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Attention Pathologists: Change Is Coming! - The Dark Intelligence Group

Attention Pathologists: Change Is Coming!

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IT’S BEEN A BUSY FOUR WEEKS for your editor at THE DARK REPORT. He has traveled to meetings, conducted site visits at a variety of large and small companies serving clinical labs and pathology groups, and even participated in strategic planning sessions for some labs and industry vendors.

I asked my colleague to tell me what he learned about the current state of the market for clinical lab and pathology testing services. Is the prognosis good or bad? “Too soon to tell!” he answered, explaining that his recent conversations with labs and industry vendors uncovered plenty of evidence to say that long-standing market forces are already in transition to a new competitive equilibrium. However, these changes represent as many positive opportunities for nimble lab organizations as they represent bad news.

Nearly every person he spoke with at industry meetings and in private conferences has a story to tell about some significant shift or disruption in their ongoing business activities. Vendors see lab customers becoming more cautious in the purchase of new analyzers. Lab informatics companies say that strong demand from labs for middleware solutions that provide real-time analytics to guide management decisions is fueling sales growth in this product category.

For clinical labs, a common experience is the change in the ownership of the physician groups that refer specimens to their laboratories. As doctors sell their medical practices to local hospitals and health systems, this change of ownership often leads to a decision to change lab providers; a change which often favors the laboratory of the hospital which acquired that physician practice.

In a similar fashion, local pathology groups often lose a long-time client and access to those specimens when those physicians sell their practice. This is happening at the same time that pathology groups are dealing with the reduction in reimbursement for a number of key pathology services, such as Medicare’s decreased price for 88305-TC.

How are pathology groups dealing with these developments? Not easily, I am told. Our editor says that business advisors to pathologists tell about the quiet sales of some pathology groups to hospital buyers—converting those pathologists into employees. Rumors are circulating of pathology groups exploring Chapter 11 bankruptcy. If true, these are early flags to the pathology profession that major forces are at work reshaping the market for anatomic pathology services.

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