I attended a presentation at the recent AACC annual conference in San Diego entitled Integrating Laboratory Diagnostics and Diagnostic Imaging by an IT-Driven Environment. One of the four speakers in this session was Emery Stephens, president of Enterprise Analysis Corporation (EAC), a noted lab consultant. His excellent lecture was entitled Health Care Information Technology in Transition. Click on this link to view his entire presentation. Inspired by his slide #7 and drawing heavily on its content, I decided to explore five alternative business models that combine variations on in-vitro diagnostics with lab/medical software. I list them below in an attempt to develop a better understanding of the future direction of the lab software industry. My goal in this note is only to list the models and then discuss them in detail at some later time.
- In-vitro diagnostics + medical imaging. This model will be instantly recognizable as the current GE/Siemens approach. Both companies were competitors on a global basis for medical imaging equipment and came to the near-simultaneous conclusion that medical imaging was highly synergistic with in-vitro testing. This approach combines in-vitro with in-vivo diagnostics. As I have noted in a previous note (see: The Pursuit of a Federated EMR Architecture by Hospital EMR Vendors), one would expect the medical software that they develop and market to support and enhance such a diagnostic-centric view of healthcare delivery.
- In-vitro diagnostics + pharmaceuticals. This is the model being pursued by Roche. Although the company is a leader in terms of its IVD products, it understands that much of its future lies in the synergy between newly emerging drugs and the companion diagnostics that will be required for an individual patient to be considered a candidate for their use (see: More Speculation About the Roche Bid for Ventana). Up to this time, Roche's interest in lab software has been limited to middleware modules that enhance and support their analyzers and reagents.
- LIS software + upstream IVD instruments. The is largely an undeveloped area but one that is theoretically possible. The only current example I would think of is Cerner's relationship to Correlagen (see: Cerner Exclusive Distributor for Correlagen's GeneExplorer). As noted in the title, this is an example of LIS software vendors reaching upstream to analyzers as opposed to the more common example of IVD vendors reaching downstream to software.
- National reference lab + lab portal software + personalized testing. The obvious example here is Quest Diagnostics and their Care360 product that was developed by their company, MedPlus. This product is a web-enabled, order-entry, results reporting link for physician offices. Their software product thus supports their core mission which is that of a large national reference lab serving physician offices. I have previously covered Quest's purchase of a company that manufactures a self-administered test for occult blood in the stool, the personalized component testing referred to above. (see: Quest Acquires Enterix).
- Home lab testing + home monitoring software. For this category, I have deviated somewhat from Emery's example of what he describes as decentralized rapid diagnostic testing, using Philips as an example. I have previously discussed the interest of Philips in home health monitoring in a previous note (see: Philips' Healthcare Expansion Strategy Revealed). Such an interest in home monitoring could easily be expanded to encompass home lab testing.