Hospital-based laboratories have traditionally dominated the private laboratory industry. However, as managed care strengthens, hospitals merge, and independent reference laboratories grow in prominence and market share, the laboratory industry - mirroring the health care system generally - is rapidly consolidating. Three large reference laborator
While the initial focus of this study was to explore the relationship between PHLs and managed care, over the course of the study, other environmental factors proved equally, if not more, important influences on the PHL operating environment.
The initial purpose of the study was to characterize the relationships between PHLs and managed care organizations in the context of health system change. There is universal concern in the public health community about managed care. Despite some isolated examples of positive effects of managed care on PHLs, such as increased reference testing for
The PHLs we studied are operating in a highly fluid and challenging environment. While the function of PHLs varies from state to state (each is unique with respect to its approach, the services it offers, and its history), every PHL serves a pivotal role in linking the private and public sectors. Funded by public sources, PHLs are typically intert
Public Health Laboratories and Health System Change . Other PHL Responses to Managed Care and Health Market Change
Aside from engaging in contracting with MCOs and/or private laboratories for clinical services and collaborating on laboratory issues with the private sector, a number of state PHLs have, or are beginning, strategic planning efforts to address the changes in the clinical laboratory services marketplace. These responses include narrowing down the t
Public Health Laboratories and Health System Change . PHL Contracts With MCOs and Private Laboratories
Nine PHL directors reported involvement in contractual arrangements: four specified contracts with MCOs, four specified contracts with private laboratories, and one specified contracting with a provider. In terms of the scope of these activities, five PHLs reported outsourcing testing services to commercial laboratories. Examples of these tests in
In the State of Washington, a public-private venue called the Clinical Lab Advisory Council (CLAC) is shaping the laboratory delivery system. The CLAC was created by the PHL director in cooperation with the Office of Laboratory Quality Assurance and a range of private laboratory interests in the state. The CLAC was initially conceived as a respons
Public Health Laboratories and Health System Change . Collaboration Around Specific Public Health Priorities
While not reported in our informal poll, interviews with PHL directors revealed that state PHLs, North Dakota and Oregon, have worked specifically to open communication lines with MCOs and private laboratories to avoid duplicative efforts in laboratory services. In North Dakota, the state PHL director negotiated an arrangement with Blue Cross of N
This section describes how state PHLs are responding to health market changes, including the growth of managed care. The types of responses range from specific subcontracts for select services negotiated between some state PHLs and private laboratories and/or MCOs, to various types of public-private collaborations (e.g., formation of public-privat
Despite the trend toward reporting negative impacts, a few PHLs in our informal poll reported positive impacts from other health market changes. According to our informal poll of PHL directors, among the positive impacts identified by PHL directors were increased collaboration between the PHL and other private laboratory entities, and a decreased
A third reported impact of non-managed care health market change has been the erosion of disease reporting efforts. Several states reported that large, national reference laboratories with regional testing centers pose a threat to the national disease surveillance effort. Michigan's PHL director noted that private, out-of-state laboratories are of
Another reported effect of non-managed care health market changes has been an increase of PHL testing volume for very specialized, expensive tests. PHLs commonly perform tests that are clinically and epidemiologically important, but, due to high cost and low volume, are not commercially viable. Often characterized as the free-rider effect, PHLs re
The most commonly reported adverse effect of non-managed care health market change was the reduction in specimens being sent to the PHLs for laboratory testing. Of the 15 PHLs reporting a reduction in testing volume, 8 attributed the decrease to increased presence of private laboratories, 2 attributed the decrease to both private laboratories and
In addition to the direct pressures that PHLs report from the presence of managed care, there are a number of other health market forces that may be contributing to the uncertainty of the laboratory services marketplace for PHLs.
Public Health Laboratories and Health System Change . Improved Collaboration With Private Constituencies
A few PHLs in our informal poll reported positive impacts from the growth of managed care. According to our informal poll results of PHL directors, among the positive impacts identified by PHL directors were increased collaboration between the PHL and the state health agency, and an increase in specialized types of reference testing by the PHL.
Several PHL directors reported concern related to difficulty in obtaining reimbursement from MCOs for testing services rendered for their members. For example, Florida's PHL director reported that some managed care clients seek treatment at a county health department without authorization from the managed care organization, have tests performed by
Another concern of PHLs is that MCOs' member-driven focus (rather than public health / population-driven focus) will reduce disease reporting and thereby hamper national disease surveillance activities. While we did not uncover any empirical evidence to support this contention, three PHL directors, two state epidemiologists, and a CDC official in
The most frequently reported impact of managed care was a reduction in the number of specimens submitted to the laboratory for testing. Seventeen of the 49 PHL directors (35%) reported that managed care had led to a decrease in the number of specimens sent to the laboratory. Reports of testing decrease as an impact of managed care were directly re
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 o
This section characterizes the impact of managed care and health market change on the practices of PHLs, and describes how PHLs are responding to uncertainties in the clinical laboratory marketplace. While our findings are based on information from all the sources described in the methods section, the poll of PHL directors has been particularly us