DIANON Systems Nails Contract To Provide AP Services To Aetna

Success in earning provider status shows that pathologists can split AP from lab testing

Sand sales efforts paid off for DIANON Systems, Inc. of Stratford, Connecticut. Last month the publicly-traded lab disclosed a new contract with Aetna/U.S. Healthcare.

The pact, signed with Aetna and SmithKline Beecham Clinical Laboratories (SBCL), allows DIANON Systems “to provide anatomic pathology services to specialists through SBCL’s sole source arrangement with Aetna/U.S. Healthcare. The agreement initially covers Aetna members in HMO plans in three states: New York, New Jersey, and Pennsylvania.” DIANON also becomes a preferred provider for PPOs and indemnity plans in all states where Aetna operates.

A Major Accomplishment

For DIANON, this is a major accomplishment. The company invested significant management resources and money in marketing its services to Aetna/U.S. Healthcare during the last three years. Gaining provider status with national managed care giants like Aetna is critical to DIANON’s long term strategic business plan.

Although many local pathologists consider DIANON to be a competitor for biopsy business originating around their hospital campus, DIANON’s successes in gaining anatomic pathology carve-outs may eventually benefit the entire pathology profession.

Until DIANON’s success with Oxford Health Plans, Inc. and Aetna, managed care plans and HMOs invariably lumped anatomic pathology with laboratory testing and awarded that contract to a commercial laboratory.

Educate Contract Managers

DIANON now demonstrates that it is possible to educate ancillary contract managers and medical directors of managed care plans about the specific benefits of anatomic pathology (AP). As these managed care executives understand the differences between AP and laboratory testing, they are willing to unbundle the two services and con- tract for them individually.

In that regard, DIANON’s achievements with Oxford and Aetna make it easier for locally-based pathology practices to argue their case and gain a carve-out of anatomic pathology. But, for local pathologists to accomplish this goal, they will have to match one element crucial to DIANON’s success.

Simply put, local pathology practices will need to invest in a sales and marketing capability that will spend the time necessary to educate managed care executives about anatomic pathology. These sales and marketing people must also build a relationship with the HMO contract staff. Then, as contracts come up for renewal, the pathology practice has good prospects for splitting the anatomic pathology apart from the contract for laboratory testing.

Another important element supporting DIANON’s multi-year effort to gain provider status is its willingness to invest in converting raw lab test data into useful clinical and utilization information. DIANON’s product is called CarePath™.

Designed To Be Value-Added

At the 1998 Executive War College, Arthur Steinberg, M.D., DIANON’s Director of Medical Management, shared the workings of CarePath. It is designed to be a value-added benefit to physicians, patients, managed care plans, and even employers.

Aetna’s Chief Medical Officer, Arthur Liebowitz, M.D., actually singled CarePath out for recognition. “DIANON’s unique program includes [pathology sub-]specialists who are devoted to specific organ sites and Carepath, a highly enriched diagnostic information system which represents a valuable treatment tool for our member’s physicians.”

Dr. Liebowitz’s statement should send a message to the anatomic pathology community, as well as commercial laboratories. Information has value and can make one provider candidate more desirable than another.

Creating Attractive Product

At a time when many hospital-based pathology practices are still in a tizzy over how to respond to national pathology providers which print color pictures of the gross and micro on patient reports, DIANON Systems should get credit for creating an information collection-presentation product that two national HMOs find attractive.

This is an example of how the clinical marketplace “raises the bar” for customer service. It changes customers’ expectations about what is an acceptable level of service and what is not.

Clients and regular readers of THE DARK REPORT know that we are not afraid to take strong positions about where the clinical marketplace is head- ed. This story about DIANON’s success with Aetna/U.S. Healthcare vali- dates several predictions we’ve made, both on these pages and from podiums around the country.

First, managed care companies will separate anatomic pathology from the contract for laboratory testing…but only after pathologists have invested time in helping them understand what anatomic pathology is and how it can help the HMO improve patient care.

Information More Valuable

Second, information is more valuable than raw laboratory test data. UroCor and DIANON proved that clinicians prefer patient reports with color pictures of the gross and micro over those without. Now DIANON is demonstrating that information products that offer more than basic lab test data have value with managed care plans. Oxford and Aetna are examples of two recent “buyers.”

Third, number one and number two just don’t happen. It requires an investment of money, dedicated staff, and management commitment to take the time necessary to effect this change in the marketplace. DIANON, along with AmeriPath and Pathology Service Associates, are examples of pathology-based companies willing to put such money on the table.

As a result, it will be these types of companies which crowd local pathology practices out of the market, at least until local pathologists decide to make similar business investments in their own group practice.


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