• by bcarlson@marketresearch.com
  • January 21 2014

Clinical Lab Services Grow, Despite Cuts

Clinical Lab Services Grow, Despite Cuts

Some of the most common tests in routine medical practice saw Medicare reimubursement cuts between 2009 and 2013, as shown in the accompanying table. Tests for Aluminum, Iron, Vitamin B12, BUN are among those that averaged a 5.8% decrease.   Yet the industry found a way to grow a little bit.  Just a little bit.  The market, according to our estimate in a recent report,  grew just over one percent in the past five years.  

We estimated at the market at $99.1 billion for 2013, up 1.3%  Our report notes that while there are a number of drivers for this market: aging populations, a growing incidence of chronic diseases, increasing emphasis on diagnosis and disease monitoring, and a growth in advanced testing technologies and practices.  However, there are also a number of inhibitors to growth such as the growing emphasis to reduce health costs and uncertain economic conditions, and these are dampening growth.

“Today, clinical laboratories are improving a physician’s ability to treat patients like never before.  There is a shift in healthcare utilization primarily due to reducing healthcare spending which makes the laboratory an even more valuable part of the treatment plan.  But cost-cutting measures mean tests may not see the benefits of hospital-stay reducing factors.

In the United States, the U.S. Congress ultimately has the responsibility to adjust the Medicare fee schedule according to economic factors, including controlling costs, monitoring utilization, and ensuring adequate delivery of health care services.  The passing of the Patient Protection and Affordable Care Act generated a number of provisions on laboratory fee schedules, mostly in the direction of reductions.  These reductions were effective starting 2011 and will continue to be adjusted through 2015.   Medicare has slashed reimbursement amounts for many common tests such as Vitamin B12, triglycerides and glucose nearly six percent between 2009 and 2013.  Some tests, such as total iron or aluminum tests have been cut 19% and 30% respectively during that period. 

Bio-Reference Laboratories, Quest, Lab Corp, Myriad, and Spectra are among the leaders in the industry.   Quest Diagnostics and LabCorp have advantages in the market due to the wide exposure, large number of locations, and greater financial positions. Smaller, independent laboratories may find it difficult to keep up with the fast changing industry largely due to limited financial abilities to invest in new technologies and testing services.  Some laboratories, such as Bio-Reference Labs have found success in operating on a regional basis while companies such as Myriad Genetics and Genomic Health remain competitive by focusing on more specialized genetic-based testing. 

Kalorama Information’s report, Clinical Laboratory Services (Markets, Growth Opportunities, Competitive Analysis and Competitor Profiles), contains more information on these markets including segment estimates and corporate profiles.  The report can be found at Kalorama Information’s website at: http://www.kaloramainformation.com/Clinical-Lab-Services-7931450/.