Arguing in Favor of Regional Laboratory Networks

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TWO STORIES IN THIS ISSUE OF THE DARK REPORT DEMONSTRATE why regional laboratory networks are a business model which should be revisited by hospital laboratories with outreach programs.

Seattle provides a great example of how an existing laboratory network gives hospitals in that region an additional business option. PACLAB, an eight-hospital laboratory network, has steadily grown in size, professionalism, and market impact. When two hospitals went shopping for a commercial laboratory partner, PACLAB was able to provide a credible proposal in both cases. (See this article.)

Plans in Florida to select a single laboratory to do all testing statewide for Medicare beneficiaries is a direct threat to independent laboratories and hospital lab outreach programs. Laboratories in that state are scrambling to develop a lobbying coalition that can stop this proposal. A regional laboratory network would help in this effort. (See this article.)

What is ironic about the situation in Florida is that the state’s major hospital laboratory outreach programs actually did have a network. The Florida Reference Laboratory Network (FRLN) was developed to help these lab outreach programs bid and service large managed care contracts in the state. However, as closed-panel HMO contracts became less of an issue in recent years, the lab network’s organizers allowed it to languish.

In contrast, Detroit’s regional laboratory network is probably “best in class.” Over a ten-year period beginning in 1992, Joint Venture Hospital Laboratories (JVHL) successfully captured almost every significant managed care contract in Michigan. As many as 150 Michigan hospital laboratories participate in certain contracts. Like PACLAB, JVHL is a work in progress. Each year additional resources are developed and put in service to the benefit of member hospital laboratories and their physician-clients.

Current developments in Seattle and the State of Florida remind us that hospital lab outreach programs can accomplish more by collaborating than by working alone. If payers continue to develop contracting models which cover larger regions, then lab outreach programs should respond by creating a regional laboratory resource. Let me also add that anatomic pathologists would benefit from the same kind of regional collaboration. But that’s another opinion for another column!

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