The hospital lab business is buffeted by value pressures and the COVID-19 pandemic and struggling to chart a transparent path ahead, in line with a brand new survey.
On the similar time, the survey by consulting and lab optimization agency Accumen evinced some optimism concerning parts of the lab enterprise, with responses suggesting a excessive stage of curiosity in hospital outreach specifically, which has been one of many extra embattled components of the business in recent times.
Accumen relaunched the survey this yr after having discontinued it for a number of years, mentioned Kimberly MacDowell, the corporate’s chief advertising officer. It collected knowledge from 242 respondents representing a spread of geographies and system sizes, with 50% of respondents serving rural populations, 33% serving city areas of between 100,000 and 1 million folks, and 17% serving metropolitan areas with greater than 1 million folks. Neighborhood hospitals comprised 48% of respondents, with crucial entry hospitals accounting for 26%, tutorial hospitals for 13%, and metropolis hospitals for 13% of respondents.
Probably the most generally expressed issues for the surveyed labs was managing prices, which is little shock given the a number of pressures driving down reimbursement, particularly for hospital labs. Most notably, the Defending Entry to Medicare Act (PAMA) has pushed down reimbursement charges, significantly at hospital labs, which have historically obtained larger fee charges for testing than the big nationwide labs which have contributed a lot of the pricing knowledge used to set charges beneath the regulation.
Moreover, non-public payors have continued to squeeze hospital lab pricing. Insurer Anthem, for example, has been implementing a rate-alignment technique in plenty of states, by way of which it goals to make extra uniform reimbursement for testing no matter what sort of lab carried out the work. Once more, this has an outsized affect on hospital labs given their historically larger reimbursement.
Among the many surveyed labs, 45% mentioned that value discount was their prime strategic precedence for 2021.
The survey additionally urged, nevertheless, that many labs should not essentially pursuing this precedence as significantly as they may. Of the responding labs, 33% mentioned they’d a price benchmarking program in place, whereas 46% mentioned they didn’t, and 21% had been unsure.
“In relation to managing prices, benchmarking is an absolute should as a logical start line,” mentioned Joe McGann, vice chairman, common supervisor lab excellence, at Accumen, noting that given the issues round value, the dearth of benchmarking “was an enormous shock to us.”
“You have to know the place you stack up [compared to other labs] and the way massive the duty at hand is and plan accordingly,” he mentioned. “Are you within the 75th percentile by way of value efficiencies or the 25th percentile? That start line will inform you the quantity of funding of effort and time it’s going to require to realize that precedence.”
McGann urged that this was symptomatic of bigger points many labs have round visibility into their testing prices.
“Once you have a look at a variety of our shoppers, they don’t have that value data accessible,” he mentioned. “A lot of them know that they’ve issues by way of their prices and that they should get them decrease in the event that they need to be aggressive, however as a result of they’ve by no means been beneath stress earlier than like they’ve over the previous couple of years with declining reimbursement now accentuated by the COVID disaster, they only do not know how one can go about doing it.”
Many have projected that these value pressures would lead hospital programs to promote or outsource parts of their lab enterprise, with massive nationwide labs like Quest Diagnostics and Laboratory Company of America profiting from the scenario to accumulate many programs’ outreach operations.
Actually, outreach acquisitions have progressed at a comparatively gradual tempo, with such transactions trending downward over the past yr or two. The Accumen survey supplies potential perception into why, as many surveyed labs seem to consider outreach can nonetheless be a stable enterprise for a hospital system.
Of the healthcare programs surveyed, 44% had a lab outreach program, leaving greater than half with out one. When requested why they didn’t have an outreach enterprise, nevertheless, the vast majority of labs cited an absence of monetary sources, versus issues about outreach’s viability as the highest purpose they hadn’t established a program.
The primary purpose for not having an outreach program was startup prices, which 35% of respondents cited. An absence of capital was cited as the highest purpose by 24% of programs. In the meantime, issues about competitors and profitability had been highlighted by solely 18% and 12% of respondents, respectively — indicating that the majority healthcare programs nonetheless take into account outreach a stable enterprise, even when they do not at the moment have the sources to begin one.
“It has been confirmed over and over for a few years not solely by industrial labs like LabCorp and Quest but additionally hospital labs, that the outreach enterprise may be very worthwhile, if accomplished properly,” McGann mentioned.
Doing it properly is less complicated mentioned than accomplished, although, he famous, including that he believed this was why lots of the hospital programs citing startup and capital prices as causes they’d not began outreach applications had determined in opposition to investing that cash.
“You have to do 10, 11, 12 issues properly,” to construct and maintain a profitable outreach program,” he mentioned. “And extra instances than not, you solely get one crack at it.”
And whereas testing prices may not be the main issue steering programs away from outreach, they had been among the many mostly cited challenges to progress amongst outreach labs, with 72% of respondents saying “noncompetitive pricing” was one in all their greatest obstacles to progress.
PAMA got here a lot decrease on the listing of issues, with solely 22% of programs rating it among the many prime three challenges to rising their outreach applications.
By way of the SARS-COV-2 pandemic, McGann urged that its affect seems most clearly in questions the survey requested round labs’ present challenges, the place staffing, turnaround time, and provide chain points had been probably the most continuously cited prime priorities (by 26%, 23%, and 17% of labs, respectively), whereas decreasing value per take a look at was least continuously cited (9%).
“The timing of the survey was proper in the course of the COVID [outbreak]. … I feel the challenges that had been cited was extra about that timing,” he mentioned, noting that issues like turnaround time and provide chain should not usually main points for labs however that each moved to the fore through the pandemic.
This story first appeared in our sister publication 360Dx, which supplies in-depth protection of in vitro diagnostics and the scientific lab market.