Finding Lab Growth Opportunities Amid the Gloom

IN MANY WAYS, THE TRADITIONAL BUSINESS MODELS for laboratory testing services are proving deficient in the face of a swiftly-evolving healthcare system. I suspect that none of us fully understand how many laboratory organizations are already under extreme financial stress.

We intuitively understand that, somewhere out in the healthcare marketplace, clever and innovative pathologists are developing new business models for laboratory testing. They are discarding outmoded operational approaches and devoting attention to understanding the changing clinical needs of their client physicians. These laboratory professionals are finding lab growth opportunities amid all the gloom of declining reimbursement for lab testing services and unwelcome Medicare policy changes (like Medicare’s announced reimbursement cut of 52% to CPT 88405-TC).

But there is even more to the good news part of this story. Here at THE DARK REPORT, we can find examples of lab entrepreneurs in different regions of the country who are founding clinical lab companies from scratch and enjoying steady growth. They are increasing specimen volume and revenue, enabling them to achieve break-even in a reasonable period of time. At the same time, they are disproving the conventional lab industry thinking that the only way to enter the clinical lab business is to acquire an existing lab company.

My point here is that our profession has two sides, a negative and a positive. I can paraphrase Charles Dickens and his famous opening sentence in A Tale of Two Cities and say this: we are seeing the best of times and the worst of times. We are at a moment in history when knowledge of the human genome will unleash an unprecedented flood of new diagnostic tests that pathologists can use to help physicians diagnose disease sooner and more accurately, then help with the selection of the most appropriate therapies.

At the same time, we are living in an age when demand for healthcare is outstripping the nation’s ability to pay for it. That guarantees a gap in funding that will cause many lab organizations to merge, sell, or go out of business.

However, 320 million Americans continue to need lab testing services. Going forward, innovative labs have the opportunity to provide this testing and make money doing it. Your challenge is to stay alert to new opportunities, then help your lab deliver added value to physicians in a financially sustainable manner.