming wave of retirements by baby boomer pathologists that will provide the momentum for these changes to the profession. As you will read on pages 13-14, our editor observes that many pathology group practices will soon need money to cash out their retiring partner-pathologists. In response to this need, a growing number of pathology groups will either allow themselves to be acquired or will sell significant equity to outside investors. In both cases, some of the money raised by these methods will be used to purchase back the equity owned by the retiring partners.

I can see this having two direct consequences to the pathology profession. First, it is likely to signal the end of the pre-eminence of the private pathology group practice, usually anchored by one or more contracts with community hospitals. Because of either outright sale of the practice or the sale of significant equity to outside investors, private pathology practices—professional corporations (PCs)—will begin to decline in numbers and influence. That’s because the buyers or new investors of these private practice groups will operate them using a different business model than the professional corporation.

Second, each time a private pathology group either sells itself to a buyer or sells a significant share of equity to outside investors, these investors will insist on one major change in the pathology group’s business activity. That change will be to increase the rate of growth in specimens and revenue. To achieve this, these pathology groups will initiate their first-ever sales and marketing programs or expand and intensify existing sales efforts.

Thus, the rather collegial pathology profession we see today, dominated by private pathology group practices (often smaller groups serving community hospitals and not funding a professional sales program) is about to undergo a gradual transformation. If professional investors change anatomic pathology in a similar fashion to how the clinical laboratory was changed between 1985 and the present, then we should expect a fundamental restructuring of the anatomic pathology sector. This may take more than 10 years to accomplish, due to the pace of retirement by baby boomer pathologists.


Leave a Reply


You are reading premium content from The Dark Report, your primary resource for running an efficient and profitable laboratory.

Get Unlimited Access to The Dark Report absolutely FREE!

You have read 0 of 1 of your complimentary articles this month

Privacy Policy: We will never share your personal information.