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Excerpts from Frost & Sullivan’s
“Impact of US Healthcare Reform on the In Vitro
Diagnostics Market”
From Volume to Value: Healthcare
Reform Reshapes Delivery Models and
Diagnostic Laboratories
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Effects of the ACA on Clinical Labs
46 million US residents without health insurance
15 million people (to date) gain access to
healthcare
47 million women get access to preventative
health services
Source: Frost & Sullivan
Affordable Care Act: Effects on Clinical Labs, US, 2011–2014
Challenges:
• Reimbursement cuts from decreased Medicare payments
• Cost containment measures
• Operational cost reduction
Opportunities:
• Increase in test volume due to easier access to healthcare and more insured people
• Increased sale of IVD products
• Aim for more efficient technologies to minimize cost of care
• New products and technology innovation
2011: Before the ACA 2014: After the ACA goes into effect
Effects on clinical labs
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Opportunities for IVD Manufacturers and Clinical Labs
Increased test volumes
Increased net sale of IVD products
Opportunities for IVD manufacturers:
• POCT
• Molecular diagnostics
• Rapid testing
• Automated analyzers
• Reagent/kits
Opportunities for clinical labs:
• 80% of diagnoses are made through
clinical lab tests
o Infectious disease testing
o Predictive and preventive care tests
o Genetic tests
Source: National Center for Biotechnology Information; Genetic Test Registry News; Frost & Sullivan
The following are macro-level trends for the IVD
industry:
• Decentralization: The move to reduce costs and
perform diagnosis during single patient visits
generate more demand for point-of-care testing
(POCT) applications.
• Molecular testing: Technologies and tests
based on genetic material and protein
composition that facilitate early detection and a
personalized approach are on the horizon. As of
2013, the National Institutes of Health (NIH)
Genetic Testing Repository had about 7,000
tests available for 3,000 conditions for 6,300
genes.
• Automation: New testing methods are coupled
with laboratory information management systems
to suit growing demand and staffing shortages.
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Care Delivery Transformation: Acute Care to
Prevention
Disease/Care Management
Prevention/Wellness
Goal:
Keep People Healthy Longer Goal:
Manage or Mitigate
Risk Goal:
Diagnose and
Reduce Treatment
Delay Goal:
Manage Goal:
Quality of Life
Goal:
Move to More
Interaction and Self-manage-
ment
Healthy / Well
At Risk Undiagnosed Chronically Ill Managed
Chronically Ill Unmanaged
End of Intervention
Continuum of Care
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• Early identification and prevention
• New models of care delivery to improve:
o collaboration among providers
o patient knowledge, self-help and health
• Increase intervention
o Higher touch at lower cost
Source: Frost & Sullivan
Affordable Care Act: Objectives, US, 2013
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Home Care
Pharma
Wellness
Services
Inpatient
Care
HCIT
Ambulatory
Care
Reimburse-
ment
Imaging
Diagnostics
Outpatient
Care
Primary
Care
Opportunity Impact Dashboard
Where are the opportunities in healthcare reform?
Which sectors are winners or losers?
Source: Frost & Sullivan
Key: Increasing Stable Decreasing
Affordable Care Act: Opportunity Impact Dashboard, US, 2013
6
Alliances and acquisitions
Biosimilars
Generics
Segments driving
non-HC players to
enter the
pharmaceutical
market
Recent Players to the Healthcare Industry
Mochida
LG
Merck
Hanwa
Research
Diagnostics services
Other areas
attracting non-HC
companies
Apple
Quest
Nikon Google/Calico
Quintiles Biogen Idec
Samsung
Source: Frost & Sullivan analysis.
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Accountable Care Organizations
Overall impact of ACA on clinical labs:
• Reduced number of tests per patient (avoids redundancy , saves costs)
• Large number of new patients coming into the healthcare continuum
Laboratories will have to reduce costs and increase productivity because of the expected lower
reimbursement rates and increased volume of lab tests. The lab may lose money as an entity, but the ACO
system as a whole will benefit from faster, better treatment of patients as well as increased patient and
physician satisfaction.
Objectives of clinical labs:
• Fee-for-service reimbursement
mode
• Volume-based transactions
Goals of ACOs:
• Outcome-based reimbursement
incentives
• Minimizes total cost of care
focusing on value rather than
volume
CMS defines ACOs as groups of doctors, hospitals, and other healthcare providers that come together
voluntarily to give coordinated, high-quality care to Medicare patients.
Source: CMS; Frost & Sullivan
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Business transformation
Understanding doctors’
ordering practices;
comparing with peers, such
as adherence to
national/local guidelines
Value of Clinical Analytics to a Clinical Lab
Clinical direction
CPOE, CDS*
care maps
Business
transformation
analysis of
aggregate clinical
data
Generator/
distributor
of clinical data
Pre-analytical Analytical Post-analytical
Integrator of clinical data
Clinical leadership
Stepping up pathologists’
role through laboratory
formulary committees
Decision support
Clarifying doctors
questions about tests
Source: Frost & Sullivan
Affordable Care Act: Value of Clinical Analytics, US, 2010–2022
*CPOE: computerized physician order entry
CDS: clinical decision support system
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Demands and Expectations of ACOs
Source: Frost & Sullivan
Demand and Response
...
...
...
...
• Serve entire continuum of care
o Home, work, clinic, hospital
• Allow patient accessibility and convenience
o Patient service centers
o 7-day-per-week service
• Consolidate and eliminate redundancy
• Keep cost per test low
• Standardize to reduce variation
• Improve quality to reduce errors
• Improve turnaround time and offer
immediate access to lab results
• Eliminate unnecessary testing
• Manage POCT throughout system
• Provide lab results seamlessly
throughout continuum of care
• Make EMR lab results accessible anywhere
o Computer, phone, pad, cloud
• Upload lab results to personal EHR
o Cloud, apps, QR codes
• Mine data to predict readmission
Expectations of ACO
Laboratory Response
• Perform more sophisticated testing
o Genomics and proteomics in all
sections of lab
• Offer lab-on-a-chip*
o Decrease lab space requirements
o Decrease TAT
• Require oversight by POCT
department
o Merge with smart phones
• Revolutionize POCT and
decentralize testing
• Increase patient self-testing
• Increase confirmatory testing in
lab
*Lab-on-a-chip is a device that integrates several laboratory functions in
a single chip that is only millimeters to a few square centimeters in size.
The concept deals with the handling of extremely small fluid volumes
down to less than picoliters.
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Connect With Us:
Jennifer Carson North America
Corporate Communications
P: 210.247.2450
Research Authors
Divyaa Ravishankar
Senior Industry Analyst
Life Sciences
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