Reading the Tea Leaves from 2010’s Events

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EACH YEAR WHEN WE PRESENT OUR “Top Ten Lab Stories” for the year, I am always surprised at which forces for change emerged during the prior 12 months. In presenting THE DARK REPORT’S “Top Ten Lab Stories for 2010,” our editor has pointed out that four of these ten stories involved the federal government in some form or fashion.

That is an interesting observation. It implies that, particularly compared to earlier years, the laboratory testing industry and healthcare in general will feel immediate effects from federal government policies and regulation, as well as the reimbursement levels voted annually by Congress. In my view, this is a major difference from earlier years.

For example, in the second half of the 1990s and the first half of the 2000s, I would say that THE DARK REPORT’S list of “Top Ten Lab Stories” for each year was generally heavily influenced by the activities of the two blood brothers and the Wall Street investment community. Certainly, the way both Quest Diagnostics Incorporated and Laboratory Corporation of America regularly scooped up the second tier laboratory companies as they came to market has shaped and altered the competitive marketplace for laboratory testing services. That acquisition activity has diminished somewhat in recent years, primarily because this consolidation wave left few independent lab companies to be acquired.

However, I cannot recall a year prior to 2010 when federal government activities made up as many as four of THE DARK REPORT’S “Top Ten Lab Stories” list. Just in the past 12 months, the feds have passed a major health reform bill that will enact major changes in each of the next eight years, the “meaningful use” rules that will guide how 480,000 physicians adopt EMRs in the next few years were published, the FDA is prepared to regulate LDTs, and a federal judge has ruled against patents for gene isolation and/or purification. Collectively, these four developments have the potential to trigger significant changes in how clinical laboratories and pathology groups con- duct their business and get reimbursed for their lab testing services.

It is a fact that state and federal budgets are under unprecedented stress—pressure probably not seen since World War II. That makes it easy to predict that our federal government will probably be the most influential change agent on the American healthcare system in the next few years. Whether this turns out favorably for pathology and lab testing remains to be seen.

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