Lab Regionalization Creates New Business Models

REGIONALIZATION OF LABORATORY TESTING SERVICES continues to be a dominant trend within the lab industry. That’s not news to our members and regular readers, because THE DARK REPORT closely tracks this important trend.

What always surprises me, however, is the variety of new business models which emerge from efforts to regionalize lab services. These experiments and innovations spring directly from the unique needs of the healthcare markets served by laboratories. I don’t think it is any coincidence that THE DARK REPORT, in just this issue, provides intelligence briefings on three specific, but very different, business models of laboratory regionalization.

The first briefing involves Houston’s Memorial Health System. When tropical storm Allison dropped 36 inches of rain, Memorial Hermann Hospital was overwhelmed by flood waters and its core laboratory was totally destroyed. Because of earlier efforts to consolidate and regionalize the lab testing resources within the health system, other Memorial hospital labs have helped to fill the loss of the core lab at Hermann Hospital.

The next briefing discusses how the Connecticut Hospital Laboratory Network (CHLN) developed an effective managed care contracting program. There are two “twists” in this story. One, CHLN involves 100% of the state’s hospital labs, giving it credibility and greater clout with payers. Two, CHLN actively partners with Quest Diagnostics Incorporated to provide services under several managed care contracts.

Third, in British Columbia, the two dominant commercial laboratories overcame issues of trust to jointly design and implement a “universal physician portal.” (Pages 9-14.) BC Biomedical Laboratories and MDS Metro Laboratory Services created PathNET, a system which allows physicians to gain access to patient lab data, regardless of which lab performed the test. Both labs, along with the provincial health system administration, want other labs in the province to participate in PathNET.

I believe these three business models represent a greater truth about lab regionalization: We have yet to see the “perfect” business model of lab regionalization. In cities and rural areas throughout the United States and Canada, laboratories and integrated health networks (IHNs) are regionalizing lab test services in innovative ways. Taken collectively, this is evidence that labs are still under strong pressure to reduce costs and boost service.


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