Laboratory Regionalization Enters a New Phase

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REGIONALIZATION OF LABORATORY SERVICES has been the primary theme behind all major changes to the clinical lab industry since the mid-1980s. There have been several phases, such as commercial lab consolidation, and hospital lab consolidation. But a constant factor underlying each of these phases has been the increased regionalization of lab services.

THE DARK REPORT is again first to identify and report on a new market cycle for the lab industry. As you will read here, our Editor-In-Chief, Robert Michel, predicts that the next phase of change will be the emergence of shared laboratory service organizations. This time, it will be primarily integrated healthcare networks (IHN) which come together and form a laboratory joint venture.

Since most IHNs have already consolidated laboratory services within their system, the continued need to reduce costs while acquiring expensive new diagnostics technology will motivate IHN CEOs to approach their counterparts across town to create a lab services joint venture. Our story on Spectrum Laboratory Network in Greensboro, North Carolina is one such example of a multiple-IHN laboratory joint venture.

I agree with Robert Michel’s prediction. Economic pressures to squeeze out more costs while investing in new diagnostics technology will continue to tax the budgets of most hospital laboratories. Excess and unused hospital lab capacity in every city must be either removed or utilized. The financial survival of all types of clinical laboratories will continue to depend on continually improving productivity. I believe the effort to support improved laboratory performance that was launched by the Premier, Inc., the national GPO, in 1998 is grounded in the same understanding of healthcare market principles as Michel’s prediction.

In fact, even as he was working on this first draft of his story, the fax machine turned on and delivered the press release announcing that the 12-hospital Aurora Health System in Milwaukee and the 8-hospital Advocate Health Care system in Chicago would merge their lab organizations. Talk about timing! It was the marketplace validating the very prediction that was in his word processor! For my money, it again demonstrates that THE DARK REPORT has a very capable prognosticator gathering up-to-the-minute business intelligence for our members.


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