Public Health Laboratories and Health System Change . Private Clinical Laboratory Environment

10/06/1997

As the private sector counterparts to PHLs, and also as an increasing source of competition, private clinical laboratories are a central element of the PHL operating environment. The American Society for Microbiology defines the clinical laboratory as,  "...a place where materials derived from the human body are examined for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or assessment of, the health of human beings."(13) Clinical laboratories perform a wide range of services, from routine tests to sophisticated genetic tests, and many of them also perform various environmental testing services. There are also simple diagnostic test kits marketed to physician offices and, in some cases, directly to consumers. Clinical laboratories may be operated by universities, hospitals, physician offices, and free-standing facilities.

Several key trends in the competitive clinical laboratory testing marketplace today are overcapacity, increased outpatient testing volume, and intense price pressure from payers (e.g., managed care, Medicare). Private clinical laboratories, like their PHL counterparts, are struggling to meet the challenges of the rapidly changing health care market. The laboratory testing industry is restructuring rapidly and dramatically in response to these trends. Hospital laboratories are actively pursuing networking opportunities with outside laboratories to capture more testing volume, while others are consolidating their laboratory operations to reduce costs. In addition, large independent reference laboratories have emerged as major players in the industry, competing effectively on a national level for outpatient laboratory testing business.

This section presents a brief overview of the market for clinical testing services, including an estimate of market size, identification of the various laboratory stakeholders, and discussion of key trends in the industry. The section also describes how changes in the clinical laboratory market may affect PHLs.