Clinical Laboratory Testing Volume 2: Business Strategies

Table of Contents for Clinical Laboratory Testing Volume 2: Business Strategies

Table of Contents:

1. Overview 5
1.1 Objectives of the Report 5
1.2 Methodology 6
1.3 Scope of the Report 7
1.4 Executive Summary 8
2. IVD Clinical Laboratory Market 11
2.1 Introduction 11
2.2 Key Players for Independent Clinical Labs 12
2.3 Reimbursement Pressure 12
2.4 Medicare Part B Spending Trends 14
2.5 Cost of Billing and Average Receipts for Commercial Labs 17
2.6 Hospital Outreach Programs 18
2.7 Criteria for Selection of Lab Services 22
3. The Clinical Laboratory Testing Market 23
3.1 U.S. Market 23
3.1.1 Hospital-based Clinical Laboratories 25
3.1.2 Commercial Clinical Laboratory Testing 25
3.1.3 Physician Office Laboratories (POLs) 26
3.2 Clinical Lab Testing Key Players 31
3.2.1 Commercial Clinical Labs 31
3.2.2 Hospital Lab Collaborative Ventures 32
3.2.3 Specialty Labs 33
3.3 Revenue and Reimbursement 34
3.4 Outlook for Clinical Laboratory Testing 37
3.4.1 Long-Term Changes 37
3.4.2 Market Drivers 38
3.4.3 The Limits to Growth 39
3.4.4 Key Technologies 39
3.4.5 Conclusion 40
4. Hot Sectors in the Clinical Lab Testing Market 41
4.1 Workplace Drugs-of-Abuse Testing 41
4.2 Clinical Toxicology 41
4.3 Clinical Testing for the Pharmaceutical Industry 42
4.4 Heavy Metal, Trace Element, and Solvent Analyses 42
4.5 Diabetes (Glucose) Testing 42
4.6 Molecular Diagnostic Testing 42
4.7 Cardiac Markers 42
4.8 Blood Bank Screening 43
4.9 Genetic Testing 43
4.10 Predictive Medicine Testing 43
4.11 Personalized Medicine 45
4.12 Cancer Testing 45
4.13 Cell Based Cancer Testing 46
4.14 Monitoring Technologies 48
4.15 Anatomic Pathology 48
5. Important Technology Trends 50
5.1 Technology Platform Innovations in Point-of-Care Testing 50
5.2 The New Paradigm 50
5.3 Consolidated Workstations 50
5.4 Automation in the Laboratory 52
5.5 Laboratory Information Systems 53
5.6 New User-friendly Interface 54
5.7 Data-Management Issues 55
5.7.1 Wireless LANs 55
5.7.2 Data and Workflow Management Systems 55
5.7.3 Beckman Central Command 56
5.7.4 Clinical IT More Widely Available in Physician Practices 56
5.7.5 Physician Electronic Health Records (EHRs) 57
6. Business Trends in the Clinical Laboratory Analyzer Sector 59
6.1 Key Developments 59
6.2 Sector Consolidation 59
6.3 Acquisition Pricing 60
6.4 A Closer Look at Six Big Lab Deals 61
6.5 Acquisition, License Agreements, Internal Development and Partnerships 62
6.6 Comparison of Quest and LabCorp 66
6.6.1 Quest 66
6.6.2 Acquisitions 67
6.6.3 Quest's Growth, 2000-2006 67
6.6.4 Laboratory Corporation of America 67
6.6.5 LabCorp's Growth, 2000-2006 68
6.6.6 Competitive Advantages at Quest and LabCorp 68
6.6.7 National Managed Care Contracts 69
6.6.8 Billing and Collection Management 69
6.6.9 Lower Reagent and Supply Costs 69
6.6.10 Esoteric Testing Capabilities 69
6.6.11 Ability to Invest in Web-Based Connectivity Solutions 70
6.6.12 Competitive Disadvantages of Quest and LabCorp 70
6.6.13 Difficulties with Turnaround Times and Stat Services 70
6.6.14 Physician-Laboratory Communication 70
6.6.15 Specimen Pickup Scheduling Inflexibility 70
6.7 Regulation of Clinical Laboratory Operations 71
6.7.1 CLIA and State Regulations 72
6.7.2 Drug Testing 72
6.7.3 Controlled Substances 72
6.7.4 Medical Waste, Hazardous Waste and Radioactive Materials 72
6.7.5 FDA 72
6.7.6 Occupational Safety 73
6.7.7 Specimen Transportation 73
6.7.8 Corporate Practice of Medicine 73
6.8 Hospital Outreach Programs 73
6.9 Supply Chain and GPO Contracting 74
6.10 Specialty Labs 74
6.11 Expansion of Hospital-Based Labs and Hospital Outreach Programs 74
6.12 Managed Care 74
7. Company Profiles 75
7.1 ACM Medical Laboratory 75
7.2 American Esoteric Laboratories 75
7.3 American Medical Laboratories 75
7.4 AmeriPath 76
7.5 ARUP Laboratories 76
7.6 Athena Diagnostics 76
7.7 Bio-Reference Laboratories, Inc. 77
7.8 BioTech Labs 77
7.9 BioLabs, Inc. 77
7.10 CBLPath 77
7.11 Centrex Clinical Laboratories 77
7.12 Clarient, Inc. 77
7.13 Clinical Laboratories of Hawaii 78
7.14 Clinical Reference Laboratory 78
7.15 Clongen Laboratories 78
7.16 CompuNet Clinical Laboratories 78
7.17 Diagnostic Systems Laboratories 79
7.18 Enzo Biochem, Inc. 79
7.19 Esoterix 80
7.20 Focus Diagnostics 80
7.21 Fresenius Medical Care AG & Co. KGaA 80
7.22 Geneva Laboratories 81
7.23 Genomic Health, Inc. 81
7.24 Genzyme 82
7.25 IBT Laboratories 83
7.26 Integrated Regional Laboratories 83
7.27 LabCorp 83
7.28 MDS Diagnostic Services 85
7.29 MEDTOX Scientific, Inc. 85
7.30 Meriter Health Services 85
7.31 Mid America Clinical Laboratories 86
7.32 Monogram Biosciences, Inc. 86
7.33 Myriad Genetics, Inc. 86
7.34 National Jewish Medical and Research Center 87
7.35 Parkway Clinical Laboratories 87
7.36 Pathology Associates Medical Laboratories 87
7.37 Psychemedics Corporation 87
7.38 Quest Diagnostics Incorporated 88
7.39 RDL Reference Laboratory 88
7.40 Satellite Laboratory Services 88
7.41 Spectrum Laboratory Network 89
8. Clinical Laboratory Testing Sector Trends and Forecasts 90
8.1 Home Care Analysis 90
8.2 Non-Traditional Collection for Laboratory Testing 90
8.3 New Systems for Critical-Care and Near-Patient Testing 90
8.4 Shift to Preventative Medicine 90
8.5 Mergers of Diagnostic Companies 90
8.6 Information Management Advances 90
8.7 Test Ordering Patterns 90
8.8 Patient Satisfaction 90
8.9 Move Away from Central Laboratory 91
8.10 Healthcare Cost Controls 91
8.11 Competition for Services 91
8.12 Drivers and Barriers of Clinical Laboratory Testing 91
8.13 Confluence of New Technology 92
8.14 New Trends in Clinical Laboratory Testing 92
8.14.1 Trends in Reimbursement Practices 92
8.14.2 Managed Care 94
8.14.3 Point of Care Testing 95
8.14.4 Satellite Facilities 95
LIST OF FIGURES
Figure 2.1: Total Medicare Expenditures, 1995-2005 13
Figure 2.2: Effect of Medicare Laboratory Fee Schedule Changes on a $10 Test, 1984-2006 14
Figure 2.3: Part B Spending on Clinical Laboratory Services, 1991-2005 15
Figure 2.4: Cost Per Billable Test 18
Figure 2.5: Annual Billable Tests Processed Per FTE 19
Figure 2.6: Outreach Business Operated at a Freestanding Lab Facility 20
Figure 2.7: Volume of Dedicated Sales and Marketing Staff for Outreach Business 20
Figure 2.8: Separately Managed Outreach Billing and Collection 21
Figure 3.1: Lab Revenue by Lab Type 24
Figure 3.2: Lab Revenue by Test Type 24
Figure 3.3: Physician Office Laboratory Revenue, 2000-2006 27
Figure 3.4: Unweighted Average Medicare Reimbursement for the 10 Most Common POL Tests 28
Figure 3.5: Total Number of Non-Waived POLs, 2000-2006 28
Figure 3.6: Number of New Tests Granted CLIA-Waived Status, 2000-2006 29
Figure 3.7: High-Volume Waived Tests 30
Figure 4.1: Laboratory Service Revenue from Pap Testing, 1998-2005 46
Figure 4.2: Percentage of Pap Tests Performed Using Mono-Layer Methods, 1998-2006 47
Figure 4.3: Market Share for Pap Test Vendors, 2006 47
Figure 5.1: Percentage of Physicians in Practices with IT for Specific Clinical Activities 57
Figure 5.2: Office-Based Physicians That Use EHRs, 2001-2005 58
Figure 6.1: Average Revenue Multiple Paid to Acquire Labs, 2000-2006 60
Figure 6.2: Hospital Market Share for Outreach Programs 73
LIST OF TABLES
Table 2.1: Hospital Laboratory Share of Part B Medicare Spending, 1996-2005 15
Table 2.2: Medicare Spending on Clinical Lab Services, 1991-2005 16
Table 2.3: Medicare Part B Spending Per Medicare Enrollee, 1998-2005 16
Table 2.4: Allowed Charges for Top 25 Clinical Laboratory Procedures, 2005 17
Table 2.5: Washington G-2 Hospital Lab Outreach Survey 21
Table 3.1: U.S. Clinical Laboratory Testing Market Revenue, 2005-2012 23
Table 3.2: U.S. Clinical Laboratory Diagnostic Test Market Segments, 2006 23
Table 3.3: Growth Rates of Test Types 25
Table 3.4: Independent Commercial Laboratory Testing Test Volume, 2005-2012 25
Table 3.5: Twenty Most Common Laboratory Tests Offered at Family Physician Offices 31
Table 3.6: Important New Waived Tests 31
Table 3.7: Revenue Growth At 14 Publicly-Traded Lab Companies, 2005 32
Table 3.8: Payer Group wise Percentage of Total Volume of Requisitions and Net Revenues 35
Table 4.1: Pap Testing at the Largest U.S. Laboratory Companies, 2006 48
Table 5.1: Applications for Wireless LAN Technology 55
Table 6.1: Laboratory/Pathology Acquisitions 61
Table 6.2: Revenue Growth at Quest Diagnostics, 2000-2006 71
Table 6.3: Revenue Growth at LabCorp, 2000-2006 71
Table 6.4: LabCorp Revenue from Managed Care Contracts, 2004-2006 71
Table 6.5: Quest Diagnostics Revenue from Managed Care Contracts, 2004-2006 71
Table 8.1: Medicare Billing Guidelines for Multi-channel Laboratory Tests 93
Table 8.2: Targeted Lab Tests and Brief Educational Reminder Messages 95

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