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Dec 1, 2010 (Vol. 30, No. 21)

Physician Office Lab Diagnostic Market

Long-term Growth Will Rest on Tests Being Shown to Increase Efficiency in Healthcare Delivery

  • The largest focus of the diagnostic industry is the hospital lab; however, increasingly, the number of tests that can be conducted at the point of practice has led to an increasing awareness of the role of physicians’ offices in decisions about testing.

    Physician office labs (POLs) are seen as a potential growth area for diagnostic testing. The term POL is diverse, encompassing physician practices as small as one to five doctors performing a few rapid tests to large practices of some 200 physicians that operate labs similar to small hospital laboratories. Some POLs even run histology and microbiology tests.

    For example, one multispecialty practice in the U.S. with 40 physicians has a lab that does 500,000 tests each year, including moderate- and high-complexity tests. This is the exception and not the rule, as typically POLs are smaller. The number of POLs in the U.S. grew from 95,069 in 2000 to over 111,000 in 2010.

    The definition of physician office test is, therefore, broad and refers to any type of test that is:

    • performed in a physician office setting,
    • conducted at the time of a consultation with a physician or other healthcare professional,
    • provides a result to be used during the medical visit, and
    • is used for screening, diagnosis, or monitoring purposes.

    The POL test field is crowded. More than 100 companies worldwide, market tests using a variety of instruments and technologies. Growth in physician office testing is fueled by trends in preventive medicine, proactive approaches in treating diabetics, the globalization of infectious diseases, and by the need to monitor patients with cardiovascular disease and other chronic conditions.

    The U.S. represents the largest POL market. The FDA has nine types of tests that are automatically CLIA-waived, including nonautomated urinalysis using dipstick or tablet reagents, ovulation tests, urine pregnancy tests, fecal occult blood tests, measurement of blood glucose using FDA-cleared monitoring instruments, spun microhematocrits, nonautomated testing for hemoglobin-copper sulfate, nonautomated testing for erythrocyte sedimentation rate, and hemoglobin tests using single analyte instruments that are self-contained and give readouts from direct measurements.

    Kalorama Information estimates a $2.08 billion market for revenues earned from sales of POLs, and expects growth to continue at a 5% growth rate to $2.6 billion by 2010.

    A majority of POL labs, about 54%, are CLIA-waived. A CLIA certificate costs $150 every two years; nonwaived facilities may incur volume-related fees of up to several thousand dollars for the same time period.

    In the past few years the expanding number of CLIA-waived tests and devices has increased testing opportunities in POLs and for near-patient testing. More sophisticated tests and multiplexed devices have been CLIA-waived. According to FDA statistics, 152 tests and analytes were granted CLIA waivers between January 1 and June 30, 2008.

    The list of waived tests and analytes will likely grow as diagnostic manufacturers respond to the demand for near-patient testing. With that in mind, virtually all of the major diagnostic companies now provide doctor’s-office systems capable of performing basic chemistry, hematology, serology, histology, and limited microbiology testing.

    For example, HemoCue, a subsidiary of Quest Diagnostics, announced in June that it had received a CLIA waiver for its HemoCue Albumin 201 system; this was reportedly the first such waiver granted to a quantitative POC test for screening, diagnosing, and monitoring microalbuminuria.

    The size of the practice and its focus profoundly influence the kind of tests performed. Test complexity establishes requirements for personnel, quality control, and inspection/accreditation. Many practices have embraced moderately complex PPM (provider performed microscopy) tests performed by a physician, physician’s assistant, nurse practitioner, nurse midwife, or dentist. These include: fecal WBC examinations, fern tests, KOH preps, nasal smears for granulocytes, pinworm preps, post-coital qualitative exams (sperm), semen analysis, qualitative, urine sediment exam, and wet mounts.

    National ambulatory-care statistics reported by the CDC indicate that 50% of all physician visits in 2008 were to primary-care generalists. Results from surveys conducted in 2005 and 2008 by the American Academy of Family Physicians indicate that this type of physician runs a mix of tests.

    The future of POL testing is far from clear. Healthcare systems worldwide are taking a closer look at expenses and the additional cost of new technologies. Reimbursement for POL tests has not been automatic. The burden has been placed on manufacturers to prove that these devices bring added efficiencies to healthcare delivery. Therefore, the position of the central lab is not yet in jeopardy.

    In the U.S., physician office labs currently perform only 8% of tests. Still, those who follow the in vitro diagnostic market will want to keep an eye on developments in this important sector.


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