“June 15, 1998 Intelligence: Late Breaking Lab News”

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Clinical laboratories continue to find their customers undergoing major consolidation. This time it involves two giants in long term care Health Care Corporation of Toledo, Ohio and Manor Care Inc. of Gaithersburg, Maryland are merging. The combined company will operate 292 long term care facilities, plus a large number of other healthcare facilities such as rehab centers, assisted living, and home health agencies. The new company will be called HCR Manor Care and will have revenues of $2.6 billion per year.

Expect more consolidation in the long term care industry as a result of Medicare reforms which become effective on July 1, 1998. In April, Paragon Health Network acquired Mariner Health Group Inc. to create a $3 billion per year LTC giant. The three national labs are already downsizing or eliminating their long term care testing programs. But many regional laboratories still consider long term care to be an important source of business.


Physician Solutions, Inc. has a new name and new corporate headquarters. The pathology-based physician practice management (PPM) company will be called Pathology Partners, Inc. As of June first, its corporate offices were relocated from Nashville to Irving, Texas, near Dallas.

Here’s welcome news for any clinical laboratory or pathology practice struggling to create the documented procedures necessary to meet a variety of regulatory requirements. The Technical Communication Program at the University of Colorado in Denver is offering to evaluate, at minimal cost, documentation provided to it by laboratories. They will test the documentation for comprehension and usability. Contact Professor James F. Stratman for details: 303-556-2884; email: jstratma@carbon.cud enver.edu.

As predicted by THE DARK REPORT, the lobbying clout hospitals have with Congress is getting results unattainable by the clinical laboratory industry. On June 5, June Gibbs Brown, inspector general for the Department of Health and Human Services, wrote a letter to U.S Representative Ron Klink, from Pennsylvania. In the letter, Ms. Brown states that the inspector general “will establish minimum monetary thresholds and/or percentage error rates” for each national investigation involving a specific procedure, such as pneumonia or lab tests.

This is the first concession by government regulators that “honest billing errors” should be recognized and factored out of Medicare fraud and abuse investigations. There is still plenty of disagreement about how to specifically implement such guidelines. But the acknowledgement by the government is a clear response to lobbying efforts by the hospital industry. The clinical laboratory industry was never successful in lobbying Congress for relief on fraud issues relating to laboratory billing practices.


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