Why not own a clinical lab?

[twinkles]

I have a question for those of you who are more adminstratively inclined: what is the profit margin on your average community hospital CP lab and why aren't there more pathologists that own that end of the lab, instead of the AP end (which seems to be far more prevalent)?

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[djmd]

I have a question for those of you who are more adminstratively inclined: what is the profit margin on your average community hospital CP lab and why aren't there more pathologists that own that end of the lab, instead of the AP end (which seems to be far more prevalent)?

Terrible. Which is no one does it.

It used to be better... actually it used to be so good it was almost criminal, but reimbursement changed...

 

[Anfield rd]

Terrible. Which is no one does it.

It used to be better... actually it used to be so good it was almost criminal, but reimbursement changed...

Some moons ago, pathologists were able to bill professional component per each test. This meant that for each hematocrit done you could have a cut. Same for micro. Rules have changed, and nowadays you cannot bill professional component per test. That's a simplified explanation, I'm sure Ladoc will be able to explain this issue in more details, peppered with personal anegdotes, biblical quotes and references to Zen.

 

[Path or bust]

So as I understand it, medicare caught onto this in the 70s-80s, in the time of million dollar pathologists. They didn't necessarily stop reimbursing for this they passed on the reimbursement to hospitals in hope that it would be passed down to pathologists. This is a topic of debate in Texas because insurance companies don't pay the hospital or pathologists for professional component. They tell patients that are being billed that they need to take it to the medical board for "improper unethical billing". The Texas medical board has ruled that pathologists do have the right to independently bill the professional component of clinical pathology services. There was also a court case on this where a judge ruled in favor of pathologists since he didn't see it fair that pathologists could be held accountable for these results yet receive no form of reimbursement.

 

[LADoc00]

Some moons ago, pathologists were able to bill professional component per each test. This meant that for each hematocrit done you could have a cut. Same for micro. Rules have changed, and nowadays you cannot bill professional component per test. That's a simplified explanation, I'm sure Ladoc will be able to explain this issue in more details, peppered with personal anegdotes, biblical quotes and references to Zen.

Actually you have been able and ARE still able to bill a PC for each and every lab test, CBC, LDH, tumor marker, Cross Match, Blood culture etc including send out tests......

the difficulty is that not many payors recognize these charges. Medicare doesnt pay them at all and instead reimburses these on a per hour basis allocated to pathologists as monthly directorship fees.

Blue Cross was successfully sued in Tenn I believe to have to recognize these charges, my prediction is that this will be the norm in the next 5 years or so.

The issue is that many pathology groups out of ignorance or laziness, marginalize CP and simply dont bill for crap...they are idiots IMO and hasten further degredation of the speciality. Personally I bill for it, spend alot of time doing CP related activities and am quite happy with the returns.

The ethical issue you have is that Medicare is essentially paying for services you are giving away for free to for profit insurance...technically this is illegal. No one has been called on it, but my prediction is that those groups who dont bill for CP pro fees will lose their Medicare Part B monies in the future.

As for starting your own CP lab, LOTS of people try it, none really succeed. It is far too big of a money maker for private medical centers (on the order of 10+ million in profit for a medium sized hospital) to give up now.

 

[BamaAlum]

Actually you have been able and ARE still able to bill a PC for each and every lab test, CBC, LDH, tumor marker, Cross Match, Blood culture etc including send out tests......

the difficulty is that not many payors recognize these charges. Medicare doesnt pay them at all and instead reimburses these on a per hour basis allocated to pathologists as monthly directorship fees.

Blue Cross was successfully sued in Tenn I believe to have to recognize these charges, my prediction is that this will be the norm in the next 5 years or so.

The issue is that many pathology groups out of ignorance or laziness, marginalize CP and simply dont bill for crap...they are idiots IMO and hasten further degredation of the speciality. Personally I bill for it, spend alot of time doing CP related activities and am quite happy with the returns.

The ethical issue you have is that Medicare is essentially paying for services you are giving away for free to for profit insurance...technically this is illegal. No one has been called on it, but my prediction is that those groups who dont bill for CP pro fees will lose their Medicare Part B monies in the future.

As for starting your own CP lab, LOTS of people try it, none really succeed. It is far too big of a money maker for private medical centers (on the order of 10+ million in profit for a medium sized hospital) to give up now.

http://www.crowell.com/NewsEvents/Newsletter.aspx?id=518#mc5

 

[pathstudent]

I have a question for those of you who are more adminstratively inclined: what is the profit margin on your average community hospital CP lab and why aren't there more pathologists that own that end of the lab, instead of the AP end (which seems to be far more prevalent)?

I don't think a pathologist can own a hospital lab (either CP or AP). They can only shoot for outpatient stuff. It would be tough because you would have to have blood draw centers and couriers to pick up all the specimens from outpatient clinics. Plus it would be nearly impossible to make any headway in a market where the Quests and such are already well established.

 

[docbiohazard]

Actually you have been able and ARE still able to bill a PC for each and every lab test, CBC, LDH, tumor marker, Cross Match, Blood culture etc including send out tests......

the difficulty is that not many payors recognize these charges. Medicare doesnt pay them at all and instead reimburses these on a per hour basis allocated to pathologists as monthly directorship fees.

Blue Cross was successfully sued in Tenn I believe to have to recognize these charges, my prediction is that this will be the norm in the next 5 years or so.

The issue is that many pathology groups out of ignorance or laziness, marginalize CP and simply dont bill for crap...they are idiots IMO and hasten further degredation of the speciality. Personally I bill for it, spend alot of time doing CP related activities and am quite happy with the returns.

The ethical issue you have is that Medicare is essentially paying for services you are giving away for free to for profit insurance...technically this is illegal. No one has been called on it, but my prediction is that those groups who dont bill for CP pro fees will lose their Medicare Part B monies in the future.

OK, so in reading all of this, I have to admit it seems a little maddening. How in the world did the ABP allow this to happen? Was there any sort of massive outcry / lobbying effort, or are we too unorganized for that?

It seems to me that an hourly compensation vs. a per test PC is insane, unless the hourly compensation somehow scales with the volume... but like Path or bust said, we're essentially on the hook for the results and the quality of the work coming out of the lab (if you're on the CP side)... so we're on the hook for that w/o recieving compensation?

It is hard to think of an analogous situation, but what if Medicare said they weren't going to reimburse radiologists for simple x-rays or something, rather they'd just pay them an hourly rate and the x-rays could be interpreted by primary care docs... people would go nuts.

I'm not saying the per test charge should be enormous. It could probably be relatively small. Maybe we could argue charging PCs for laboratory tests will improve healthcare efficiency and actually drive health care costs down by enhancing the judicious ordering of laboratory tests...

BH