Welcome to the first CLP of 2001!
The center spread of this issue kicks off the first in a series of 10 articles scheduled this year about the diagnostics industry. The Diagnostics Industry Overview on page 20, written by Jonathan Briggs, takes a top-of-the-trees look at the demographics, market trends, regulatory issues and mergers & acquisitions that serve as both gas pedal and brake for this dynamic multi-billion dollar segment of the healthcare industry where we toil each day.
Briggs looks at some of the causes and effects of consolidation. In 1994, for example, there were 15 diagnostics industry manufacturers producing and marketing 98 percent of the dollar volume of equipment and supplies sold to clinical laboratories. By 1998 — and still holding today — the number of major players had dwindled to seven.
The 1990s were not kind to the lab industry. Both government and private insurers rang every drop of fat out of laboratory budgets in their quest to lower reimbursements. But for those who feel beaten down by the budget slashings, there’s reason to believe that the worst is over. Market analysts from Merrill Lynch and BCC Research see glimmers of hope and even shining beacons of light in the lab’s future.
No one is forecasting the demise of managed care, but a 5 percent predicted growth rate for the industry takes on a different sheen now that former NASDAQ darlings are demonstrating their swan dives. And that’s just for the market as a whole. Diabetes (glucose), nucleic acid and point-of-care testing are going to continue to be huge. Those three segments can expect growth rates of 15 percent, 35 percent and 15 percent, respectively. Hematology and coagulation also look strong, according to the two reports.
If it’s true (as the statistics indicate) that 70 percent of all clinical decisions are based on clinical diagnostic tests, and clinical diagnostics account for just 3 percent of healthcare spending, then lab tests are one of the last great bargains left in healthcare. With healthcare bargains as rare as Florida voters who were happy with the butterfly ballot, the lab seems better positioned than most of the healthcare industry to meet the challenges of the future.