Consolidation: Threat Or Opportunity

Consolidation: Threat Or Opportunity

IS CONSOLIDATION GOOD OR BAD FOR OUR HEALTHCARE SYSTEM? I don’t know if any of us could accurately answer that question. For better or for worse, big corporations will continue to buy up the little guys.

I do feel confident in predicting that ongoing consolidation will occur in all areas of healthcare. Among our readership, hospital laboratory consolidation continues apace. Pathology practice consolidation is certainly under way and will affect increasing numbers of pathologists.

Given that the process of consolidation will be with us for many years into the future, what should be the response of laboratory executives and pathologists? Is consolidation a threat? Or is consolidation an opportunity?

Consolidation would indeed be a threat for anyone who believes that their job would be affected by an unwelcome acquisition. But I offer another perspective. This perspective is directed towards the leaders of clinical labs and pathology practices.

As leaders, it is your responsibility to accurately assess market trends and guide your business appropriately. Employees and partners depend on your insight and guidance to maintain a financially stable company. It is in that spirit that I offer you this insight: consolidation which affects your market area is an opportunity for you and your laboratory to gain market share.

Most big companies find it difficult to offer superior customer service. They also struggle to respond appropriately to the unique quirks of local markets. In that respect, consolidation works against their success because it makes it more difficult for them to be responsive in the market. Their strength usually derives from the cost advantage they enjoy due to economies of scale and their ample war chest of capital to throw at sales and marketing.

Within the commercial laboratory industry, the three blood brothers demonstrate the truth of this. If their large size translated into superior customer service, why haven’t they become crushingly dominant in every city where they provide testing?

Therein lies the opportunity for independent commercial laboratories and pathology practices. Their ability to respond quickly to market changes, their local presence, and their long-standing client relationships give them a leg up when competing for business. Anytime the big boys get bigger, these nimble local competitors can frequently take advantage of post-consolidation confusion to gain market share. That is why I see consolidation as an opportunity for many independent labs and pathology practices.

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