Profitable Prices for New Lab Information Services

Profitable Prices for New Lab Information Services

ONE RESPONSE TO THE CONTINUED CUTBACKS for laboratory test reimbursement during the 1990s was a deluge of papers and speeches by pathologists and lab executives hammering at the theme that laboratory information possesses the potential to improve the quality of healthcare outcomes while reducing the cost of care. In the face of financially disastrous reductions in lab test reimbursement, laboratorians attempted to educate private payers and government health program administrators about the added value of laboratory testing.

Now it seems that the time has come for clinical laboratories and in vitro diagnostics companies to capitalize on the potential of laboratory test information to add value to the healthcare system. As you will read on pages 2-5, an increasing number of the largest MCOs (managed care companies) in Michigan are beginning to request additional laboratory information services. Joint Venture Hospital Laboratories, a regional laboratory network of 109 hospital laboratories statewide, is working to develop these enhanced lab information capabilities.

THE DARK REPORT believes the Michigan experience is typical of other major metropolitan markets. MCOs across the country are responding to the increased reporting requirements of HEDIS. But they are also beginning to look for tangible ways to improve healthcare outcomes while cutting the cost of care. Laboratory testing is one way to achieve both goals.

Thus, I predict that the age of “added value” laboratory information is almost upon us. This goes beyond the simple reporting of a single test result on a single patient to a single physician. It will involve laboratory medicine in more sophisticated data capture and data analysis. The resulting knowledge from this lab information will be worth a lot of money to payers, physicians, and patients.

For the laboratory industry and the pathology profession, this is a crossroads in the healthcare marketplace. Sophisticated management of lab information will create value, but labs will incur costs to produce this information. Can laboratories and pathologists successfully price these enhanced laboratory information products to capture some of that added value? To do so will require pricing discipline and more sophisticated management understanding of the competitive healthcare marketplace. Both were lacking in the early 1990s when capitated lab services contracts hit the marketplace. To avoid deja vu, this generation of lab executives and pathologists must apply proven management tools to the pricing and selling of the emerging, added value, lab information products.

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