“March 27, 2000 Intelligence: Late Breaking Lab News”

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Will lab information system services be a value- added selling point for the national reference labs? Developments at American Medical Laboratories (AML) and Specialty Laboratories would indicate yes. First, AML entered a strategic alliance with Park City Solutions to develop e-commerce solutions targeted at healthcare and laboratory services. Now Specialty Labs has recruited Jack Redding and Charles Halfpenny away from Advanced Health Technologies (AHT, owner of Dr. Chart). Both companies are making substantial investments to develop Web-based lab services to offer to their hospital lab customers.


During the past 24 months, both AML and Specialty declared that web-based lab info services will be a strategic business priority. In contrast, not much is known about the plans of competitors Mayo Medical Laboratories and ARUP Laboratories. Expect all four reference labs to enhance their Internet services and offerings.


Don’t think that Medicare compliance will slacken anytime soon. A new audit by the OIG claims that Medicare overpayments to hospitals and other providers rose 7% in 1999, to $13.5 billion. This exceed the $12.6 billion of overpayments in 1998 (but was less than $20.3 billion in 1997). Nancy Dickey, M.D., immediate past president of the American Medical Association, issued a written statement that categorized the OIG’s audit as “irresponsible grandstanding.” She further declared that “Medicare hassles and overly aggressive billing audits are souring physicians on the Medicare program.”


Even as one department of the government was announcing that hospitals and other providers were overbilling Medicare, another was announcing that hospital profit margins declined during 1999. The Medicare Payment Advisory Commission reported that hospital pretax profit margins declined from 4.3% in 1998 to 2.7% in 1999. Last year was the first time in Medicare’s 34-year history that spending declined.


Now that drugmaker SmithKline Beecham PLC (SB) is merging with Glaxo Wellcome PLC, it no longer needs its Philadelphia headquarters. SB’s downtown headquarters building, with 1.1 million square feet, will be sold to a New York investment firm. Including its laboratory division, once based in the suburb of Collegeville, SB has been a major employer in the Philadelphia area. All that has changed in two years with Quest Diagnostics Incorporated’s purchase of SmithKline Beecham Clinical Laboratories and the SB merger with Glaxo Wellcome.


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