Hospital Lab Management Agreement
As with the outsourced model, the technical assistance agreement usually includes a five-year contract. When the institution decides to terminate the contract, it must acquire or replace all necessary laboratory equipment and supplies and ensure that it has sufficient staff to perform the technical and purchasing tasks previously performed by laboratory staff. Outsourcing has accelerated thanks to aggressive measures taken by large laboratory companies in search of hospital customers, as companies face a drop in profits as insurers lower rates. An advantage for the establishment that sells its outreach business is a cash infusion (but the profit varies depending on the profitability of the market for the buyer). As the volumes of the outreach tests will also be removed from the laboratory, there will be a downsizing. As laboratory services move from a mixed hospital and outpatient model to many hospital laboratories, they will close technical services. The trend has accelerated, thanks to aggressive measures taken by large laboratory companies in search of hospital clients wishing to relocate laboratory services. Thomas Tiffany, PhD, CEO and founder of Adept Clinical Consultants, LLC (AC2T), former CEO of PAML1. Why are hospitals and commercial laboratories more interested in partnership? Large commercial laboratories have found that their commercial activities are not up to scratch and that they have generated growth through acquisitions and destocking agreements of hospital laboratories. Hospitals should expect lower reimbursements, and in 2013 hospital revenue growth declined, as did margins.
With declining laboratory reimbursements and new clustered outpatient services that affect laboratory compensation, hospitals have a driving force in finding ways to reduce costs and potential partnerships with commercial laboratories to reduce costs. However, in a recent survey (Modern Health August 2014), less than 30% of hospitals surveyed are looking for such partnerships or outsourcing laboratory services, while the driving force seems to come from commercial laboratories such as LabCorp and Quest. Hospitals in large cities are closer to distribution centres. A hospital in a small rural community in Nebraska cannot benefit from outsourcing to the same extent as a New York hospital. CEO SUMMARY: Nearly half of the country`s hospitals and health systems are thinking about how they can use their clinical laboratories to support clinical and financial strategies.