CEO SUMMARY: Laboratory medicine is about to find itself between the two jaws of a powerful vise. One jaw is pending major legislative overhaul of the entire healthcare system, along with dwindling reimbursement as Medicare and Medicaid runs out of money. The other jaw is personalized medicine, companion diagnostics, and expensive molecular testing. As these jaws squeeze tighter, clinical laboratories and anatomic pathology groups will need effective response strategies.
PERSONALIZED MEDICINE may represent the single most disruptive force facing both healthcare and laboratory medicine today. But that’s just one of several highly disruptive developments that need to be tracked by pathologists and laboratory managers.
The short list of pending disruptors might include the major healthcare reform legislation that continues to show signs of life in Congress; the predicted tidal wave of physician adoption of electronic medical record (EMR) systems in response to federal incentive payments; and the need for labs to offer genetic and molecular test technologies which are more complex and expensive.
Increased Pace Of Change
Collectively, these disruptors portend an increased pace of change, along with the need for clinical laboratories and anatomic pathology groups to be nimble in their responses. To inform and educate pathologists and laboratory executives about the threats and opportunities associated with these powerful and disruptive forces, special sessions and presentations will take place at the upcoming 15th Annual Executive War College on Laboratory and Pathology Management. The event takes place on April 27-28, 2010 in New Orleans at the Sheraton Hotel.
Personalized medicine as a disruptor will be addressed by several experts. At UCLA Medical Center, the pathology group and the radiology group created a joint venture and earlier this year opened what might be the nation’s first purpose-built integrated imaging/pathology service center for patients.
During a single visit, a patient can get all needed imaging studies, along with location-guided biopsies. Within 48 hours or less, the UCLA pathologists and radiologists deliver the single, integrated diagnostic report to the patient’s physician.
Scott Binder, M.D., Senior Vice Chair, Pathology and Laboratory Medicine, will be at the Executive War College to discuss this innovative effort to deliver an integrated, personalized medicine service that combines in vivo and in vitro diagnostics. Of equal interest is the fact that the business plan for UCLA’s pathology and radiology joint venture projects millions of dollars in new case referrals as physicians take advantage of a “one-stop” integrated diagnostic service for the specific types of cancers involved in the joint venture.
Reshaping Lab Medicine
For a strategic look at how personalized medicine, companion diagnostics, informatics integration, and evidence-based medicine (EBM) will reshape healthcare and laboratory testing, two speakers will offer informed perspectives.
David King, CEO of Laboratory Corporation of America, will take attendees “behind the scenes” with insights as to how employers, payers, and the pharmaceutical industry are using laboratory test data in innovative ways. He’ll offer the likely evolution of laboratory testing as companion diagnostics incorporates rapid, multi-analyte molecular testing into care pathways.
Equally powerful insights on the transformation of anatomic pathology will be the theme of Thomas Grogan, M.D., Founder and Chair Emeritus at Ventana Medical Systems, Inc., of Tucson, Arizona. Clients and regular readers of THE DARK REPORT will recall that Ventana, with annual revenues of $290 million, was acquired by Roche Holdings in early 2008 for a purchase price of $3.4 billion. (See TDR, July 16, 2007.)
Anatomic Pathology’s Future
The premium price Roche paid for Ventana was an early example of how pharma companies will pay substantial amounts of money to buy and control biomarkers that would be useful as companion diagnostic tests for their therapeutic drugs. Grogan will address this subject, and provide detailed perspectives about how a variety of technologies are likely to reshape anatomic pathology—ranging from multi-analyte molecular assays and rapid sequencing to automation of tissue processing and analysis and digital pathology.
Turning to digital pathology and its potential to disrupt the nation’s existing network of private pathology practices, Ajit Singh, Ph.D., CEO of BioImagene, Inc., of Sunnyvale, California, will discuss this topic. Before coming to BioImagene, Singh was CEO of the Image and Knowledge Management Group of Siemens Healthcare, based in Erlangen, Germany.
Thus, Singh is able to provide pathologists and laboratory executives with unique insights about how digital pathology is likely to transform surgical pathology and shift case referral patterns. He will also discuss the expected points of interaction and integration between radiology and pathology, based upon wider adoption of digital pathology images.
Shifting from strategic to operational, one threat immediately confronting clinical labs and pathology groups is increased adoption of EMRs by office-based physicians. If the laboratory cannot respond with the right solutions, these physicians will move their lab test referrals to a laboratory that is ready to rapidly install a functional LIS-to-EMR interface.
But, the new complication is the need for laboratories to support the “meaningful use” requirements which a physician must meet before qualifying for the federal EMR adoption incentives. To speak on this topic at the Executive War College is Pat Wolfram, Vice President, Marketing & Customer Services at Portland, Oregon-based Ignis Systems Corporation.
Wolfram is in the thick of connecting labs to physicians’ EMRs. He is blunt about the need for action. “To remain competitive, every clinical laboratory and hospital lab outreach program needs to gear up and provide a functional LIS-to- EMR interface that allows the physician— from within his EMR, and as a natural part of his work flow—to order lab tests and have the laboratory test results automatically populate the patient record,” he said. “If any medical laboratory is unable to do this, it will lose physician clients as they turn to a laboratory competitor who can provide this service.”
Recognizing the importance of this new trend, two other speakers will address LIS-to-EMR interfaces and meaningful use. With a focus on the HITECH legislation and health information exchanges (HIEs), Rob Atlas, CEO of Atlas Medical Software, in Calabasas, California, will advise labs on how to leverage these developments in their favor.
The need to integrate laboratory test data across the health system and into outreach physicians’ offices will be addressed by Ravi Sharma, CEO at 4Medica in Culver City, California. His company is working with several first-mover laboratories and health systems so that lab test results and information in the patient EHR are able to move seamlessly throughout the system.
All laboratories have an immediate need to improve quality, reduce cost, and increase productivity. Each of these goals is to be addressed by speakers at the Executive War College.
Blood Product Costs
Take the skyrocketing costs of blood products for example. At the University of Alabama in Birmingham (UAB), the lab’s transfusion service initiated a successful program to improve utilization. Marisa Marques, M.D., Coagulation Service Director at UAB, will share how red blood cell usage was reduced by 25% over the first stage of this multi-year effort.
Offering a different perspective on improved utilization of transfusion and blood bank services is Priscilla Figueroa, M.D., who is Section Head of Transfusion Medicine at the Cleveland Clinic in Cleveland, Ohio. At the Cleveland Clinic, Figueroa’s lab team is using Lean, work flow redesign, and similar methods to improve utilization of blood products while improving quality. These approaches can by used by other labs seeking similar improvements.
Because most laboratories have used automation for several years now, a focused series of presentations has been organized. Five different speakers will share how their organizations are achieving “best practices” from their laboratory automation systems.
Clin Lab, Pathology M&A At Executive War College
MERGER AND ACQUISITION (M&A) ACTIVITY picked up at the end of 2009. Experts believe that important transactions will take place this year that have the potential to reshape the competitive marketplace.
Once again, for the third consecutive year, the Executive War College is assembling the leading experts in lab and pathology M&A to assess the current market. This special session will take place on Tuesday, April 27, on the first day of the Executive War College.
Leading off the session will be a review of laboratory and pathology sales closed during 2009 and 2010 year to date, conducted by Chris Jahnle, Principal at Haverford Health Advisors in Paoli, Pennsylvania. Jahnle will also identify trends affecting the value and sales prices of labs and pathology groups.
There will be sessions for sellers on tax planning and pre-sale issues, along with the latest information on seller due diligence concerning billing and reimbursement issues. A sellers panel and a buyers panel will provide insights about why deals are happening and how recent laboratory sales prices reflect current market conditions.