Lab Economics

V OLUME 6, N O . 8 AUGUST 2011

ANALYST’S REPORT HIGHLIGHTS THE HIGH COST OF HOSPITAL LAB TESTING

CONTENTS

HEADLINE NEWS

Report highlights high cost of hospital labs..............1, 6-7 Dallas pathologist and AmeriPath reach settlement ..........1, 9 Aurora Diagnostics buys two more path labs; James New is stepping down ..........1-2

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necdotal evidence presented in a new Wall Street research report suggests that hospital labs are charging managed care companies significantly more than the national labs. The report written by Ralph Giacobbe at Credit Suisse compared the cost of a series of tests performed at a United Healthcare in-network hospital lab in New York City versus a nearby LabCorp location. Giacobbe found that the hospital charged over 23 times more than LabCorp ($384 vs. $16.25) for the same exact tests. Given the significant upcoming changes brought on by healthcare reform, and focus on cost-effective care, Giacobbe believes managed care companies will redouble their efforts to direct patients to lower-cost labs. And with growing out-of-pocket costs, he expects more consumer attention and awareness to help drive change. Continued on pages 6-7.

MERGERS & ACQUISITIONS

Linden buys Strata Pathology .............2 Signal Genetics buys DiagnoCure’s lab .................................8 Poplar Healthcare expands into oncology .......................................8 Solstas buys two more labs: Southern Diagnostics and Oracle Diagnostics ....................10 US Clinical Labs acquires Georgia lab ........................................10 Lab acquisition summary, 2010-2011 ............................................11

DALLAS PATHOLOGIST AND AMERIPATH REACH SETTLEMENT

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MEDICARE

Medicare Part B spending up 4.6% last year ...............................2-4 The outlook for Medicare is bleak ......4

ichael Robles, DO, and AmeriPath have reached a confidential settlement agreement that ends a lawsuit that Robles had filed challenging...