^{By Kimberly Scott, Managing Editor, G2 Intelligence}
Increasing pressure from health plans is putting the squeeze on local and regional labs, which are finding it more and more difficult to compete with the low prices offered by the nation’s two largest lab companies, Quest and LabCorp.

To survive, labs will need to come up with new strategies that will give them greater leverage in their discussions with third-party payers, advises Michael Snyder, vice president, laboratory services, Medical Spend Management LLC (Flemington, N.J.)

As employers demand lower cost of benefits, health plans continue to ratchet down provider payments. Because the national labs are able to accept highly discounted payments, many of the smaller and mid-size labs are being cut out of the networks altogether.

Three major trends are threatening local and regional labs in their relationsihps with managed care: downsizing of provider networks, steerage to in-network providers, and a change in the BlueCross BlueShield "Blue Card" rules that affect how lab services are paid.

To survive in this changing marketplace, local and regional labs need to create new service models that focus on employer needs, as well as form networks or associations that will give them the clout and leverage to compete with the national labs, says Snyder.

For more on managed care pressures and what labs can do to survive, see the June issue of Laboratory Industry Report.