There has been a trend a recent years for hospitals and health systems to sell their lab outreach businesses, often to one of the two largest commercial reference labs, Quest Diagnostics and LabCorp, and then outsource their lab services to the same company. There is some early evidence that this trend may now be reversing (see: IS THE JOINT VENTURE HOSPITAL LAB AN EMERGING TREND?). Below is an excerpt from the article:
News of a new laboratory joint venture involving ProMedica Health of Toledo, Ohio, and Sonic Healthcare USA, of Austin, Texas, should be of interest to lab administrators and pathologists managing hospital or health system laboratories (see: ProMedica and Sonic Healthcare Form New Laboratory Joint Venture Partnership). This joint venture is evidence that forward-looking health systems and hospitals recognize the importance not only of retaining control of their laboratory services, but also of leveraging and expanding lab testing to support integrated clinical care in all locations....[T]he oft-repeated message of national lab firms to Wall Street analysts and investors in recent years is that hospitals and health systems want to sell their lab outreach businesses and outsource hospital laboratory services to commercial lab companies....
The Dark Report considers this latest pact involving ProMedica and Sonic to be significant for four reasons: First, this top-tier health system (with 13 hospitals in multiple states) is making a substantial commitment to ensure that its newly minted joint-venture hospital laboratory continues to be a key clinical service into the future. Second, ProMedica is putting up substantial capital as its part of the new lab joint venture, an indication it expects the outreach laboratory business to be financially viable, even as payers continue to pay less for lab tests. Third, its lab joint venture with Sonic aims to reduce lab costs, but the goal of serving inpatient, outpatient, and outreach patients with a standard menu of tests and reference ranges can result in a unified patient lab test record....Fourth, ProMedica gains access to Sonic’s advanced analytics.
I hope that the idea on the part of hospital executives to sell their lab outreach program and then outsource some of their lab testing is losing steam. Often this idea is favored by health system executives who do not view laboratory testing, particularly esoteric testing, as being mission critical. The idea is also entertained by hospitals that are in financial trouble as a means to secure ready cash. I don't think that this is a good idea (see: The Counter-Argument to Selling Your Hospital Lab).
We are now in the golden era of diagnostics in which, particularly for complex patients, the "hard pull" is diagnosing rather than treating disease. We have been propelled into this era by molecular pathology and cancer genomics. Inpatient admissions continue to decline and a large component of healthcare is being decentralized. The latest trend in healthcare is the construction of micro-hospitals (see: 5 common questions about micro-hospitals, answered) or bedless hospitals (see: Get a new body part and go home the same day: the rise of the ‘bedless hospital’) with a focus on the various diagnostic services as well as telemedicine. It makes no sense to outsource one of the key elements of the smaller hospitals of tomorrow that are now being constructed.