Hospital labs make up about 60% of the total testing revenue in the U.S. Analysts estimate that Quest and Laboratory Corporation of America. have slightly less than 25% of the lab market and may have lost some market share as hospitals have bought up physician groups. When doctors are employed by hospitals, they are more likely to send lab work to the hospital's lab than to an independent lab company.
The Advisory Board's Conlin said that while hospitals have to think about quality in deciding whether to outsource lab services, most currently are relying on outside providers such as Quest or Laboratory Corporation of America. for some testing. “There's a 50/50 chance you're working with them already,” he said.
But many hospitals and health systems have sought to achieve comparable cost savings without outsourcing to lab services companies. Some large systems have centralized lab services into a single facility and have satellite labs at individual hospitals.
In addition, independent hospitals in some markets, such as Pennsylvania's Lehigh Valley, have joined together to form for-profit lab companies to handle lab services for their hospitals and the community at large. Under this model, each hospital generally maintains its own satellite lab for services that require immediate turnaround, such as for ICU patients.
William Mosser, vice president of materials management at the Franciscan Missionaries of Our Lady Health System in Baton Rouge, La., said that his system is considering its options, including outsourcing to a lab services company or establishing a partnership model featuring a centralized lab. “We're all looking for ways to lower our total costs,” Mosser said.
About 15 critical-access hospitals are in the same geographic region as Franciscan hospitals in Baton Rouge and Monroe. Building a centralized laboratory that can also service healthcare providers outside the Franciscan system is one way to bring in revenue and better coordinate care.
“Linkage from a care perspective is going to happen sooner or later,” Mosser said.
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