In our role as the lab industry’s management “futurist” we spend a lot of time pondering the meaning of individual events in cities throughout the United States. One common trait of successful organizations is their ability to accurately translate such events into a strategic plan which correctly predicts the future… and positions their company to be at the right place, at the right time, with the right product.
During the last few years, changes to the clinical laboratory industry were exponential. Public laboratories went from being the darlings of Wall Street to the brink of financial disaster. Medicare and Medicaid transformed from acceptably profitable reimbursement programs into burdensome administrative nightmares. Hospital mergers and acquisitions upended traditional regional healthcare arrangements. Managed care, and its growing emphasis on capitation, placed all laboratories under extreme pressure to slash costs and revamp operations.
In times of radical change, what advice can we give to clinical laboratory executives? What future is predicted by our crystal ball? No single answer emerges, but there is one piece of sage advice. All evidence tells us that the clinical laboratory industry has entered a mature market phase. This means there will be no rapid growth in the volume of testing performed within the United States. Any laboratory which expands specimen volume will do it at the expense of a competing laboratory.
Thus, our advice is that laboratory executives should base their laboratory’s strategic business plan on an “added-value” proposition. We believe that success lies in emphasizing services and testing which laboratory clients find valuable, even compelling. This is more important than any single-minded focus on cutting costs.
Quest Diagnostics Incorporated, in joining their Phoenix laboratory with Sonora Laboratory Sciences, recognizes the truth of the mature marketplace. The strategic plan for the Atlanta reference laboratory joint venture between Columbia and MDS/Autolab does not, since it calls for outreach sales to help fill excess capacity at the newly constructed laboratory. UroCor, Inc. of Oklahoma City is a disease management company/diagnostic laboratory which understands the importance of value-added services as a vehicle for growth in a mature market. We expect the accuracy of our advice will be confirmed as the marketplace responds to the strategic plans of UroCor as well as the Phoenix and Atlanta joint ventures during the next two years.