CEO SUMMARY: For the past 14 years, a non-pathologist entrepreneur has enjoyed a growing business in offering autopsy services to clients willing to pay out-of-pocket. By design, the business is limited to the Southern California region. But demand in that region is enough to regularly engage the autopsy services of six pathologists. Here’s a look at the key strategies that support this business concept.
OVER THE PAST DECADE, autopsies became a casualty of managed care’s cost-cutting mentality. With few private payers willing to reimburse for autopsies in most situations, the pathology profession shifted its attention to other health services.
Despite the impact of managed care, however, the private pay market for autopsies can be accurately described as “alive and well.” However, few in the pathology profession consider the unmet demand for private-pay autopsies to be a business opportunity. Evidence points to the contrary.
One example is entrepreneur Vidal Herrera. During the past 14 years, his Los Angeles-based business, 1-800-AUTOPSY, has performed thousands of autopsies, primarily in the Southern California area. A non-pathologist, Herrera sustained a career-ending major back injury while working as a Field Deputy Coroner for the Los Angeles County Chief Medical Examiner.
Following his injury, Herrera knew he wanted to continue his career in
forensics. 1n 1988, he founded 1-800-AUTOPSY to provide autopsy services primarily to private-pay clients and hospitals that needed his assistance in performing autopsies.
Without a formal marketing program, Herrera’s autopsy business grew steadily. “Currently we complete between 400 and 600 procedures each year,” stated Herrera. “About 90% of these are autopsies and the balance is mostly procurement and/or retrieval of tissue and organs. We typically charge a total of between $2,000 and $3,000 for an autopsy.
“Our customer pays the pathologist who performs the autopsy directly,” he added. “The fee collected by 1-800- AUTOPSY averages between $1,300 and $1,500. For this, we arrange a site and a pathologist to perform the autopsy, take photographs, collect body flu- ids, arrange for X-Rays, deliver the final report, and coordinate transportation of the body, as necessary. We do not bill insurance companies. In general, Medicare and most payers consider an autopsy procedure to be unnecessary.”
Herrera, President of 1-800-AUTOPSY, says the demand for autopsy services is substantial. “Our telephone starts ringing as early as 5:00 o’clock in the morning as people on the East Coast call us. Phones continue to ring late into the evening,” he said. “Many of our callers are family members of someone recently deceased. For a variety of reasons, they want a medical opinion as to the circumstances of death. Interestingly, concerns about medical malpractice are a major factor in many autopsy requests.”
In fact, by his own estimate, Herrera estimates that he only provides autopsy services to less than 10% of the requests fielded by his company.
The decline in the number of autopsies done annually in the United States provides insight into the demand which sustains Herrera’s business. “In the United States, as recently as 1970, the autopsy rate for all deaths performed at no cost to the family was 50%,” he observed. “Today, an autopsy is performed on less than 3% of deaths nationally. Because of changes in health insurance guidelines during this time period, there is virtually zero funding to pay for autopsies performed in hospitals.”
Even though insurance reimbursement for autopsies has evaporated, the legitimate need for autopsies continues. Herrera says there is one primary reason that family members are interested in paying for autopsies. “Not surprisingly, most requests are related to concerns about malpractice,” he observed. “That’s not to say they all end up in litigation, but the interest in having answers spurs many calls.”
1-800-AUTOPSY has grown between 10% and 15% annually. Its annual revenues reach into the high six figures, independent of the professional fees directly paid to pathologists who perform the autopsy procedure. Six pathologists perform the majority of procedures for 1-800-AUTOPSY. Five are full-time, hospital-based pathologists.
Pathologists associated with 1-800-AUTOPSY must be willing to work on call. “We get many requests from pathologists to do autopsies for our company,” explained Herrera. “But most of these physicians only want to work on a certain day between certain hours. Unfortunately, that is not possible in this business. I tell them ‘there are no appointments for death. When death happens, our physicians must respond, regardless of the time of day.’ That requirement dissuades many pathologists interested in doing work for us.”
Travel is another barrier to the expansion of Herrera’s business. “In general, our pathologists charge $200 per hour for their services. We restrict our travel and find it less expensive to ship bodies to us than to travel outside the state to perform an autopsy,” he stated. “But the downside to that is we lose lots of business because we do not have the ability, in regions outside of Southern California, to do autopsies.”
Plenty Of Requests
In fact, by his own estimate, Herrera estimates that he only provides autopsy services to less than 10% of the requests fielded by his company. “Daily we get calls from all over the United States. At this point, we turn down nine of every ten requests, primarily because we decline to travel outside our service area to perform the autopsy,” he noted. “But I want to point out that, even in declining this work, we have grown between 10% and 15% per year for more than a decade. That shows how much opportunity exists in the private-pay autopsy field.”
To meet this unrealized business opportunity, Herrera is developing a franchise program. The goal would be to replicate the Los Angeles-based 1-800-AUTOPSY operation in other cities. Primary candidates for franchising are not pathologists. They are pathology assistants, autopsy technicians, and funeral directors/embalmers. “Physicians tend to be motivated in their practice of medicine,” explained Herrera. “In contrast, pathology assistants already tend to be organizers and have a knack for orchestrating the needed services between families and pathologists performing the autopsy.”
Within the academic medical com- munity, there is recognition that Herrera is keeping a “dying art” alive. “Each year, as new residents begin pathology rotation, I am often asked to demonstrate proper classic techniques for performing physical autopsies to the first-year residents,” explained Herrera. “I do this for the medical programs at USC, Cedar-Sinai Medical Center, and for the Veterans’ Administration in West Los Angeles and Long Beach.”
Herrera is committed to the field of forensics. He is considering launching a school or academy in thanatology (the medical and legal study of death and the conditions affecting dead bodies). This year he helped three people enter the field of forensics.
From the perspective of THE DARK REPORT, Herrera’s success with 1-800-AUTOPSY provides at least four important insights. First, the 14-year life of the company and its steady growth demonstrates the substantial and unfilled demand for private pay autopsies.
Second, his business was built up through word of mouth, without the professional sales and marketing campaigns typically used to develop new business and fuel revenue growth. This is evidence that the autopsy market has substantial unfilled demand and virtually no viable competition.
Third, the large and ongoing volume of autopsy requests received by 1-800-AUTOPSY that originate from outside its Southern California service area provides compelling evidence of a sizeable market with unmet needs. The fact that families, physicians, and attorneys from throughout the United States seeking autopsy services can find 1-800-AUTOPSY on their own and call it with a request is remarkable. It is a potent validation of a market opportunity that the pathology profession continues to overlook.
The fourth insight involves the reluctance of pathologists to take a leadership role in businesses based on pathology services and laboratory medicine. 1-800-AUTOPSY was founded by a non-pathologist. In its 14-year life, no pathologists played a critical role in financing the business, providing guidance at the board of director level, or served on its executive team.
Notwithstanding the personalities of the principals of this business, certainly the professional skills of board-certified pathologists could have advanced this business model in many useful ways. Alternatively, in observing the growth of this business, no pathologist in Southern California decided to develop a competitive business to 1-800-AUTOPSY.
This mirrors the similar absence of pathologists at the highest levels of the remaining large laboratory companies. For many reasons, the business spirit and initiative that marked the pathology profession during the 1970s and 1980s has become nearly extinct.
Popular Forensic Television Shows Use Herrera’s Lab Facility for a Backdrop
HAVING BUILT A STATE-OF-THE ART autopsy facility, 1-800-AUTOPSY fell victim to a bureaucratic mistake which led to its starring role in several forensic television shows.
Following the purchase of a building, the City of Los Angeles issued eight permits to allow 1-800-AUTOPSY to upgrade it to modern standards with the stated purpose of performing autopsies. Two weeks prior to the completion of renovations, the city realized it had made a major mistake. The area where the building is located had been rezoned five years prior and its use for autopsies violated the current zoning. It successfully blocked 1-800-AUTOPSY’s use of the building for that purpose.
With its building turned into a lemon, Vidal Herrera, President of 1-800-AUTOPSY, filed a lawsuit for damages against the city. However, the opportunity to make lemonade from the “lemon” building arrived from an unlikely source: Hollywood!
Some of the hottest television shows today involve forensic science. Hollywood producers called 1-800-AUTOPSY looking for an autopsy laboratory that could be used as a set. As it turned out, the equipment in the laboratory was also needed for filming.
Studios like Sony, Warner Brothers, and Universal have used the 1-800-AUTOPSY building for television programs like: CSI, CSI Miami, Crossing Jordan, Boom Town, and Dragnet. In addition, The Discovery Channel did segments with a doctor affiliated with Herrera, including a review of Marilyn Monroe’s death, an analysis of shark bites, and a review of Princess Diana’s autopsy reports and her death.
“It was a surprise to experience the glamour that television now associates with forensics,” stated Herrera. “However, it is frustrating that we have this well- designed laboratory for performing autopsies and a bureaucratic mistake by the city prevents us from using it for its intended purpose.”
Entrepreneurs in Pathology
Unlike those decades, when individual pathologists and groups were willing to invest time and capital to launch businesses that expanded clinical laboratory services in their community, in this decade, little entrepreneurship within the profession has been forthcoming.
Thus, full credit should be given to Vidal Herrera for recognizing the opportunities in forensic pathology. His success with 1-800-AUTOPSY should inspire more pathologists to pursue the entrepreneurial path.
Power of Internet To Build Case Volume
ONE BUSINESS LESSON to be learned from 1-800-AUTOPSY is the power of the Internet to attract customers for a pathology-based business.
1-800-AUTOPSY President Vidal Herrera admits that his business does not maintain an aggressive marketing program. Further, its services are limited primarily to Southern California. Despite these facts, Herrera receives telephone calls daily with inquiries and requests for autopsies from people throughout the United States.
For the most part, it is 1-800-AUTOPSY’s Web site which educates people about its services and provides contact information. The Web address is : www.1800autopsy.com.
