U.S. Clinical Laboratory and Pathology Testing :

Transcription

1 U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts Now more than ever, it s critical to understand the industry at a macro level. Prepare your organization to compete in this difficult environment.

2 For the first time since G2 Intelligence began reporting on the clinical lab industry, it is contracting. This report details the causes, trends, and implications and what solutions are being implemented by a range of organizations. U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts G2 Intelligence s all-new study builds upon and replaces the former biennial report, Laboratory Industry Strategic Outlook. With enriched content and improved rigor with respect to data analytics, it s the industry handbook no laboratory executive should be without. Here s why: It is the only report that provides data-driven, comprehensive business intelligence on the overall U.S. clinical and pathology laboratory testing industry. It forecasts market growth or contraction out to 2015, preparing laboratories of various sizes and types for potential opportunities and/or challenges ahead. It features never-before-reported data on hospital labs by facility size and type, including short-term acute care, children's, long term care, and critical access. It provides valuable data on the molecular market, including next-generation sequencing, and rich analysis of the infectious disease segment the largest in the molecular market. It offers helpful strategies for independent labs, with real-world insights from peer laboratories, and what they re doing to adapt and succeed. It includes valuable analysis on the new lab outreach environment, including: How the growing popularity of the physician-as-employee model threatens a historically important revenue stream The need to find new client targets, such as employer wellness programs It covers key IT topics, with particular focus on labs technology and connectivity concerns. G2 Intelligence s Proprietary Market Sizing Methodology Utilizing government, private payer and other sources to crosscheck data, this is the one report that relies on multiple sources to create a unique bottom-up, rather than top-down view, to better support strategic business planning. Major Data Inputs: Truven Health Analytics: Private payer lab test reimbursement data American Hospital Directory (AHD): Hospital lab cost data across payers MedPAC: Medicare lab test payments through clinical fee schedules Reference Data: Medicare Part B lab test reimbursement data Payer mix data through primary and secondary research Other relevant secondary data Primary market research data Laboratory Industry Revenue P ($ Billions) $66.9 $70.3 $76.1 $74.0 See report A comprehensive 230+ page report, supported by over 125 data-rich tables and charts P 2014P 2015P P = Projected Midpoint estimates are displayed for 2014 and 2015 Source: G2 Intelligence, Truven Health Analytics, CMS, American Hospital Directory Order your copy today! Click Here!

3 Featuring both qualitative and quantitative research, this exclusive study is comprised of the following: Views from the Field found throughout the report, detailing experiences of peer laboratories, and what they are doing to adapt and compete in a changing marketplace. Major Trends and Implications for Laboratories discusses key trends surrounding lower reimbursement, consumer health care, point-of-care testing, physician-as-employee, provider-payer convergence, and new payment and care delivery models. Hospital Laboratory Sector provides proprietary market sizing and analysis of test volumes and revenues, and explores how market forces are shaping the future of this sector. Independent Laboratory Sector includes a comprehensive look at market sizing, structure, and dynamics, plus key strategies for taking on the reimbursement and reform challenges ahead and describes how to achieve a shift in the value proposition, while improving population health outcomes. Molecular Diagnostic and Genomic Testing Market with health care market reform mandating a shift to value-based care, conflicting payment paradigms, and an increased demand for test transparency and evidence of clinical utility, get all the details on market size, projections, and analysis of selected MDx sectors. Anatomic Pathology Market as doors for conducting business as usual close, new ones are opening. Learn more, while examining market size and structure, reimbursement update and outlook, M&A data, and prospects for the future. Medicare and Medicaid a wealth of actionable intelligence on these increasingly complex programs, including overviews, spending trends, and key dynamics impacting the laboratory industry, plus payment reform, cost-cutting mandates, competitive bidding, and more. Health Care Reform examines new reimbursement challenges and shifting payment methods, including new Medicare demonstrations of coordinated care delivery models aimed at improving quality and lowering costs. Plus, gain intelligence on the aggressive stance being taken by private payers. Order now and receive your copy for $1,495 by Clicking Here! To find out more, or to place your order by phone, please call or , us at [email protected], or fax the order form on the back to About G2 Intelligence Advancing the Business of Diagnostic Medicine G2 Intelligence provides timely, accurate and trusted analysis of industry and market trends, legal and regulatory developments, and technology and innovation that directly affect the operations, financial performance, and competitive position of diagnostic testing laboratories and related medical services providers. Our mission is to deliver relevant, meaningful and actionable findings on diagnostic industry markets, related regulatory changes, and lab operations. The organization strives to exceed client expectations and develop mutually beneficial relationships with industry leaders and influencers. About the Analysts L. Eleanor J. Herriman, M.D., M.B.A., Managing Director, Advisory Services Herriman is a pathologist executive with 15+ years experience in the medical technology industry. She leads G2 s advisory services, which provides strategic consulting and custom market research and assessments for a range of clients, and is the author of three G2 reports. Her market experience spans the clinical laboratory, in vitro diagnostics, and strategy consulting for Bain & Company. Herriman earned her M.D. at Baylor College of Medicine, and received an M.B.A. from Harvard Business School. Jenny Xu, Ph.D., Director of Research Xu leads G2's primary market research, secondary research, and syndicated industry analysis. Prior to joining G2, Xu worked at the global consultancy ZS Associates and the full service market research firm, Harris Interactive. Xu earned her Ph.D. with honors from the Annenberg School for Communication at the University of Southern California. Jennifer Musumeci, MS, Associate Director, Advisory Services Musumeci has 10+ years of experience in both domestic and international healthcare research. She has worked at Harris Interactive, KJT Group, Cegedim Strategic Data, Novartis Global Oncology and Bayer Healthcare Pharmaceuticals. Musumeci earned her MS in Human Development at the University of Rochester. G2 Intelligence research is priced for one authorized user only. For more information and custom licensing solutions for multiple users that will keep your organization in compliance with U.S. Copyright Laws, please contact Randy Cochran, [email protected] or call To order by phone, please call G2 Customer Care at , or [email protected]

4 U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts Table Of Contents Table of Contents CHAPTER 1: Overview and Outlook for the U.S. Laboratory Testing Industry...9 Laboratory Industry Market Size and Structure... 9 Trends Hospital Laboratory Sector Summary Independent Laboratory Sector Summary Molecular Diagnostics Sector Summary Anatomic Pathology Sector Summary Laboratory Industry Outlook CHAPTER 2: Major Trends and Implications for Laboratories...23 Lower Reimbursement Consumer Health Care Point-of-Care (POC) Testing Physician-as-Employee Model Provider-Payer Convergence New Payment and Care Delivery Models Molecular Medicine and Sequencing Summary CHAPTER 3: Hospital Laboratory Sector...49 Hospital Laboratory Market Introduction Hospital Market Environment Hospital Laboratory Market Sizing Hospital Laboratory Spending as Share of Overall Care Expenditures Hospital Laboratory Market Structure and Dynamics Sources of Revenue: Patient Type and Payers Hospital Laboratory Outreach Outlook for the Hospital Laboratory Sector CHAPTER 4: Independent Laboratory Sector...77 Independent Laboratory Market Introduction Independent Laboratory Market Sizing Independent Laboratory Market Structure and Dynamics Sources of Revenue: Top Tests and Payer Mix Laboratory Reference Testing Market Competitive Market Strategies Outlook for the Independent Laboratory Sector CHAPTER 5: Molecular Diagnostic and Genomic Testing Market Overview Overall Market Size and Projections Estimates Analysis of Selected MDx Sectors National MDx Landscape MDx Laboratory Landscape Plain Language Media, LLLP iii

5 U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts Next Generation Sequencing Pricing and Reimbursement Strategic Insights Summary CHAPTER 6: The Anatomic Pathology Market Anatomic Pathology Market Introduction Anatomic Pathology Market Size and Structure Anatomic Pathology Reimbursement Update and Outlook Anatomic Pathology Mergers and Acquisitions Anatomic Pathology Market Outlook CHAPTER 7: Medicare and Medicaid The Medicare Market Trends in Medicare Spending Key Medicare Dynamics Impacting the Laboratory Industry The Medicaid Market Key Medicaid Dynamics Impacting the Laboratory Industry CHAPTER 8: Health Care Reform Government Reform Private Market Reform Laboratories Enter a Dynamic Reform Marketplace View from the Field APPENDIX A: G2 Intelligence Sizing and Forecasting Methodologies Sizing Methodology Forecasting Methodology APPENDIX B: Top Medicare Part B Laboratory and Pathology Procedures by Revenue APPENDIX C: Molecular Tests with Evidence of Health Care Savings APPENDIX D: FDA Approved/Cleared Molecular Diagnostic Tests APPENDIX E: Medicare Program History and Overview Program Administration Program Structure About the Analysts About G2 Intelligence iv 2013 Plain Language Media, LLLP

6 Table of Figures U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts Laboratory Industry Revenue P ($ Billions)... 9 Laboratory Industry Revenue Growth Rates P Laboratory Industry Revenue by Facility Type Laboratory Industry Test Volume (Non-Waived) by Facility Type Laboratory Industry Revenue by Testing Segment Laboratory Industry Growth Rates by Testing Segment 2012 and 2013P Survey Data: Genetic Knowledge in Practice Estimated Hospital Laboratory Revenue P ($ Billions) Annual Hospital Laboratory Non-Waived Test Volume 2012 vs. 2013P Total Hospital Care Expenditures P ($ Billions) Hospital Laboratory Spend as Share of Total National Hospital Expenditures P Total Number of CLIA-Certified Hospital Laboratory Facilities Hospital Laboratory Counts vs. Estimated Laboratory Revenue by Facility Type Average Revenue per Laboratory by Hospital Type 2011 ($ Millions) Top 100 Hospital Laboratories by Laboratory Cost Top 15 Small Hospital Laboratories by Laboratory Cost 2011 (Bed Size < 200) Top 15 Medium Hospital Laboratories by Laboratory Cost 2011 (Bed Size ) Top 15 Large Hospital Laboratories by Laboratory Cost 2011 (Bed Size > 500) Hospital Laboratory Revenue Share by Patient Type E Average Hospital Laboratory Revenue Payer Mix Hospital Laboratory Revenue by Patient Type Hospital Outreach Performance vs. National Laboratories in Rankings of Most Profitable Market Segments for Outreach Average Net Revenue Per Test : Not Inflation Adjusted Average Net Revenue Per Test : Nominal vs. Inflation Adjusted Revenue Per Outreach Test by Size : Not Inflation Adjusted Key Performance Metrics for Hospital Outreach by Size Key Performance Metrics for Hospital Outreach by Location Top Outreach Competitors Overall Outreach Market Share Experience Outreach Competitors by Location Most Cited Outreach Program Strengths Most Cited Outreach Program Weaknesses Percentage of Laboratories Focus on Physician Offices/Clinics by Location Most Promising Outreach Market Segments by Hospital Size Sales and Field Service Rep Support by Location Revenue Generation by Laboratory Sales Representative Percentage of Transactions Involving Hospital Outreach Laboratories Annual Independent Laboratory Non-Waived Test Volume 2012 vs. 2013P Estimated Independent Laboratory Revenue P ($ Billions) Revenue Growth at Top 5 Publicly Traded Laboratory Companies ($000) Revenue Share of Top 5 Publicly Traded Laboratory Companies Share of Top Independent Laboratory Non-Waived Test Volume Top 100 Independent Laboratories by Annual Non-Waived Test Volume Quest and LabCorp: Annual Revenue Per FTE P ($000) Plain Language Media, LLLP v

7 U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts Quest and LabCorp: Revenue Per Requisition P ($) Compare Strategies of Quest and LabCorp Distribution of Top 25 Medicare Part B Tests by Revenue Top 25 Medicare Part B Laboratory and Pathology Procedures by Revenue Average Independent Laboratory Revenue Payer Mix Reference Testing Market by Sector 2011 ($ Billions) Reference Laboratories Used When Referring Out MDx Tests Leading Esoteric Reference Laboratories How Reference Laboratories Are Perceived by the Market Would Laboratory Consider a Change in Reference Laboratory? Reasons for Considering Changing Reference Laboratory Percent of Hospital Offering MDx Tests that Refer Out Number of Closed U.S. Laboratory Transactions Q Bio-Reference: Esoteric vs. Non-Esoteric Test Revenue P ($) Key Financial Performance Data at Major Public Laboratory Companies Quest Diagnostics vs. LabCorp: Compete on High Value Esoteric Tests Regional and Community Laboratories with IT Connectivity to Client Systems MDx Market Drivers Overall MDx Market Revenue Estimates and Growth P ($ Billions) MDx Market Revenue Estimates by Sector 2013 ($ Billions) MDx Market Revenue Estimates by Sector Percent of Molecular Laboratories that Perform Hospital Acquired Infection (HAI) Tests MDx Test Volume and Share of Volume by Type of Lab NGS Features and Advantages NGS Primary Modes Overview of Leading Next Generation Sequencing Platforms Z-Code Association to Reimbursement Palmetto MolDX Test Requirements AMP Proposed CPT/GSP Hierarchical Structure Fee for Service Lab Model vs. Lab Model Anatomc Pathology Market Revenue P ($ Billions) Top Pathology Laboratories by Pathology Test Volume Pathologist Practice Sizes Mean Pathologist Compensation by Work Setting 2011 vs Mean Pathologist Compensation by Work Situation Pathology Test Volume by Market Segment Pathology Test Revenue by Market Segment Distribution of Tests for the U.S. Pap Testing Market 2013 Est.* Pathology Revenue At-Stake from Insourcing Large POL Share by Number of Laboratories, Volume, and Revenue Distribution of New Cases for 10 Most Common Cancers Projected Numbers of New Cancer Cases/Growth Rates by Site (Number of People in Thousands) CPT Medicare Reimbursement: Professional Component vs. Technical Component Impact of 2013 Medicare Physician Fee Schedule Changes on Part B Anatomic Pathology Revenue vi 2013 Plain Language Media, LLLP

8 U.S. Clinical Laboratory and Pathology Testing : Market Analysis, Trends, and Forecasts Impact of 2014 Medicare Physician Fee Schedule Changes on Part B Anatomic Pathology Revenue Total Valuations of U.S. Laboratory M&As ($ Millions) Number of Closed U.S. Laboratory Transactions 2008 Through October Pathology Laboratory Transactions in Pathology Laboratory Transactions in 2013 (as of October 2013) Top 10 U.S. Laboratory Acquisitions by Purchase Price ($ Millions) Quest Diagnostics Anatomic Pathology Revenue ($ Millions) Average Valuations by Laboratory Type Medicare Enrollees P (Millions) Medicare Expenditures P ($ Billions) Medicare Spending for Clinical Laboratory Services ($ Billions) Medicare Spending on Clinical Laboratory Services by Facility Type ($ Billions) Share of Medicare Clinical Laboratory Fee Schedule Spend by Facility Type Changes in Medicare Laboratory Fee Schedule for $10 Test Effects of Laboratory Fees Schedule Changes on a Hypothetical $10 Test Updates to Part B Clinical Laboratory Fee Schedules Pathology Codes with Potential Reimbursement Reductions of 65 Percent or Greater Medicaid Enrollment (Millions) Medicaid Expenditures ($ Billions) Medicaid Expenditures by Service 2003, 2005, 2008, and Medicaid Enrollment and Expenditures by State FY State Support for Diagnostic, Screening, and Preventive Services State Decisions on Medicaid Expansion (as of June 20, 2013) Medicaid Enrollment in Managed Care vs. Other (Millions) USPSTF Grade A and B Preventive Services Measures That Matter Identified by Medicaid s Million Hearts Program Timeline for Key Features of the ACA Essential Health Benefits Demonstration Test List (as of December 2011) Medicare Bundled Payment Models G2 Intelligence Sizing Methodology G2 Intelligence Forecasting Methodology Top 10 Medicare Part B Hematology and Coagulation Procedures by Revenue Top 10 Medicare Part B Traditional Microbiology Procedures by Revenue Top 10 Medicare Part B Immunology Procedures by Revenue Top 10 Medicare Part B Anatomic Pathology Procedures by Revenue Top 10 Medicare Part B Drug Testing Procedures by Revenue Compilation of Molecular Tests with Evidence of Health Care Savings Infectious Disease Tests Bacterial, Eukaryotic and Fungal Infectious Disease Tests Viral Molecular Diagnostic Tests Human Plain Language Media, LLLP vii