U.S. Clinical Laboratory and Pathology Testing 2013-2015: 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.
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 2013-2015: 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 2010-2015P ($ 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. 2010 2011 2012 2013P 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!
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 888-729-2315 or +1 604-210-4580, email us at CustomerService@G2Intelligence.com, or fax the order form on the back to +1 885-649-1623. 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, randy@plainlanguagemedia.com or call +1-888-729-2315. To order by phone, please call G2 Customer Care at +1-888-729-2315, or email CustomerService@G2Intelligence.com
U.S. Clinical Laboratory and Pathology Testing 2013-2015: 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... 14 Hospital Laboratory Sector Summary... 16 Independent Laboratory Sector Summary... 17 Molecular Diagnostics Sector Summary... 18 Anatomic Pathology Sector Summary... 19 Laboratory Industry Outlook... 20 CHAPTER 2: Major Trends and Implications for Laboratories...23 Lower Reimbursement... 23 Consumer Health Care... 26 Point-of-Care (POC) Testing... 31 Physician-as-Employee Model... 33 Provider-Payer Convergence... 37 New Payment and Care Delivery Models... 39 Molecular Medicine and Sequencing... 41 Summary... 47 CHAPTER 3: Hospital Laboratory Sector...49 Hospital Laboratory Market Introduction... 49 Hospital Market Environment... 49 Hospital Laboratory Market Sizing... 50 Hospital Laboratory Spending as Share of Overall Care Expenditures... 51 Hospital Laboratory Market Structure and Dynamics... 52 Sources of Revenue: Patient Type and Payers... 61 Hospital Laboratory Outreach... 62 Outlook for the Hospital Laboratory Sector... 75 CHAPTER 4: Independent Laboratory Sector...77 Independent Laboratory Market Introduction... 77 Independent Laboratory Market Sizing... 78 Independent Laboratory Market Structure and Dynamics... 79 Sources of Revenue: Top Tests and Payer Mix... 91 Laboratory Reference Testing Market... 94 Competitive Market Strategies... 100 Outlook for the Independent Laboratory Sector... 108 CHAPTER 5: Molecular Diagnostic and Genomic Testing Market...111 Overview... 111 Overall Market Size and Projections... 112 2013 Estimates... 113 Analysis of Selected MDx Sectors... 115 National MDx Landscape... 117 MDx Laboratory Landscape... 118 2013 Plain Language Media, LLLP iii
U.S. Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, Trends, and Forecasts Next Generation Sequencing... 119 Pricing and Reimbursement... 121 Strategic Insights Summary... 129 CHAPTER 6: The Anatomic Pathology Market...131 Anatomic Pathology Market Introduction... 131 Anatomic Pathology Market Size and Structure... 132 Anatomic Pathology Reimbursement Update and Outlook... 143 Anatomic Pathology Mergers and Acquisitions... 147 Anatomic Pathology Market Outlook... 152 CHAPTER 7: Medicare and Medicaid...153 The Medicare Market... 153 Trends in Medicare Spending... 155 Key Medicare Dynamics Impacting the Laboratory Industry... 164 The Medicaid Market... 166 Key Medicaid Dynamics Impacting the Laboratory Industry... 171 CHAPTER 8: Health Care Reform...181 Government Reform... 181 Private Market Reform... 192 Laboratories Enter a Dynamic Reform Marketplace... 194 View from the Field... 197 APPENDIX A: G2 Intelligence Sizing and Forecasting Methodologies...199 Sizing Methodology... 199 Forecasting Methodology... 200 APPENDIX B: Top Medicare Part B Laboratory and Pathology Procedures by Revenue 2011...201 APPENDIX C: Molecular Tests with Evidence of Health Care Savings...207 APPENDIX D: FDA Approved/Cleared Molecular Diagnostic Tests...213 APPENDIX E: Medicare Program History and Overview...225 Program Administration... 225 Program Structure... 225 About the Analysts...229 About G2 Intelligence...231 iv 2013 Plain Language Media, LLLP
Table of Figures U.S. Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, Trends, and Forecasts Laboratory Industry Revenue 2010-2015P ($ Billions)... 9 Laboratory Industry Revenue Growth Rates 2010-2015P... 10 Laboratory Industry Revenue by Facility Type 2012... 11 Laboratory Industry Test Volume (Non-Waived) by Facility Type 2012... 11 Laboratory Industry Revenue by Testing Segment 2012... 13 Laboratory Industry Growth Rates by Testing Segment 2012 and 2013P... 13 Survey Data: Genetic Knowledge in Practice... 45 Estimated Hospital Laboratory Revenue 2010-2015P ($ Billions)... 51 Annual Hospital Laboratory Non-Waived Test Volume 2012 vs. 2013P... 51 Total Hospital Care Expenditures 2000-2013P ($ Billions)... 52 Hospital Laboratory Spend as Share of Total National Hospital Expenditures 2010-2013P... 52 Total Number of CLIA-Certified Hospital Laboratory Facilities 2000-2013... 53 Hospital Laboratory Counts vs. Estimated Laboratory Revenue by Facility Type 2011... 54 Average Revenue per Laboratory by Hospital Type 2011 ($ Millions)... 55 Top 100 Hospital Laboratories by Laboratory Cost 2011... 56 Top 15 Small Hospital Laboratories by Laboratory Cost 2011 (Bed Size < 200)... 59 Top 15 Medium Hospital Laboratories by Laboratory Cost 2011 (Bed Size 200-500)... 60 Top 15 Large Hospital Laboratories by Laboratory Cost 2011 (Bed Size > 500)... 60 Hospital Laboratory Revenue Share by Patient Type 2010-2012E... 61 Average Hospital Laboratory Revenue Payer Mix 2012... 61 Hospital Laboratory Revenue by Patient Type 2012... 62 Hospital Outreach Performance vs. National Laboratories in 2011... 63 Rankings of Most Profitable Market Segments for Outreach 2011... 63 Average Net Revenue Per Test 2001-2011: Not Inflation Adjusted... 64 Average Net Revenue Per Test 2009-2011: Nominal vs. Inflation Adjusted... 64 Revenue Per Outreach Test by Size 2009-2011: Not Inflation Adjusted... 65 Key Performance Metrics for Hospital Outreach by Size... 66 Key Performance Metrics for Hospital Outreach by Location... 66 Top Outreach Competitors Overall 2006-2011... 67 Outreach Market Share Experience 2011... 67 Outreach Competitors by Location 2011... 68 Most Cited Outreach Program Strengths 2011... 69 Most Cited Outreach Program Weaknesses 2011... 69 Percentage of Laboratories Focus on Physician Offices/Clinics by Location 2011... 70 Most Promising Outreach Market Segments by Hospital Size 2011... 71 Sales and Field Service Rep Support by Location 2011... 72 Revenue Generation by Laboratory Sales Representative... 72 Percentage of Transactions Involving Hospital Outreach Laboratories 2008-2012... 74 Annual Independent Laboratory Non-Waived Test Volume 2012 vs. 2013P... 79 Estimated Independent Laboratory Revenue 2010-2015P ($ Billions)... 79 Revenue Growth at Top 5 Publicly Traded Laboratory Companies ($000)... 80 Revenue Share of Top 5 Publicly Traded Laboratory Companies... 80 Share of Top Independent Laboratory Non-Waived Test Volume 2012... 81 Top 100 Independent Laboratories by Annual Non-Waived Test Volume 2012... 81 Quest and LabCorp: Annual Revenue Per FTE 2000-2013P ($000)... 88 2013 Plain Language Media, LLLP v
U.S. Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, Trends, and Forecasts Quest and LabCorp: Revenue Per Requisition 2007-2013P ($)... 88 Compare Strategies of Quest and LabCorp 2013... 89 Distribution of Top 25 Medicare Part B Tests by Revenue 2011... 91 Top 25 Medicare Part B Laboratory and Pathology Procedures by Revenue 2011... 92 Average Independent Laboratory Revenue Payer Mix 2012... 93 Reference Testing Market by Sector 2011 ($ Billions)... 94 Reference Laboratories Used When Referring Out MDx Tests... 95 Leading Esoteric Reference Laboratories 2012... 96 How Reference Laboratories Are Perceived by the Market... 97 Would Laboratory Consider a Change in Reference Laboratory?... 98 Reasons for Considering Changing Reference Laboratory... 98 Percent of Hospital Offering MDx Tests that Refer Out... 99 Number of Closed U.S. Laboratory Transactions 2008 - Q1 2013... 100 Bio-Reference: Esoteric vs. Non-Esoteric Test Revenue 2000-2013P ($)... 102 Key Financial Performance Data at Major Public Laboratory Companies 2012... 103 Quest Diagnostics vs. LabCorp: Compete on High Value Esoteric Tests 2012... 104 Regional and Community Laboratories with IT Connectivity to Client Systems... 106 MDx Market Drivers... 113 Overall MDx Market Revenue Estimates and Growth 2012-2015P ($ Billions)... 114 MDx Market Revenue Estimates by Sector 2013 ($ Billions)... 114 MDx Market Revenue Estimates by Sector 2013... 115 Percent of Molecular Laboratories that Perform Hospital Acquired Infection (HAI) Tests... 117 2013 MDx Test Volume and Share of Volume by Type of Lab... 118 NGS Features and Advantages... 119 NGS Primary Modes... 120 Overview of Leading Next Generation Sequencing Platforms... 121 Z-Code Association to Reimbursement... 124 Palmetto MolDX Test Requirements... 125 AMP Proposed CPT/GSP Hierarchical Structure... 127 Fee for Service Lab Model vs. Lab Model... 128 Anatomc Pathology Market Revenue 2012-2014P ($ Billions)... 132 Top Pathology Laboratories by Pathology Test Volume 2012... 133 Pathologist Practice Sizes... 133 Mean Pathologist Compensation by Work Setting 2011 vs. 2012... 134 Mean Pathologist Compensation by Work Situation 2012... 135 Pathology Test Volume by Market Segment 2012... 135 Pathology Test Revenue by Market Segment 2012... 136 Distribution of Tests for the U.S. Pap Testing Market 2013 Est.*... 137 Pathology Revenue At-Stake from Insourcing 2012... 138 Large POL Share by Number of Laboratories, Volume, and Revenue 2012... 139 Distribution of New Cases for 10 Most Common Cancers 2013... 140 Projected Numbers of New Cancer Cases/Growth Rates by Site (Number of People in Thousands)... 141 CPT 88305 Medicare Reimbursement: Professional Component vs. Technical Component... 144 Impact of 2013 Medicare Physician Fee Schedule Changes on Part B Anatomic Pathology Revenue... 145 vi 2013 Plain Language Media, LLLP
U.S. Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, Trends, and Forecasts Impact of 2014 Medicare Physician Fee Schedule Changes on Part B Anatomic Pathology Revenue... 146 Total Valuations of U.S. Laboratory M&As 2008-2012 ($ Millions)... 147 Number of Closed U.S. Laboratory Transactions 2008 Through October 2013... 148 Pathology Laboratory Transactions in 2012... 149 Pathology Laboratory Transactions in 2013 (as of October 2013)... 149 Top 10 U.S. Laboratory Acquisitions by Purchase Price ($ Millions)... 150 Quest Diagnostics Anatomic Pathology Revenue 2009-2012 ($ Millions)... 150 Average Valuations by Laboratory Type 1996-2012... 151 Medicare Enrollees 1966-2030P (Millions)... 155 Medicare Expenditures 2000-2020P ($ Billions)... 156 Medicare Spending for Clinical Laboratory Services 2002-2012 ($ Billions)... 158 Medicare Spending on Clinical Laboratory Services by Facility Type 2002-2012 ($ Billions)... 159 Share of Medicare Clinical Laboratory Fee Schedule Spend by Facility Type 2002-2012... 159 Changes in Medicare Laboratory Fee Schedule for $10 Test... 161 Effects of Laboratory Fees Schedule Changes on a Hypothetical $10 Test... 162 Updates to Part B Clinical Laboratory Fee Schedules... 162 Pathology Codes with Potential Reimbursement Reductions of 65 Percent or Greater... 163 Medicaid Enrollment 2007-2011 (Millions)... 167 Medicaid Expenditures 2007-2011 ($ Billions)... 167 Medicaid Expenditures by Service 2003, 2005, 2008, and 2010... 168 Medicaid Enrollment and Expenditures by State FY 2010... 169 State Support for Diagnostic, Screening, and Preventive Services... 171 State Decisions on Medicaid Expansion (as of June 20, 2013)... 172 Medicaid Enrollment in Managed Care vs. Other 2005-2011 (Millions)... 174 USPSTF Grade A and B Preventive Services... 176 Measures That Matter Identified by Medicaid s Million Hearts Program... 178 Timeline for Key Features of the ACA... 182 Essential Health Benefits... 184 Demonstration Test List (as of December 2011)... 188 Medicare Bundled Payment Models... 190 G2 Intelligence Sizing Methodology... 199 G2 Intelligence Forecasting Methodology... 200 Top 10 Medicare Part B Hematology and Coagulation Procedures by Revenue 2011... 201 Top 10 Medicare Part B Traditional Microbiology Procedures by Revenue 2011... 202 Top 10 Medicare Part B Immunology Procedures by Revenue 2011... 203 Top 10 Medicare Part B Anatomic Pathology Procedures by Revenue 2011... 204 Top 10 Medicare Part B Drug Testing Procedures by Revenue 2011... 205 Compilation of Molecular Tests with Evidence of Health Care Savings... 208 Infectious Disease Tests Bacterial, Eukaryotic and Fungal... 214 Infectious Disease Tests Viral... 218 Molecular Diagnostic Tests Human... 221 2013 Plain Language Media, LLLP vii