Heeding the Lessons of Market Competition

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COMPETITION FOR LAB TESTING DOLLARS IS THROWING NEW CURVEBALLS at both clinical labs and pathology group packages. Failure to spot these developments and respond to them now will have swift financial consequences.

In this issue of THE DARK REPORT, readers will notice how we’ve identified market threats to the status quo of laboratories across the country. Probably the most noteworthy development is the threat to anatomic pathology as specialist physicians build their own, in-clinic pathology laboratories.

That is why it is instructive to study the efforts of Kettering Pathology Associates (KPA), a five-physician group in Kettering, Ohio, to retain specimen referrals as each of three gastroenterology groups in town decided to open their own in-house pathology labs. (See pages 3-6.) As each GI group opened its lab, it requested a proposal from KPA. The first two times, KPA declined to do the work at the discounted rate the GIs were seeking. But after losing 40% of their outreach specimen volume to the first two new in-house labs, the pathologists at KPA decided to work with the third GI group when it opened its lab last month.

Next, we provide the assessments of consultants who actively work with both pathologists and specialty physicians. (See pages 7-9, 17.) Many of you are likely to be surprised by their observation that pathologists can do okay in a discounted fee arrangement—if they just show up, read slides, and get a monthly check from the specialists. That’s because pathologists in these types of deals have no overhead or other costs.

In the clinical laboratory sector of the marketplace, our coverage of Quest Diagnostics Incorporated’s South Florida business unit provides a serious early warning about how labs that use Six Sigma and Lean effectively can create competitive advantage while raising the bar on customer expectations. (See pages 10-16.) By fulfilling those needs with targeted and innovative services such as a scheduling system to allow patients make appointments for collecting their specimens, the lab was able to differentiate itself from its competitors and raise the level of customer service in the lab industry in Florida. The result was a return on its investment in quality improvement of almost $10 for every $1 invested and a prestigious quality award, which the business unit won this year.

These three articles show why it is imperative for pathologists and lab directors to respond to such changes nimbly in order to grab market share in today’s competitive environment.

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