Pathology Boot Camp to Address Three Trends

Challenges for anatomic pathology groups include pricing, competition, and technology

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CEO SUMMARY: Anatomic pathology groups across the nation must develop effective strategies to address challenges in pricing, intensifying competition, and expensive new technologies. That’s the assertion of three pathology practice administrators who have organized a boot camp in Dallas next month specifically to train other practice administrators and managers. This event will provide administrators from any size pathology group with useful skills and insights.

AS A PROFESSION, anatomic pathology (AP) is under siege. The nation’s 3,300 independent pathology group practices face challenges on several fronts—each of which eats away at the financial viability of the private practice model.

To answer these threats, next month a special training session for pathology practice administrators will provide knowledge and expertise on how to respond to these trends, so that pathology groups can prosper in tough times. The event is the “APF Pathology Practice Managers’ Boot Camp 101: Elements of a Successful Practice.” It will be conducted on November 6-7 in Dallas, Texas. This event is organized by the American Pathology Foundation (APF).

Intrigued, THE DARK REPORT contacted the event organizers to learn more about current trends threatening pathology groups and what types of business strategies will be discussed at the upcoming boot camp. Sessions will be led by three accomplished pathology practice administrators. They are Krista Crews, Executive Director, of ProPath in Dallas, Texas; Tricia Hughey, CEO, of UniPath, LLC, in Denver, Colorado, the largest pathology practice in the Rocky Mountain region; and Lance Beard, Administrator, Pathology Associates of Corpus Christi, LLP, and HistoPath, Inc., in Corpus Christi, Texas.

Fierce Competition In AP

“Competition is fierce in pathology,” noted Crews. “Referring physicians want pathologists to deliver greater service, higher quality, and faster turnaround times. It is incumbent on every pathology group practice to understand three marketplace trends. First is pricing and how it supports a profitable pathology practice. Second is the arrival of new technology and how it is transforming work flow and clinical services in anatomic pathology. Third is how to respond to ever more intense competition for AP specimens.

“Many pathology groups today lack sufficient resources on the business side,” added Crews. “Too often, a pathology group addresses business issues by assigning the most business-savvy pathologist in the group to handle those tasks. But if that pathologist doesn’t have adequate time to devote to the business concerns of the practice, then his or her pathology group will lose ground in the marketplace.

Pathologists Need To Invest

“Pathologists must be willing to invest in the business side of their practices,” she continued. “Doing so allows them to compete with aggressively-priced competitors, even as they deploy new technology to make their group a tougher competitor.

“To me, the most important trends today are pricing, technology, and competition, as I noted earlier,” noted Crews. “On pricing, pathology groups are squeezed every time they renegotiate a contract, especially from the bigger healthcare payers.

“There are fewer payers because of consolidation and each payer asks the same question: ‘Why should I pay your pathology group more for this particular test when I can get it for less from LabCorp or Quest Diagnostics?’ asked Crews. “That’s a tough question to answer, meaning the challenge for pathologists is to justify rational reimbursement.

Emphasize Important Codes

“In negotiating managed care contracts, pathologists need to work to get away from tying all pricing for pathology serv- ices to a government price schedule, such as from Medicare,” she explained. “You can work against that trend by carving out the eight, ten, or more codes that are most meaningful to your individual situation. Negotiate those codes at specific rates with each of your payers. Then get whatever reimbursement you can on the remainder of the codes. Put the 80/20 rule to work on your behalf by getting 80% of your rev- enue from those 20% of codes that are the most important ones to your group.

“To make this strategy successful, your pathology group must know its workload,” noted Crews. “The information you need comes from your billing system. If it is done right, then you know the specific codes worth fighting over, such as 88304, 88305, and 88342, and codes for immunostains. Every pathology group has this information. It’s time to use it. “The second trend is technology, particularly the use of information systems,” Crews said. “To be successful in today’s market, a pathology group must deliver results quickly and accurately. This requires the pathology practice to have the proper electronic links with its referring physicians, and that costs money. Maintaining a high level of service and offering current technology are the cornerstones of your group’s successful response to competitors.

A Relationship Business

“Historically, pathology was a relationship business. But it is now much less of a business built on personal relationships because of the growth of managed care, the development of national labs, and the commoditization of lab tests,” she added. “Your pathology group’s referring physicians may love you because of your quality results and great turnaround time (TAT), but that still may not be enough to maintain the relationship when competitors’ sales reps call on your client physicians.

“Your competitors’ TAT may be slower than your group’s TAT,” she explained. “But even if they are slower, they’ll win if they deliver test results directly into the clinician’s electronic medical record (EMR) system and make the process easier for the referring physicians’ office.

“The third trend is competition,” observed Crews. “Pathologists today have all kinds of non-traditional competitors, both regionally and nationally. This change in the competitive landscape occurred because overnight delivery services and electronic reporting now allow any pathology group to receive specimens from all 50 states and efficiently deliver test reports back to the referring physicians.

“There is also competition from those physicians who are not pathologists, such as urologists, gastroenterologists and dermatologists,” continued Crews. “Many of these specialists are developing anatomic pathology as an in-office ancillary service.

“In recent years, these physicians have banded together into bigger groups with many more doctors. That gives these consolidated regional ‘super practices’ large volumes of patients, more tools, and more business resources than local pathologists. In these situations, long-term relationships and the pathologist’s quality won’t be sufficient to allow local pathologists to retain the business.

“Let’s face it, many labs have sales people moving into our territories, but it’s not simply the presence of sales people that should cause the worry,” she explained. “You have to worry when they offer services that you don’t offer. If you’re in a large market where there is good transportation, be prepared for regional and national competition. Transporting specimens is easy in anatomic pathology.

“So, your group must focus on the service and convenience of delivering your results,” she continued. “You may be the best in scientific quality and have fast TAT, but if an out-of-area competitor can match you on quality, can also get close on TAT, and delivers automated results with an easier-to-digest report, you will probably lose that account.

“Another aspect of technology relates to rapid advances in the digitization of pathology images and the move toward fully digital systems in anatomic pathology,” advised Crews. “Pathologists need to stay in the driver’s seat about how and when to deploy this new technology.

“Further, it is important to understand the inherent competitive downside of not using these new technologies,” observed Crews. “If a pathology group can understand how an investment in these systems will pay off by making their pathology group a more effective competitor in the market, then that group will be well ahead of the curve.

Embrace New Technology

“The pathology profession needs to embrace technology and constantly look for ways to use new innovations to improve processes and cut costs,” she explained. “For example, bar code technology can streamline and automate lab processes and help eliminate errors. In the traditional histology laboratory, much of the work processes are manual. Our lab implemented bar codes in histology and that has helped us to achieve greater throughput without adding more staff or other resources.

“In fact, ProPath grew its business 30% to 40% directly as a result of these operational improvements,” observed Crews. “Throughput was made better and more reliable by automating processes and replacing our manual reading of labels with automated reading of labels.”

At the upcoming pathology administrator’s boot camp, each of these three topics: pricing, technology, and competition, will be addressed during the two day conference. Organizers of this special training note that there is swift and ongoing transformation taking place in the anatomic pathology market. Competitive forces set in motion during the 1990s have accelerated during this decade. For example, during the 1990s, such companies as Dianon Systems, Inc.; UroCor, Inc.; and Impath, Inc. established themselves as national laboratory companies and began sending sales reps into local communities across the country to solicit specimens and case referrals.

More Competitors

During that decade, these three companies posted rapid growth rates in specimen volume, revenue, and net profit. Watching from the sidelines were the two blood brothers and Wall Street. By the end of the decade, both Laboratory Corporation of America and Quest Diagnostics Incorporated had developed primary strategies to expand their presence in the anatomic pathology marketplace and investors were funding new companies specifically to compete for anatomic pathology specimens.

Since 2000, the anatomic pathology marketplace has become crowded with a host of new and different competitors. This has placed many private pathology practices under great financial stress, as competitors siphoned away specimens referred by physicians who had been loyal to their local pathology group for decades.

An Unusual Opportunity

THE DARK REPORT observes that it is both unusual and overdue for pathology practice administrators from three thriving pathology “supergroups” to share their insights, knowledge, and experiences in a conference such as the Boot Camp 101. Their perspectives on how to turn the pricing tables on payers, ways to use technology to expand market share, and how to meet and beat AP competitors are likely to make this APF practice administrators’ boot camp a unique learning opportunity.

Pathology Practice Administrators To Learn Business Strategies at APF’s “Boot Camp”

IT WAS FRUSTRATION at the lack of opportunities for pathology practice administrators to get practical, effective knowledge and training that inspired the upcoming American Pathology Foundation’s “Pathology Practice Management Boot Camp 101: Elements of a Successful Practice,” to be held in Dallas, Texas, on November 6-7, 2008.

“Our goal is get back to the basics,” stated Lance Beard, Administrator at Pathology Associates of Corpus Christi, LLP, and HistoPath, Inc., in Corpus Christi, Texas. “Administrators will acquire a detailed understanding of national, regional, and local trends. They will then develop effective strategies and action plans that are appropriate to their pathology groups’ particular needs and situations.

“We saw the need for a forum designed expressly for pathology practice administrators,” added Tricia Hughey, CEO of UniPath, LLC, in Denver, Colorado. “We all have similar concerns, confusions, challenges, and complexities in our respective groups. The boot camp gives us a chance to learn from within and then return to our practices better armed and fully engaged in a bi-directional network of peer mentorship.

“Those attending the boot camp will leave with specific knowledge about what is required to run a successful practice, how to assess their situation, and how to develop a plan,” observed Krista Crews, Executive Director, of ProPath in Dallas, Texas. “It can’t give every attendee answers to all questions because each market is different. But this boot camp will give them: 1) the tools to know where to look for answers; 2) what it takes in their market to be successful; and, 3) how to develop a plan that helps their group achieve financial and clinical goals.”

For registration information and to download a brochure on the APF Boot Camp visit the APF’s Web site at www.apfconnect.org.

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