How Smaller Lab Organizations Can Compete

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MAYBE THE PENDULUM IS SWINGING BACK IN FAVOR of smaller laboratory organizations. During most of the 1990s, consolidation and large size seemed to generate clout. But huge size didn’t always result in profitable laboratory companies.

Witness the red ink spilled from such public laboratory companies as Corning Clinical Laboratories (now Quest Diagnostics Incorporated), Laboratory Corporation of America, Unilab, and others during the years 1995-1997. And these were the companies that survived. Others filed bankruptcy and disappeared, such as Meris Laboratories, Physicians Clinical Laboratories, and Universal Standard Medical Laboratories.

Now the Internet and healthcare e-commerce promise to reshuffle the competitive deck. In the laboratory marketplace, this will create an opportunity for smaller laboratory organizations to regain their competitive edge. Large size and huge specimen volumes will not be the competitive advantage that it once was. Instead, being close to the customer and serving the unique needs of physicians and patients in the local community will be the critical success factors for laboratories.

That is why the business achievements of Clinical Laboratories, Inc. (CLI) in Throop, Pennsylvania are worth studying. (See pages 2-6.) It recognized the opportunities that Web-enabled lab test results reporting would create. Two years ago, when most labs were not paying attention to the Internet, Kuo Cheng and Gary Ross had the vision and fore- sight to recognize this opportunity. Using the internal resources of the lab, they “home brewed” their own Web-enabled lab test result reporting system for clients and had it in operation by the summer of 1998!

This is local laboratory services at their best. Good management vision, coupled with a nimble response and fast implementation, is mak- ing CLI the dominant lab competitor in its service area of Northeastern Pennsylvania. I believe that hospital laboratory administrators sit atop untapped gold mines around their hospital campus. Just like CLI, they have a natural market advantage with the physicians on their hospital staff. It is time for hospital lab administrators to harness the power of the Internet. In so doing, they can become the primary lab resource in their local community.


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