The Paradigm Shift in Pathology
(Pathology In-sourcing, aka TCPC billing, "pod or condo labs", in-office pathology laboratories)
By Bernie Ness,
B J Ness Consulting Group, LLC
The OIG has issued their legal opinion on the so called "pod labs". Most pathologists think that pathology in-sourcing will be soon shut down and put out of business. The fact could not be farther from the truth. Several strategies are now unfolding in the marketplace with specialty physicians in urology, dermatology, and gastroenterology.
Why is this happening? Almost every specialty group these days is looking for "lost' revenue. The urologists lost Lupron injection revenues in January 2005. In many of the large group practices the amount lost numbers in the hundreds of thousands of dollars. About 2 years ago the GI's took a 25% pay cut from Medicare on their clinical services. No clinician can see another 25% caseload increase without endangering patient health and safety.
When the GI's first got hit they started looking at opening endoscopy centers free standing of their hospitals to pick up the technical fees. Sometimes this meant setting up their own facility at a cost of several million dollars. Other times, and especially in CON (certificate of need) states, they converted a suite in an existing surgery center to an endoscopy suite for their patients. Now they are looking at setting up their own anatomic pathology laboratories. I have had several groups contact me in the last few weeks to inquire if I knew anyone who could help them do this for their partners. I referred them on to a fellow consultant with that special expertise.
Now that the urologists are in the crosshairs of Medicare they are facing the same economic challenges that their GI brethren have endured. Their problem is that they are already doing prostate biopsies in their offices and several other procedures. They are looking at any and all types of procedures or services to help them recapture the lost revenues. They too have been active in contacting me about setting up their own anatomic pathology laboratory in their practice. This is no different from what dermatologists have been doing for decades with their patient biopsies.
What should pathologists do? This shift in the market dynamics demands a strategy. Most pathology groups are relying on some kind of state or Federal legislation to solve this issue for them. This may happen but not likely. If the specialists set up their own anatomic labs in their offices with a pathologist and histotechnologist on site, there is nothing the Stark law will be able to do about it. It will fall under the in office laboratory provisions of Stark. I have seen the spreadsheets and the economics are very compelling to set up an anatomic pathology laboratory. In fact, recently I was doing sales training in Florida for a large multi-specialty pathology group sales force. The issue of "pod labs" came up and the practice manager of the pathology group admitted that if he were the manager of a large GI or urology group he would set up his own anatomic pathology laboratory. I also understand from a trusted nationally recognized source that saw one of the in-office pathology lab locations that the laboratory was top notch with state of the art equipment and fully staffed with registered technical personnel.
Between direct billing, hiring a pathologist, and setting up your own in office AP laboratory, the pathology profession is under intense fire. Pathologists are becoming the sub-contractors of laboratory medicine. In any business, subcontractors are always under pressure to reduce costs (your fees), increase quality, and improve service. Without being subcontractors, pathologists have struggled to meet the needs of the specialty physicians in their markets. How many of you have color digital reports for urology and GI? How many of you have the capability to send those reports as emails to fit into EMR's in the specialists' office? How many of you have bar coded requisitions specific for urology and GI to reduce time and increase quality for the specialty office? How many of you have electronic order taking ability? How many of you have patient education materials available specific for urology and GI patients on a website? How many of you even have a website?
By not providing the services your customers require to be competitive in their markets, the shift away from local hospital-based pathologists will continue to erode the outpatient business. I probably talk to more specialty physicians than any executive in the country each month. They are not real pleased with their pathology services they receive locally. Their feeling is that they have given the pathology laboratory tons of money over the years and they see no improvements in the services provided to them. Every business has to stay competitive to stay in business. That means there are investments that must be made to that business each and every year. I have to do investments in my consulting practice each year and pathology groups are no exception. If you do not invest in your customer base you can expect one thing for certain, you will lose clients because their loyalty has waned.
What should you do? Develop a strategy to be competitive. Do not stand by idle! Those that stand on the sidelines and wait to react to what happens next will be doomed. Here is a new concept. Why not take the time to visit one of your busy urology and/or GI clients and actually meet the office staff and find out how well you are doing in their eyes. It is called MBWA (management by walking around). You might also want to sit and talk to the MD's of the group and ask them the same questions about your services to their office. This is what good companies do all the time. You might learn something about your own business. For the latest developments see below.
Want to learn more about the alphabet soup with pathology in-sourcing (TC/PC billing, pod labs, condo labs, and POL AP labs) that is changing pathology today? Want in-depth knowledge from a national authority with first hand experience with of all 3 types of business arrangements? Of course you do! Learn more from the source, the B J Ness Consulting Group.
We have assembled a 100 page "white paper" (above) filled with details on each business model strategy and their tactics to change pathology forever. You won't find this information from CAP, The Dark Report, or APF or any other consultant out there. A special web price of $99 if you email us now for a digital copy (regular price $500). Shippng and handling included for printed version at $199 each. Allow 2 weeks for your check to clear and USPS mail delivery.
