November 2006
Washington G-2 Reports’s 24th Annual Lab Institute program featured presentations from more than 70 lab executives, consultants, and political figures. Below we’ve highlighted some key news and advice given by a few of the speakers:
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Thomas P. Mac Mahon, outgoing chairman and CEO of LabCorp, provided perspective on his 25 years in the clinical laboratory industry and reflected on the industry’s future. "In the last five years, I have observed an increased awareness by regulators, by legislators, and the public capital markets that the lab industry is essential to the delivery of quality care for patients," he said. "Investors are lining up at the doors of this industry to invest large amounts of capital, because they know that medical testing will continue to prosper as our population continues to age, as innovations continue to occur, and as new tests continue to be introduced." However, Mac Mahon cautioned that laboratory testing is now at "a historic inflection point," necessitating collaboration to address common challenges.
One industry trend he highlighted was consolidation on a variety of levels. "There are thousands of smaller laboratories who would like to combine with other laboratories in the not too distant future," adding that LabCorp is contacted every day by the owners or brokers of labs seeking to be acquired.
Rep. Fortney "Pete" Stark (D-CA), ranking member of the House Ways & Means Health Subcommittee observed, "What’s changed since 1994 and the Contract With America and Newt Gingrich and his gang is that they really want to disband, dismantle, take apart the Medicare system," which has spurred the development of such initiatives as competitive bidding for lab services.
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Rep. Fortney “Pete” Stark (D-CA)
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Stark also predicted a move toward standardization of electronic medical records and of information technology in healthcare. "One person, one entity with the ability to enforce it, and the way Medicare can enforce it is they won’t pay you unless you have it in the right format," said Stark. "And that might trickle down to the others. The Blues [Blue Cross and Blue Shield] can do it. Somebody’s got to say, ‘Gang, this is the system! And you’ve got five years to convert into it, and you know what? You’re not going to like it.’"
American Clinical Laboratory Association (ACLA) President Alan Mertz evaluated the political landscape, noting: "Whether the Democrats take the House and the Senate or if they just pick up a few seats, no matter what happens, it will be much harder to pass any legislation. I think there will be a lot of oversight in the House if they do take over, and that can be good or bad for labs."
On the approximately 4% cut in the physician fee schedule slated for January, Mertz said, "I think there’s a pretty good chance a bill will pass in the lame duck session that would eliminate that cut." He also speculated that there would be up to a two-year freeze on payments so that they would not be reduced. "There is even some possibility for a small increase for the physician fee schedule for the sustained growth rate (SGR), perhaps .5% or 1% tied to some sort of performance measure."
As for Medicare cuts, "it’s only to get worse," according to Mertz, as providers and the soaring number of beneficiaries battle for their share. "We must continue to work together on the reimbursement for labs, something we all agree on, from the very smallest labs to the largest."
For more on Lab Institute 2006, including an in-depth look at how telepathology is affecting patient care and an update on the competitive bidding demonstration, see the December 2006 issue of Laboratory Industry Report.
| Lab Professionals Weigh In on Top Issues |
| What is the lab industry’s most potent |
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| reimbursement threat in the future? |
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| Stagnating and/or declining Medicare payment |
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| rates: |
25.90% |
| Implementing Medicare’s lab competitive |
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| bidding demonstration: |
48.20% |
| Push by large health insurers such as |
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| |United Health to negotiate lower rates: |
20% |
| Inequitable coverage and payment policies |
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| for molecular/esoteric testing: |
5.90% |
| What is your own lab’s biggest reimbursement |
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| challenge in the year ahead? |
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| Trend by private insurers of doing business |
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| only with preferred labs: |
31% |
| Unfair and/or arbitrary payment and coverage |
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| decisions by Medicare: |
41.70% |
| In-sourcing of anatomic pathology services |
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| by physician specialty groups: |
6% |
| “Low-ball” pricing imposed by competitors |
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| in your market area: |
21.40% |
| Source: Washington G-2 Reports 2006 Lab Institute Attendee Survey |
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