THE DARK REPORT Honors Lab “Movers & Shakers”

Management leaders who are guiding their laboratories to uncommon success

CEO SUMMARY: It’s time again to recognize and honor the lab industry’s strong leaders in innovative management. These laboratory executives are implementing business strategies designed to position their lab organizations to serve the changing needs of the healthcare system. Their vision and willingness to “stay the course” are traits they hold in common.

IT’S BEEN FIVE YEARS since the first list of lab industry “Movers & Shakers” was announced by THE DARK REPORT.

It was a time when the lab industry’s brightest and most innovative leaders were generally unrecognized. It was also a time when the financial fortunes of laboratories throughout the country were ebbing to their lowest point. If ever there was a need for management heroes, it was certainly during the second half of the 1990s.

In creating the “Mover & Shaker” awards, THE DARK REPORT wanted to celebrate uncommon excellence in laboratory management. It also hoped to stimulate a higher level of debate about what constituted exceptional laboratory management.

Remember, the mid-1990s was a time when most public lab companies had either gone bankrupt or had merged, eventually forming the three blood brothers. Given the dismal performance of the executives who had run these companies, it could certainly be argued that the public sector of the lab industry lacked a management sophistication common in most industries outside of healthcare.

Within the hospital laboratory sector, one could find precious-little documentation to validate the claimed accomplishments of many high profile lab administrators who frequently spoke at lab industry meetings. Not coincidentally, many laboratorians attending such meetings became skeptical of unvalidated claims made from the podium.

That certainly contributed to a lot of healthy skepticism within the lab industry during those years. Then, in January 1997, THE DARK REPORT published its first “Movers & Shakers” honorees. That class of eight individuals set a high standard for others to follow. (See TDR, January 6, 1997.)

Included that year were Ken Freeman, Chairman and CEO of a Quest Diagnostics Incorporated, as well as Louis D. Wright, Jr., M.D., Chairman of what was then South Carolina-based Pathology Service Associates (PSA).

Five Years Of Growth

Since 1997, Freeman’s Quest Diagnostics Incorporated has acquired Smith-Kline Beecham Clinical Laboratories and become the world’s largest laboratory company, with more than $3 billion in revenues. Dr. Wright’s PSA evolved into a near-national pathology business organization, with pathology networks in 13 states serving 80 group practices and 400 pathologists.

Freeman and Wright are just two inspiring examples of how good management leaders, following a sound business strategy, can achieve consistent results. This was even more notable because they did it despite the radical reorganization and widespread financial woes that roiled the lab industry during the second half of the 1990s.

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Management Excellence

It’s an interesting anomaly that both the lab industry and the pathology profession have never pursued management excellence with the same vigor and enthusiasm as seen within other high-tech industries. In fact, there have been relatively few credible efforts to rigorously identify and study the management methods used by the lab profession’s most successful leaders.

That’s probably a result of the ample profits earned during the glory years of fee-for-service medicine. Since most labs enjoyed generous profit margins, there was little motivation to identify top-performing lab organizations and learn their management secrets.

If that was once true in the past, it is no longer true in the present. The ever-present economic squeeze on lab testing makes it essential that all labs and pathology group practices acquire and implement successful techniques of high-performance lab management.

It is in this spirit that THE DARK REPORT proudly recognizes this year’s list of lab industry “Movers & Shakers.” These individuals established high standards for their laboratories. They’ve accomplished uncommon results through their leadership, and vision. The performance of their labs is proof that good management does generate sustained financial stability and prosperity.

Kuo Cheng
Chief Executive Officer
Clinical Laboratories, Inc. Throop, Pennsylvania

YEARS AHEAD of its independent commercial lab peers, Clinical Laboratories, Inc. (CLI) introduced a viable Web-accessed lab test results reporting system to its physician office clients.

By most standards, CLI is a small lab company, serving the area around Scranton, Pennsylvania. But its accomplishments belie its small size.

Under the direction of CEO Kuo Cheng, it developed its own home-grown solution for Web-accessed lab test results reporting—and spent just $70,000! Early in 2000, CLI become one of the first labs in the nation to offer physicians the capability of retrieving their patients’ lab test results via wireless PDA units, such as PalmPilots.

As Cheng says, “The Internet levels the playing field and allows us to compete against bigger labs on more equal terms.” CLI’s willingness to invest in new lab information services is helping attract new physician-clients.

More importantly, under the leadership of Kuo Cheng and with the support of CLI’s Board of Directors, the lab company is demonstrating that even small laboratories can be innovative. Such labs, with limited access to capital and human resources, can succeed in implementing bold business strategies!

Marc Grodman, M.D.
President & Chief Executive Officer
Bio-Reference Laboratories, Inc. Elmwood Park, New Jersey

AT LAST YEAR’S Executive War College, there was quite a stir after Marc Grodman, M.D. spoke to senior execs gathered at the Lab CEO SUMMIT.

Dr. Grodman, President and Chief Executive Officer of Bio-Reference Laboratories, Inc., had just declared the most valuable business asset that a clinical lab possesses is its relationship with its office-based physicians. Further, he asserted, this asset was under assault by the multitude of e-health companies which wanted to interpose themselves between lab and doctor.

Under Dr. Grodman’s guidance, Bio-Reference is furiously investing to develop an array of information services, rooted in lab test data and utilizing Internet connectivity, to generate additional revenue from physicians, payers, and patients.

Innovation and “out-of-the-box” thinking are alive and well at Bio-Reference. The company is on a growth track and has introduced a number of new services and products to its base of clients.

The jury is still out as to whether or not physicians and payers will embrace these new services. Implementation of these ideas must also be deftly executed. But when compared to other lab organizations, Dr. Grodman and Bio-Reference are certainly blazing a new trail.

Joseph Halligan
President & Chief Executive Officer
PharmChem, Inc. Menlo Park, California

INTERESTING THINGS ARE AFOOT AT PharmChem, Inc. of Menlo Park, California, where President and CEO Joseph Halligan has been challenging conventional management thinking.

During 2000, PharmChem implemented the lab industry’s most progressive ASP-system (application service provider) solutions for drugs of abuse test ordering and results reporting. Via Internet access, clients can e-order tests. The system, with little human intervention, will arrange collection sites, ship necessary supplies, notify client and patient, track specimens, cue the medical review, report results, and generate an accurate bill!

Halligan’s goal is to use technology and work flow process redesign to eliminate errors and systemic “breakdowns” which affect customers and create waste. In effect, he’s moving his people to management tasks that generate higher value while using technology to improve services and reduce expenses.

There’s also an interesting twist to the Halligan story. He’s no stranger to chemistry laboratories. He was a principal at Fotomat, which, in its prime, processed tens of thousands of rolls of film every night. That’s one reason why, with his arrival at PharmChem in 1996, the company has enjoyed sustained growth.

David L. Schultz
President Clinical Pathology Laboratories, Inc.
Austin, Texas

HERE’S A “MOVER & SHAKER” who’s not well known on the national scene, but has widespread respect among lab competitors in his home state of Texas.

As President of Clinical Pathology Laboratories, Inc. (CPL) of Austin, Texas, David L. Schultz has presided over a solid decade of virtually unbroken growth in specimens, revenues, and net profits.

More importantly, he’s been willing to combine common- sense management with a willingness to implement unorthodox business strategies. As a result, CPL has become the major lab player in the Texas Hill Country area and is making steady inroads into nearby metropolitan markets like Dallas, Houston, and San Antonio. It’s a tightly-run operation with shrewd marketing programs supporting its sales effort.

By design, both CPL and David Schultz have kept a low profile within the laboratory industry. This is typical of many “Movers & Shakers,” since they are intensely focused on the performance of their lab organization.

However, it’s no coincidence that CPL not only weathered the turbulent financial storm of the 1990s, but found continuing prosperity. Under Schultz’ leadership, CPL’s sustained success validates the fact that “good management trumps all cards.”

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