INTRODUCTION: To celebrate five eventful years of service to the laboratory industry and pathology profession, THE DARK REPORT is pleased to present its first “White Paper” on the laboratory industry. Our goal is help laboratories and their suppliers accurately identify relevant market dynamics and understand how and why these market forces will affect the stability and financial fortunes of laboratories during the first 24 to 36 months of this new decade.
IN THE FUTURE, I BELIEVE the year 2000 will be seen as a pivotal time for the clinical laboratory industry and the pathology profession.
Calendar year 2000 is a theater curtain separating us from the tumultuous decade of the 1990s and focusing our attention on the exciting opportunities predicted for medicine during the first decade of the new century.
Whereas the 1990s were a time of consolidation and cutbacks across the laboratory industry, expect the first decade of the 2000s to be a time of relative growth and prosperity for clinical laboratories and the anatomic pathology profession.
I am among those who agree that a flood of new technologies will find direct application in diagnostic testing. But I am not a Pollyanna. Serious obstacles lie ahead for the laboratory industry. Market trends rooted in the 1990s will continue to challenge lab executives and business-minded pathologists.
Effectively, this means that lab managers must continue to develop viable business strategies for their laboratory organizations. These strategies must address and solve such market- place pressures as: 1) the need to continuously reduce the cost of laboratory testing; 2) coping with inadequate lab testing reimbursement; 3) improving the productivity of medical technologists and laboratory instruments; 4) increasing the added value of lab testing for physicians, patients, and payers; and 5) meeting the demand for enhanced laboratory informatics products and services by lab users.
The goal of this White Paper is to identify and articulate the fundamental factors currently at play in the competitive marketplace for laboratory testing services. This includes hospital labs as well as commercial labs. It is my belief that, at the local level, the trend of lab regionalization will increasingly blur traditional differences between hospital labs and commercial laboratories.
This White Paper offers basic premises about the organization and management of laboratory organizations in the United States. It includes a retrospective look at key market trends of the 1990s and the lab industry’s failure to respond effectively to those trends. Management lessons learned (and not learned) during the 1990s will continue to have relevance during the 2000s.
I would like to be clear on one point. This White Paper is not a prediction of the long term future of the lab industry. There are plenty of experts writing “what if” pieces’ about our future.
Rather, the emphasis on this White Paper is squarely on the “here and now.” It is about marketplace dynamics and healthcare trends directly influencing the organization of laboratories and the way they are operated. Stated another way, this White Paper is intended to help people managing laboratories and pathology group practices understand why some lab business models are successful and why others are failures.
Each chapter in this White Paper deals with a specific topic in laboratory management. Chapter One discusses the general business premises that characterize the laboratory industry. Chapter Two identifies key strategic business failures of the 1990s. These help us understand why the lab industry continues to be challenged to implement effective responses to healthcare forces and trends still shaping the market for laboratory testing services.
Laboratory Industry White Paper Topics
This White Paper is organized into four chapters:
Different Testing Segments
Chapter Three provides an overview of the different testing segments that make up the American laboratory industry. Chapter Four is a summary and overview of the laboratory industry. It attempts to “connect the dots” and give a fuller picture of what the laboratory industry is today and how it will evolve during the next 24 to 36 months.
Having taken on the difficult, if not impossible, job of evaluating the laboratory marketplace and its relationship to a changing healthcare system, I welcome comments and input from our clients and regular readers. The best of these responses can be printed in future issues of THE DARK REPORT. My hope is that this White Paper stimulates positive dialogue among your lab’s executive team.