Lab Industry Strategic Outlook 2011: Market Trends and Analysis

Transcription

1 Lab Industry Strategic Outlook 2011: Market Trends and Analysis Published by: G2 Intelligence 1 Phoenix Mill Lane, Fl. 3 Peterborough, NH Customer Service: Fax:

2 Lab Industry Strategic Outlook 2011: Market Trends & Analysis 2011 BNA Subsidiaries, LLC Printed in the United States of America G2 Intelligence 1 Phoenix Mill Lane, Fl. 3 Peterborough, NH Customer Service: Fax: Joe Bremner Doug Anderson Dan Houder Beth Butler President V.P., Publisher Chief Marketing Officer Director of Marketing Lab Industry Strategic Outlook: Market Trends & Analysis 2011 Editors Copy Editor L. Eleanor J. Herriman, MD, MBA Mark Terry Janice Prescott isbn: BNA Subsidiaries market research businesses include G2 Intelligence. BNA is the largest independent publisher of information and analysis products for professionals in business and government. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, without the prior written permission of BNA Subsidiaries, LLC, Peterborough, New Hampshire, USA. This document is protected by copyright law. It is illegal under federal law (17USC101 et seq.) to copy or fax any of the contents of this document even for internal use without permission. Violators risk criminal prosecution and penalties of up to $150,000 in damages per offense. To report copyright abuses, please contact Candice Batten at ext. 636 or cbatten@kennedyinfo.com. ii

3 Lab Industry Strategic Outlook 2011: Market Trends & Chapter Analysis 1: Table Of Contents CHAPTER 1: Size and Structure of the U.S. Clinical Laboratory Testing Market...9 CHAPTER 2: Hospital Laboratory Sector...15 The Hospital Laboratory Outreach Market...22 Estimated Size of the Hospital Reference Testing Market...27 CHAPTER 3: Independent Laboratory Sector...31 Sector M&A Activity...31 Revenue Growth at 16 Publicly Traded Lab Companies...34 Small Independent Laboratories...39 Quest and LabCorp Competitive Advantages...39 National Managed-Care Contracts...39 CHAPTER 4: The Physician Office and Other Laboratory Sector...41 Other Laboratories...61 CHAPTER 5: Mergers and Acquisitions A Closer Look at 10 Recent Lab Deals...70 Analyzing the Lab Industry...72 CHAPTER 6: The Medicare Market...75 Medicare History...75 Overall Medicare Part B Spending Trends...75 Medicare Part B Clinical Laboratory Services Spending Trends...77 Medicare Market Share Trends...79 Individual Laboratory Procedures...80 Reimbursement Pressure...81 Fraud and Abuse Crackdown CHAPTER 7: The Medicaid Market...87 Medicaid Spending on Laboratory Services State Control...89 Healthcare Reform...91 CHAPTER 8: The Esoteric Testing Market...93 Trends in Developing Esoteric Test Menus...95 Pricing for Esoteric Testing...96 Market Share Trends...97 Revenue Growth at Eight Esoteric Testing Laboratories...98 CHAPTER 9: The Anatomic Pathology and Cytology Market Breaking Down the Outpatient Anatomic Pathology Market Reimbursement Medicare Reimbursement CPT Medicare Expenditures CPT Medicare Claims Volume Trends CPT Medicare Expenditures CPT Medicare Claims Volume Trends CPT Medicare Expenditures CPT Medicare Claims Volume Trends CPT Medicare Expenditures CPT Medicare Claims Volume Trends iii

4 Lab Industry Strategic Outlook 2011: Market Trends & Analysis CPT Medicare Expenditures CPT Medicare Claims Volume Trends CPT Medicare Expenditures CPT Medicare Claims Volume Trends Combined Medicare Expenditures for Six High-Volume CPT Codes Anatomic Pathology Test Volume Projections Challenges Facing the Anatomic Pathology Market The Technology Only Challenge A Snapshot of the Anatomic Pathology Market CHAPTER 10: The Market for Workplace Drug Testing Market Size and Leading Competitors Alternative Drug Testing Methods CHAPTER 11: The Outlook for the U.S. Clinical Laboratory Testing Market Positive Facts for the Industry Negative Facts for the Industry CHAPTER 12: The Role of Suppliers/Distributors and Group Purchasing Organizations (GPOs) Distributors/Suppliers Group Purchasing Organizations (GPOs) GPO Revenue? How It Works APPENDIX A: Profiles of 11 Publicly Traded U.S. Laboratory and Pathology Companies Bio-Reference Laboratories Enzo Biochem Genomic Health Genoptix Genzyme Genetics Laboratory Corporation of America Medtox Scientific Myriad Genetics NeoGenomics Psychemedics Corp Quest Diagnostics APPENDIX B: A Directory of Privately Held Laboratory and Pathology Companies APPENDIX C: Consolidation and Productivity at the Top Three Independent Labs APPENDIX D: A Directory of Venture Capital, Private Equity, Investment Banking, and Other Financial Firms Involved With the Life Sciences and/or Healthcare APPENDIX E: A Directory of Clinical Laboratory Consultants About the Analysts About G2 Intelligence iv

5 Chapter 1: Table of Figures Laboratory Industry Revenue, ($B)... 9 National Expenditures on Health Services & the Laboratory Industry ($BB) Laboratory Industry Market Share by Test Volume, Laboratory Market Segments by Revenue, 2010P ($B) Major Testing Segments in the Laboratory Industry, 2008, 2009 and 2010P ($B) Lab Segment Annual Growth Rates, P ($B) Projected Growth By Laboratory Segment, 2010P The Clinical Laboratory Testing Market by Test Volume in The Clinical Laboratory Testing Market By Revenue in 2010P Total Hospital Laboratory Test Volumes, 2007 and Hospital Laboratory Revenues ($B) Total National Hospital Care Expenditures ($B) Total Number of CLIA-Certified Hospital Laboratory Facilities Annual Billable Test Volume Estimated Annual Billable Test Volume for Estimated Average Annual Billable Test Volume Growth Rates, Top 75 Hospital Laboratories by Non-Waived Test Volumes, An Average Hospital Outreach Program Average Referral Volume by Laboratory Type Average Reference Laboratory Expense by Laboratory Type Average Reference Laboratory Expense Per Bed by Hospital Bed Size Comparison: Days in Accounts Receivable, Comparison: Average Days in Accounts Receivable, Bad-Debt Expense as a Percentage of Revenue, Outreach Program Performance vs. National Reference Laboratories Estimated Size of Hospital Reference Market, Average Reference Laboratory Expense % Change, A Snapshot of 50 Large Hospital-Based Laboratory Outreach Programs, Revenue Trend for Independent Laboratory Sector ($B) Quest and LabCorp: Annual Revenue Per FTE ($000) Revenue Growth at Quest Diagnostics and LabCorp ($M) Revenue Growth at 16 Publicly Traded Lab Companies ($000) Annual Revenue Growth at Publicly Traded Lab Companies Top 100 Independent Laboratory Corporations by Non-Waived Test Volumes, Snapshot of Small Independent Laboratories Overview of 2009 Managed Care Contracts and Membership Numbers LabCorp Revenue from Managed-Care Contracts, ($M) Quest Diagnostics Revenue from Managed-Care Contracts, ($M) Total National Physician Service Expenditures, P ($B) Physician Office Laboratory Revenue, P ($B) CLIA-Certified Physician Office Labs versus Labs in General, Twenty Most Common Laboratory Tests Offered at Family Physician Offices Top 100 Physician Office Laboratories by Waived Test Volumes, Breakdown of Physician Office Laboratory Types Top 100 Physician Office Labs by Nonwaived Test Volumes, Top 100 POL Waived Test Volumes Vs. Total POL Surveyed Test Volumes, Waived Versus Nonwaived Test Volumes, 2007 and Total Number of Non-Waived POLs, v

6 Lab Industry Strategic Outlook 2011: Market Trends & Analysis New Tests Granted CLIA Waived Status, January 2009-September Value of Laboratory Mergers, Acquisitions & IPOs ($M), Number of Laboratory Mergers, Acquisitions, and IPOs, Average Revenue Multiple Paid to Acquire Labs, Laboratory Mergers & Acquisitions, January 2000-September 2010 ($M) Number of Medicare Enrollees, P (M) Medicare Part B Expenditures Versus Overall Medicare Spending, P ($B) Part B Clinical Laboratory Services Spending Trends, ($B) Medicare Part B Clinical Laboratory Services Expenditures Versus Overall Part B Spending, P ($B) Medicare Part B Clinical Laboratory Services Expenditures Versus Overall Medicare Spending, ($B) Medicare Spending for Clinical Laboratory Services, ($B) Hospital Labs Share of Part B Laboratory Expenditures, Distribution of Medicare Expenditures, Allowed Charges for Top 25 Clinical Laboratory Procedures, Effect of Medicare Laboratory Fee Schedule Changes on a $10 Test Changes in Medicare Laboratory Fee Schedule for a $10 Test Major Laboratory Fraud & Abuse Settlements ($M) Total Medicaid Enrollment, 1997 to 2010P (M) Total Medicaid Expenditures, P ($B) Total Medicaid Expenditures at Top 10 States, 2008 ($M) Medicaid Expenditures by Services, 2005 & Benefits by Service: Laboratory and X-Ray Services, Outside Hospital or Clinic (As of Oct. 2006) Size of Test Menu Which National Esoteric Lab is Your Primary Reference Lab? Top Esoteric Laboratory Consolidation, Lab Segment Annual Growth Rates, P ($B) Which National Esoteric Testing Lab Offers the Best Value(i.e., Service Plus Price)? Percentage of Labs Actively Seeking to Broaden Their Esoteric Test Menus, 2002, 2004, 2005, What is the Biggest Barrier Your Laboratory Faces in Expanding its Esoteric Testing Menu? Most Frequent Test Referrals Does Your Lab Plan to Switch Its Primary Reference Lab within the Next 12 Months? Market Share Trends, 2002, 2004, 2006, Revenue Growth at ARUP Laboratories ($M) Revenue Growth at Prometheus Labs ($M) Revenue Growth at Genzyme Genetics ($M) Revenue Growth at Myriad Genetics ($M) Revenue Growth at Bio-Reference Laboratories ($M) Revenue Growth at Genoptix ($M) Revenue Growth at Genomic Health ($M) Revenue Growth at NeoGenomics ($M) Revenue Growth at 8 Esoteric Testing Laboratories, ($M) The Anatomic Pathology and Cytology Market, 2009 and 2010P Anatomic Pathology and Cytology Market Share, Size of the Anatomic Pathology Market Outpatient Anatomic Pathology Market vi

7 Chapter 1: Top 60 Medical Part B Anatomic Pathology Procedures (2008) Medicare Reimbursement for Professional Component of CPT Medicare Reimbursement for CPT 88305, Medicare Expenditures for CPT for ($M) Submitted Claims Volume for CPT for (M) Medicare Expenditures for CPT for ($M) Submitted Claims Volume for CPT for (M) Medicare Expenditures for CPT for ($M) Submitted Claims Volume for CPT for (Thousands) Medicare Expenditures for CPT for ($M) Submitted Claims Volume for CPT for (Thousands) Medicare Expenditures for CPT for ($M) Submitted Claims Volume for CPT for (M) Medicare Expenditures for CPT for ($M) Submitted Claims Volume for CPT for (Thousands) Medicare Expenditures for Six High-Volume Codes for ($M) Submitted Claims Volume for Six High-Volume Codes for (Thousands) What is Your Forecast for Test Volume by Anatomic Pathology for 2010? Top Three Challenges to Growth in 2009, by Facility Type Anatomic Pathology Laboratories Average Price of Drug Tests Drugs of Abuse CLIA Waived Tests SAMHSA-Certified Drug Testing Laboratories Directory of SAMHSA-Certified Drug Testing Laboratories National Expenditures on Health Services & the Laboratory Industry ($B) Laboratory Industry Revenue, P ($B) Median Age of the U.S. Population Projected U.S. Population By Age, (Thousands) Average Health Care Plan Cost Increases Average Revenue Per Requisition at Quest Diagnostics Average Revenue Per Requisition at LabCor Laboratory Personnel Employment Projections Average Vacancy Rates for Key Laboratory Positions, Median Hourly Pay Rates: Decline in Number of Medical Technologist Programs Number of Certified Medical Technologists: Healthcare Distribution Service Sectors, Healthcare Distribution Product Mix, Healthcare Distribution Benefits Cardinal Health Financial Overview, Cardinal Health Segment Financial Overview, ($M) Thermo Fisher Financial Overview, ($M) Thermo Fisher Financial Breakdown, Owens & Minor Financial Overview, P ($M) Henry Schein Financial Overview, ($M) McKesson Financial Overview, P ($M) AmerisourceBergen Financial Overview, ($M) Top Healthcare Distributors Revenue, ($M) Does Your Laboratory Use a GPO? vii

8 Lab Industry Strategic Outlook 2011: Market Trends & Analysis Does Your Laboratory Purchase the Majority of Its Reference Lab Services through a GPO? Month Changes in Price Indexes Overall Projected Price Changes Month Changes in Price Index Per Goods Premier Financials ($000) As of January 18, 2010, Amerinet Reported the Following Membership Statistics Bio-Reference Laboratories Enzo Biochem Genomic Health Genoptix Genzyme Genetics Laboratory Corporation of America Medtox Scientific Myriad Genetics NeoGenomics Psychemedics Corp Quest Diagnostics A Directory of Privately Held Laboratory and Pathology Companies Annual Revenue per FTE at Quest and LabCorp, ($000) Productivity at the Three Largest Independent Labs, A Directory of Venture Capital, Private Equity, Investment Banking, and Other Financial Firms Involved with the Life Sciences and/or Healthcare A Directory of Clinical Laboratory Consultants viii

9 Lab Industry Strategic Outlook 2011: Market Trends & Chapter Analysis 1: CHAPTER 14 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. Formerly known as Washington G-2 Reports, the company has covered and reported on the diagnostic industry for over 30 years. G2 Intelligence delivers topical and analytical periodicals, proprietary research studies, and custom advisory services, and through live and virtual events, facilitates industry meetings and information exchanges. 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. G2 Intelligence is a division of Kennedy Information, LLC, a leading provider of professional markets analysis. Information on other G2 Intelligence products and services can be found at Diagnostics Market Analysis and Trends Lab Industry Strategic Outlook 2011: Market Trends & Analysis Lab Industry Analysis 2010: Test Volumes, Revenues and Category Leaders U.S. Laboratory Reference Testing: Market Profile & Pricing Trends 2010 Lab Industry Strategic Outlook India: Trends & Analysis 2010 Laboratory Business Strategy and Operations How to Build a Molecular Testing Laboratory: Key Strategic & Operational Considerations Sales Compensation in the Laboratory Industry: Incentives, Plans and Strategies Healthcare Market Reforms: Implications and Prescriptions for Laboratories Laboratory Industry Strategic Outlook: Niche/Specialty Markets Survival Guide to Negotiating Managed Care Contracts Strategies for Anatomic Pathology, Second Edition Guide to Integrated Diagnostics: Where Digital Pathology, Digital Radiology and Molecular Diagnostics Meet Directory of Laboratory Outreach Programs Guide to Laboratory Sales & Marketing Business Strategies for Laboratory Outreach Programs, 3rd Edition 9

10 Lab Industry Strategic Outlook 2011: Market Trends & Analysis Compliance, Regulation and Risk CLIA Compliance: The Essential Reference for the Clinical Laboratory, 3rd Edition Medicare Reimbursement Manual For Laboratory & Pathology Services 2011 Periodicals Laboratory Industry Report National Intelligence Report G2 Compliance Report Diagnostic Testing & Technology Report Webinars G2 Intelligence produces live web events that provide unique insight and analysis into the issues that matter the most to your lab. Learn with your colleagues in a convenient, interactive forum and gain access to our expert faculty s perspective on a wide range of topics. Can t make the date for the live event? View our webinar archive for access to recordings of our most highly-rated events. Find out more at Annual In-Person Conferences G2 s highly-rated in-person events have set the standard for learning and networking opportunities since Featuring world-class faculty, and an ever-changing array of topics, G2 s in-person events are designed to deliver the intelligence and insight you need to manage in today s quickly changing, hyper-competitive business environment. Position your lab for growth, keep up with the competition, and stay current on the latest regulatory changes that impact your lab both now and in the future. Find out more at Lab Institute Molecular Diagnostics, Fall & Spring Laboratory Outreach Lab Leaders Summit LabCompete: Laboratory Sales & Marketing 10