Business Trends: More Hospitals Looking to Outsource Their Lab Testing

'Looking for new business opportunities? A new survey shows a substantial jump in the number of hospitals looking to outsource lab services. creating potential opportunity for labs. Although no hospitals plan to outsource their entire lab functions, the July survey by global investment bank and financial services company UBS finds that 23% of hospitals in the United States are interested in outsourcing more lab services, up from just 4% in April.

The Outsourcers

UBS surveyed 75 hospital CEOs and CFOs, with oversight for 655 hospitals throughout the country. Respondents were geographically dispersed:

• Midwest: 33%
• South: 33%
• Northeast: 18%
• West: 16%
  
  

The majority of respondents, 88%, were responsible for non-profit hospitals. The hospitals they oversee tend to be larger: 41% oversee hospitals with 300 or more beds, and 39% oversee hospitals with 100 to 300 beds.

The hospitals are in various areas:

• Rural: 28%
• Urban: 23%
• Suburban: 22%
• Small town: 11%
• Multiple: 16%

Size Doesn't Matter

Interestingly, the survey finds that smaller hospitals are equally likely to use third-party outsourcing as large hospitals:

• Hospitals with more than 300 beds: 24%
• Hospitals with less than 300 beds: 23%

Location May Matter

Hospitals in the South and Midwest appear most interested in increasing lab outsourcing:

• South: 28%
• Midwest: 27%
• West: 17%
• Northeast: 9%

Opportunity for Labs

Perhaps most surprisingly, hospitals are looking beyond the usual suspects when it comes to outsourcing. When asked which third-party lab they are considering using for outsourcing, the survey finds:

• LabCorp: 42%
• Quest Diagnostics: 33%
• Other: 17%

This is especially noteworthy, because in April, respondents were split 50-50 between LabCorp and Quest; "other" wasn't even on the radar.

Additional Considerations

The survey does not ask whether recent data breaches involving LabCorp and Quest caused some respondents to choose "other." Given the timing of the survey in relation to news of the breaches, however, there may be a connection.

Survey findings suggest that reimbursement pressure from Protecting Access to Medicare Act (PAMA) cuts may be a factor with regard to lab outreach strategy, which the survey also asked about. But it does not look at PAMA as it relates to lab outsourcing. Here again, though, there may be a connection.