PAML Launches Hospital Lab Consulting Arm

Pacific Northwest powerhouse PAML has launched a program to provide enhanced consulting services to hospital laboratories. The announcement by the Spokane, Wash.-based PAML comes just a couple of months after Austin, Texas-based Sonic Healthcare USA announced it was launching a similar service. As with the Sonic service, PAML officials indicated it was not a springboard toward acquiring hospital laboratories. “We’re not looking specifically at acquisitions,” said Francisco R. Velázquez, M.D., PAML’s chief executive officer. “This is a value-added service for clients and prospective clients that need assistance in certain areas of their operation. “Labs are a great investment for hospitals,” he added. “They’re not very expensive to run, and they get a good return on them, but the lab staff has not always been trained well in how to leverage their services.” PAML’s decision to burnish its hospital consulting services comes at a time when larger laboratories are under pressure to organically grow their revenue sources, as most opportunities for deal-making among midlevel and small labs have been consummated. Hospital labs present a new opportunity. “With the current climate of lower reimbursements and higher costs, hospitals are focused on driving costs down and developing revenue-generating departments,” said Bill Remillard, PAML’s technical operations director. Martha Robbins, a clinical laboratory consultant in Oswego, Ill., who previously directed the national laboratory practice for Coopers & Lybrand in the 1990s, agreed that hospital consulting can provide new business inroads for the larger labs. “It’s a way for them to make more money,” she said. Robbins added that such consulting relationships can not only in bring in more clinical business but also help solidify relationships with existing clients. Although Velázquez noted that PAML’s program is being marketed primarily through word of mouth, it has already signed up three clients. Moreover, it has received a half-dozen queries from other hospitals. Some of them are located in Florida and the Eastern Seaboard, which are outside of PAML’s traditional operating area. “These are places where traditionally we have no market concentration,” he said. Similar Issues Although each hospital lab is different, Velázquez observed that their operational issues tend to have a shared heritage about 65 percent of the time. Among the biggest issues: Multiple lab sites have created problems of managing the various locales, supply chain management, and, perhaps most significantly, billing and collections. Bad debt for hospitals has been on the rise, and some part of it is attributable to laboratory, Velázquez noted. “Hospital lab testing is a lot of small claims, and our particular expertise is capturing reimbursement—particularly when you have a lot of smaller claims in high numbers,” he said. “Hospitals will pay attention to the billing for an open heart procedure because it brings in a lot of money. But when you have a half million bills of $100 apiece, they may not. And that adds up to money.” Robbins did strike a note of caution for such deals. Although she observed that PAML is well regarded in the industry, that it already provides clinical laboratory services places it in a delicate position. “If I were going to hire someone as a lab consultant to come in, I wouldn’t hire a firm that has something to gain from what I tell you,” she said. “I would hire someone with no bias at all.” Velázquez said such a concern has been addressed. “The consulting teams are focused on a specific task; they’re not there to solicit business,” he said. “We keep a firewall between the two. We don’t want anyone to think we have an ulterior motive.”