IS THE TIMING of the criminal indictments of three ex-UroCor executives going to be a fortuitous event for the anatomic pathology profession?
I ask this question because the exploding trend of specialist physician groups internalizing anatomic pathology services was slated to be the sole topic for this and the next issue of THE DARK REPORT. Moreover, both issues will be expanded because of the sheer volume of intelligence and information we will present to you.
Over the nine years that I have written THE DARK REPORT, only once was an entire issue devoted to a single topic. That was our coverage of how 9/11 caused massive disruption to clinical laboratory and blood banking services, and how the lab industry didn’t miss a beat in serving the American public.
Trend Toward In-House Path
Why, then, would we plan to devote two entire issues to the sole topic of specialist physician groups and how they are actively bringing anatomic pathology services into their groups? It’s because we consider this trend has the potential to be a serious threat to the long-term financial viability of the nation’s hospital-based pathology group practices.
These groups are the cornerstone of anatomic pathology services in their communities. If they lose the source of their high volumes of biopsies and other specimens coming from outside the hospital, many of these groups will be deprived of the financial and other resources necessary for them to sustain their important role as the laboratory medicine experts of each community.
I need to stress this point. The increased interest by specialist physicians to capture anatomic pathology revenues generated by their patients, if unchecked by other factors, has the potential to seriously erode the financial well-being of hospital-based pathology group practices. To properly inform and educate our clients about this trend, it will require at least two expanded issues of THE DARK REPORT, plus subsequent intelligent briefings as appropriate.
Clinical laboratory administrators also have a stake in this upcoming marketplace battle. I recommend they closely track the progress the phenomenon of specialist physicians capturing anatomic pathology revenues and its impact on local pathology groups. Remember, the introduction of molecular technologies into clinical diagnostics is going to tear down the traditional “Chinese Walls” that have long separated clinical lab testing operations from anatomic pathology (AP) services.
Instead, the knowledge and expertise of anatomic pathologists will be increasingly integrated with that of clinical pathologists, clinical chemists, medical technologists, and other skilled laboratory professionals. If a community loses needed expertise in anatomic pathology as a result of this trend, it will be that much more difficult for the local clinical laboratory to set up and offer molecular tests as they become available.
Now that you understand why we are taking the extraordinary step of preparing two expanded issues of THE DARK REPORT on this disturbing trend, I’d like to comment on the criminal indictments facing three ex-UroCor executives. As you may have already read, this is a significant event because it will probably trigger deep-reaching changes to some common laboratory sales and marketing practices.
But I think these criminal indictments may have another impact, one that is not obvious yet to many pathologists. UroCor served a specific market: urology. At its peak, it boasted that it provided diagnostic lab tests and AP services to more than half of the nation’s urologists.
As you will read in this issue and the next, of all the specialist physicians eyeing anatomic pathology as a source of ancillary revenue, it is urologists who are fastest at looking at the concept, then taking steps to create their own anatomic pathology laboratory.
These criminal indictments should prove chilling to any urologist who studies them carefully and has a candid discussion with his/her legal counsel. Here is the first instance of a federal attorney charging a laboratory—and its clients—for engaging in such practices as discounted pricing for lab tests and waiving charges to payers and patients if the lab is an out-of-network provider.
If UroCor’s activities are judged to be inducements and thus violations of Medicare anti-kickback laws, then some urologist-clients of UroCor during the year 1990-1999 are also guilty.
It is equally important that, for 20 years, Medicare regulators and the OIG have paid close attention to the possibility that laboratories may use a variety of techniques to induce business. The Stark Amendments further attempt to control a physician’s opportunity to profit from self-referrals.
A consequence of all this Medicare compliance scrutiny—and the $1 billion dollars paid by laboratory companies in the 1990s to settle allegations of Medicare Fraud and Abuse—is that laboratory executives and pathologists are keenly sensitive to the potential of many types of lab business transactions to cross the line and violate the myriad of Medicare compliance requirements.
It is unlikely that urologists, gastroenterologists, and dermatologists are as keenly attuned to the Medicare compliance pitfalls attached to laboratory testing operations. It might be a safe prediction for me to make that specialist physicians may yet find that operating an anatomic pathology laboratory entails much more risk, and malpractice exposure, than is justified by the profits they may earn from their in- house AP laboratory.
Criminal Case Is A Warning
It is for these reasons that I think the timing of the UroCor criminal indictments may prove to be a most fortuitous event for the anatomic pathology profession. Not only will it more sharply define what types of laboratory marketing practices may be considered inducements, but there is the possibility that some urologists, having received the benefits from UroCor’s discounted laboratory test pricing and the like during the 1990s, might in the future face criminal charges themselves, as the recipients of UroCor’s inducements.