Survival Essentials for Local Labs

IF THERE IS ANY SINGLE SIGN OF TOUGH TIMES FOR LOCAL LABS, it is decreasing access to patients due to the exclusionary contracting tactic of health insurers. That tactic is the subject of our lead story.

Unhappy with this tactic, a number of lab administrators and lab management consultants are starting to say: “I’m as mad as hell and I’m not going to take it anymore!”, just as the news anchor Howard Beale, in the 1976 movie Network, encouraged his listeners to shout from their windows.

I am moved to make that comparison because, here at THE DARK REPORT, we are hearing some lab managers and consultants who want the profession of lab medicine to better understand the back-room dealings done between private health insurance companies and some of the nation’s largest laboratories. These individuals are willing to share their knowledge of the inside deals being done that specifically exclude some of the nation’s finest local laboratory organizations from providing lab test services to patients in their communities.

In such managed care contracting situations, it does “take two to tango.” The health insurer has to be tempted by ever-decreasing lab test prices offered by the national labs in order to agree to exclude the toughest lab competitors of the winning lab company from the provider network. Moreover, that same health insurer must then take proactive steps to pressure physicians and patients to stay in network.

One question we are regularly asked by these lab managers is “at what point do these types of contracting arrangements cross the line and begin to violate federal and state antitrust and anticompetitive business practices?” That is a reasonable question, because often the line between legal and illegal business practices is unclear and government prosecutors are hesitant to pursue a case where the outcome in court has much uncertainty.

On the other hand, it was Supreme Court Justice Louis Brandeis who famously said that “Sunlight is the best disinfectant.” This is something to remember because a increasing number of lab consultants and lab executives with knowledge of these events are interested in having the full story told—not just to the profession of lab medicine, but to the legislators and government officials who, once informed of the situation, are in a position to correct the worst offenses. That would be a useful step forward in helping community labs across the nation.


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