THESE ARE UNSETTLING TIMES FOR PATHOLOGISTS, particularly those who practice in a private pathology group that serves one or more community hospitals. Blame it on healthcare’s unfolding transformation and the new aggressiveness of payers to cut the prices they pay for anatomic pathology services.
At the strategic level, healthcare’s acceptance of integrated care organizations like ACOs and patient-centered medical homes will cause these entities to want to utilize anatomic pathology services in different ways. At the same time, if ACOs do succeed in keeping people out of hospitals, how do pathology groups serving community hospitals access an adequate volume of inpatient specimens to financially sustain their operations?
At the tactical level, both the Medicare program and private health insurers have demonstrated a willingness to lower the prices they pay for the CPT codes that represent pathology’s highest volume procedures. Just the technical component price cuts enacted by Medicare in recent years have eviscerated the profitability of many technical pathology labs owned and operated by private pathology groups.
Simply said, private pathology groups are finding themselves caught in the jaws of a powerful vice. One jaw is the trend toward integrated clinical care. The other jaw is the trend toward value-based reimbursement, including bundled payments and per-member-per-month fees. (Think: no more fee-for-service!)
As the jaws of this vice tighten during the next 24 to 36 months, I expect the financial woes of many pathology groups to become visible. In fact, consultants, attorneys, and other advisors to pathology groups are telling us that they are already engaged in conversations with their pathology group clients on how to restructure or reconfigure their group practices.
One such restructuring step is already happening. It is reported that many pathology groups are taking steps to release their least productive pathologists. This is increasing the number of pathologists re-entering the job market.
All of these developments make it imperative that pathologist business leaders understand how the twin forces of healthcare transformation and the shift away from fee-for-service payment will alter the existing financial stability of their group practices. Now is the time to be responsive to these changes.