“July 28, 2003 Intelligence: Late Breaking Lab News”

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In recent weeks, Quest Diagnostics Incorporated lost both a key executive and a major client. Vicki DiFrancesco, Vice President of Hospital Sales and Marketing, submitted her resignation earlier this month. She is leaving to pursue personal interests. DiFrancesco became part of Quest Diagnostics when it acquired American Medical Laboratories (AML) last year. AML had successfully captured many Quest hospital reference accounts and DiFrancesco had played a major role in that success. (See TDR, September 16, 2002.)

MORE ON: Quest

Within the past two weeks, one of Quest Diagnostics’ largest hospital reference clients decided to switch. North Shore Long Island Jewish Health System laboratories (NSLIJHS) inked a new reference testing contract with Mayo Medical Laboratories. This health system is one of the nation’s five largest, so the loss of prestige to Quest is probably as painful as the loss of referral testing and comes on the heels of DiFrancesco’s departure.

CMS AND PREMIER COLLABORATE ON PERFORMANCE PLAN

CMS (Centers for Medicare and Medicaid Services) has been authorized funding for a hospital “pay for performance” plan that relies on clinical data gathered and stored by Premier, Inc. Over the three-year life of this demonstration program, up to $21 million will be distributed to participating hospitals which score in the top 10% of quality in the five clinical areas of coronary artery bypass surgery, heart attack, heart failure, hip and knee replacement, and pneumonia. Premier’s “Perspective” clinical database will house the performance data.

ADD TO: Performance Plan

There is one controversial aspect to this performance- based incentive plan. That is CMS’s intent to assess penalties for low performers. To aid in recovering the cost of the demonstration program, CMS plans, in year three, to cut Medicare payments by 2% for the poorest performing hospitals that show no improvement and by 1% for the next 10% of lowest per- forming hospitals. For lab directors and pathologists, this demonstration project is evidence that more provider measurement programs are on their way. Both clinical laboratories and anatomic pathology group practices should watch these developments and prepare appropriate strategies to respond to these types of provider measurement programs.

ROCHE PAYS IGEN $1.415 BILLION IN BUYOUT

Roche Holdings will settle a six-year long patent infringement dispute by purchasing patent-holder Igen International, Inc. for $1.45 billion. Roche had lost the court battle and faced a $505 million judgement. The Igen patents affect Roche’s Elecsys/E170 diagnostics product line.

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