Growth Prospect: External Lab Services

Posted on July 9, 2010

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Patients have patience (yes, that was intentional) for results proportional to the significance of their health issue in question. When a woman wants badly to know if she is pregnant, she will pay $13 for a home pregnancy test for an immediate result instead of waiting at least one week past her first missed period for an appointment with her OB/GYN. This is not a life-or-death scenario, but at least the individual has options available for faster information.

When someone is in pain or danger, a patient should have the opportunity for information as quickly as possible. Numerous situations arise where hourly or same-day results are ideal.  If not same-day, then possibly the next day at the latest. In the case of imaging, the x-rays or MRIs are available; it is usually the human interpretation that takes longer.

Unfortunately, this is not the case with current stand-alone labs. A typical independent (non-hospital) laboratory that processes routine tests (fluids, solids, tissue) is really what a photo processing lab was twenty years ago:  a collector who forwards its orders to the place that does the actual processing. This is an old, subpar service model.

Several weeks ago my wife went to a national lab chain, which collected samples at a doctor’s request; she was having some GI pain and was very uncomfortable. We wished for the best (results in a few hours?), adjusted our expectations (three to five days surely), and were told it would take seven to ten days.  Seven to ten days?! It is not easy to live with athlete’s foot for seven to ten days, let alone something GI related. Could her condition develop into something more severe in the meantime?

What made the experience even more sour was the results took even longer: sixteen business days, plus the time it took for the GI doctor to get my wife an appointment to discuss the results. We were put in the awkward position of deciding whether to go through with a colonoscopy (much more invasive, expensive and complicated), while waiting for test results (much less invasive, expensive and complicated). The process was done in the right order, but the information flow frustrated the process.

A more urgent example of test results lag time ocurred when the H1N1 virus was prominent last year.  A student in Jacksonville, who may have been infected, was held out of school and the school shut down for over three days while the community waited for blood results from the CDC lab. Three days is an eternity for something that serious, which could lead to an outbreak, not to mention a major logistical headache for parents and students. Similar scenarios played out in Mexico as well as nationwide last year.

Medical centers have in-house labs to combat this very scenario; they know the value of critical information. Surely there is a market for hospitals to reach out to their communities and find a way to offer those services (expanded at their hospital or as separate facilities off campus), and make a profit to boot. I would much rather support a quick-turnaround lab backed by the lab management expertise and brand recognition of a local hospital, than a storefront with no control over results which more closely resembles the business model of a dry cleaner than healthcare provider.

Savvy clinics and hospitals looking for new revenue streams should consider competing in this market.

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Posted in: Growth Prospect