Public Health Laboratories and Health System Change . Impact of Managed Care on PHLs


The presence and growth of managed care has posed significant financial and organizational challenges to the clinical laboratory market as a whole. Because managed care organizations (MCOs) emphasize cost reduction, often have limited (or exclusive) arrangements with suppliers and service providers, and may tend to treat, not test, public health officials have been concerned that the growth of managed care would have negative impacts on the functions and practices of PHLs. Specifically, PHL stakeholders proposed two main hypotheses on managed care's possible adverse effects on the functions of PHLs:

  • PHLs traditionally serving as the primary providers of diagnostic testing services to the Medicaid population will lose testing volume, and possibly entire testing areas, as these populations are covered by MCOs that have contracts with private clinical laboratories.
  • PHLs traditionally playing a large role in disease reporting fear a lack of responsiveness to disease reporting requirements on the part of many MCOs. This lack of responsiveness, coupled with a possible approach of treating patients immediately rather than testing to identify the cause of an illness, may result in diminished disease surveillance and monitoring capacity.

Results of our poll show that PHL directors believe managed care is having an adverse effect on PHLs practices and functions. Twenty-one of the PHL directors (43%) stated that managed care had an adverse impact on their laboratories' functions (see Figure 15 below).

Figure 15: Managed Care Impact on PHLs

Figure 15: Managed Care Impact on PHLs