“May 17, 1999 Intelligence: Late Breaking Lab News”

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Maybe the clinical laboratory industry is finally getting its political act together. Last issue of THE DARK REPORT, we noted that the New York State Clinical Laboratory Association (NYSCLA) is working to get the New York Department of Health to issue an opinion as to whether “below-cost” lab contract pricing is an inducement under existing statutes. Now comes news that, on the West Coast, the California Clinical Laboratory Association (CCLA) is invoking a little-known provision of state law to request that the California Department of Health adopt a regulation to mandate the use of ICD-9 codes by prescribers. It would be good news for all labs should both trade groups prevail in their efforts and state regulators respond favorably on these issues.

Neuromedical Systems, Inc. (NSI), maker of PapNet, is the first casualty of the automated Pap smear technology wars. AutoCyte, Inc. confirmed this week that it’s acquired NSI’s intellectual property, including patents, from NSI’s bankruptcy action.

PREDICTION: MONEY WOES AHEAD FOR NATION’S HOSPITALS

Laboratories are not the only category of healthcare provider to be hit hard by Medicare reimbursement cutbacks. In the last 18 months, home health agencies, long term care facilities, and physical rehabilitation providers reported financial difficulties directly attributable to reduced Medicare reimbursement. THE DARK REPORT predicts that an increasing number of hospitals will soon begin reporting significant losses, as the impact of recent Medicare reforms works its way through the system. It may take another 24 months for a clear picture of deteriorating hospital finances to develop.

ADD TO…HOSPITALS
Any widespread deterioration of hospital finances will become a political hot potato because, unlike laboratories, hospitals have lobbying clout at the local, state, and federal level. However, until lobbying is under way, hospital laboratories will feel the full weight of any financial difficulties plaguing their institution.

Wonder what’s up with the impending acquisition of SmithKline Beecham Clinical Laboratories by Quest Diagnostics Incorporated? The comment period by antitrust regulators (Department of Justice and Federal Trade Commission) expired without action by either agency. Next step is a vote by Quest shareholders, scheduled to occur in early June. Indications are that Quest will become owner of SBCL on July 1, 1999.

$ How much do employers spend on employee healthcare and related issues? Over $8,600 per year, according to a national survey of 17 large employers, including Dow Chemical, Lucent Technologies, and Xerox. This number covers costs in 1997 for healthcare ($5,000), turnover ($1,900), unscheduled absences ($700), nonoccupational disabilities ($630), and worker’s compensation ($400). The survey was done by Medstat Group and the American Productivity and Quality Center.

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