Why Pathologists Benefit from Growth of In-Office Path Labs

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Dear Editor:
Your article on the trend of office-based physicians building in-clinic anatomic pathology laboratories was fascinating, but in my opinion, it was off the mark.

In the article, “AP Labs in Doc’s Clinics Now an Established Fact” (See TDR, September 6, 2011), you wrote that the growth of In-clinic pathology labs is disrupting community hospital-based pathology groups. Yes, this trend is disruptive because, as you correctly point out, in-office anatomic pathology laboratories do capture lab test volume from community pathology practices. While it may appear that this trend is bad for pathologists, in fact, the opposite is true.

Perhaps you believe the tales of woe coming from some pathology associations and large specialty pathology firms such as AmeriPath, GI Pathology, and Aurora Diagnostics. If so, you may be interested to learn that the real story is a bit more complex than they say.

In reality, local hospital-based pathologists have been taking it on the chin for many years because urologists, gastroenterologists, and other specialists have left hospitals to open ambulatory surgery centers (ASCs) that compete directly with hospitals. Seeing an opportunity, entrepreneurs jumped on this trend and started specialty pathology labs to process specimens from these ASCs. The early entrants to this field were AmeriPath and Bostwick Labs.

National lab companies like these were nimble new entrants into specialty pathology. Hospital-based pathologists were left out because they lacked sales teams, data systems, and couriers. Instead, they were often stuck inside the hospital—unable to respond to the needs of these potential clients. Plus, hospital administrators had little interest in serving non-patients just to keep pathologists happy.

But then local physicians started in-office pathology labs, and a new opportunity was born. I would assert that the specialist physician owners of these in-office labs were not the only the big winners. Local hospital-based pathologists also benefit because the national specialty pathology labs cannot compete in this market. They cannot make money providing a local pathologist who will work part time at an in-office lab. Instead, the money specialty pathology labs once made on the technical component (TC) of anatomic pathology is now flowing to in-office pathology labs and it is the national specialty labs who howl in pain.

Hospital Pathologists Benefit

Local hospital-based pathologists are benefit- ing from this trend because they can go to work for these in-office pathology labs and bill
for the professional component (PC). In a hos- pital, they get none of the billed TC. At most in-office pathology labs, pathologists are paid essentially the Medicare professional fee less the practice expense portion of that fee because they did not build the lab. The volumes are significant, there is no competition, and the in-office labs pay the pathologists directly. The pathologists avoid the billing expense and have flexible hours.

All this is good news for the local pathologists working in these in-office labs. That’s the trend that was left out of your story and it’s one that many of your readers would be glad to discuss with you.
Yours truly,
Joe Plandowski
Editor: Joe Plandowski is one of the founders of In-Office Pathology (www.iopathology.com) in Lake Forest, Illinois. Contact him at 800-280-3785 or iopath@bex.net.

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