Are Clinical Labs Prepared for What Is to Come?

Are Clinical Labs Prepared for What Is to Come?

IT IS TIMELY TO ASK THE QUESTION, “Are the nation’s clinical laboratories prepared to deal with the multiple challenges already visible in the healthcare marketplace today?”

What leads me to ask this question is the unexpected number of deals involving the hospital lab outreach programs announced since the start of the year. Certainly the sale of PAML to Laboratory Corporation of America was not a surprise, as rumors had swirled about that deal for more than two years. Similarly, it was known that PeaceHealth Laboratory was being shopped by its parent health system.

But many lab managers were surprised to learn that Mount Sinai Health System in New York was selling its lab outreach business to Quest Diagnostics Incorporated. And few people knew that Western Connecticut Health Network was engaged in discussions to create of a lab joint venture with Sonic Healthcare.

Four significant transactions spaced so closely together is unusual. The important question for hospital-based lab administrators and clinical pathologists is whether these recently-announced transactions represent the leading edge of an emerging trend, or whether they are simply the coincidence of several transactions in which the parties were attempting to complete deals before the end of 2016, but the negotiations ran over and were finalized in early 2017.

You will read our coverage about the hospital lab outreach transactions on pages 3-12. Broadly speaking, there seems to be three elements motivating hospitals to assess what they might do with their clinical labs. One element is the financial squeeze hospitals and health systems are experiencing. The second involves payer cuts to lab test fees that reduce the revenue hospital lab outreach programs earn. The third is hospitals taking steps to deliver value-added care and finding ways to leverage their labs toward that goal.

Because of the keen interest in the financial sustainability of hospital laboratory outreach programs, this topic will be one of the significant themes at our upcoming Executive War College in New Orleans on May 2-3, 2017. Among the sessions will be a lab buyer panel with three of the nation’s four largest lab companies confirmed to speak, along with another panel of successful lab outreach leaders sharing their strategies and successes. Other important sessions will address the financial consequences of the PAMA price reporting rule.

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