Mike Eller (Northwell): Yes, pretty much. We’re fortunate that our outreach business expands as our health system expands. We purchase other practices, but about 40 percent of our outreach are nonaffiliated physicians, so we’re still a strong competitor in our market.
Consolidation seems to be the order of the day. I don’t see much that argues it won’t or cannot happen or can be avoided. Clark Day, what are your thoughts about that? You’re a sprawling mega system as it is.
Clark Day (IU Health): We are, and that sprawl continues. Our CEO has taken the idea of selling the lab to an outside entity off the table. We continually get reassurance that we are an integral part of the health system and a strategic front door. “A great health system deserves a great laboratory” is a phrase our CEO has used.
We are investing in and growing our outreach business. When I crafted that strategy eight years ago, our revenue was $3 million to $4 million. We reached our 25 by 25 aspirational goal, which was to be at $25 million in revenue by 2025. We’re at about $27 million, and that’s pure outreach—non-IU Health hospitals and physician laboratories. That helps us keep costs per test low. I think we can double that business in the near term, but we’re trying to manage the growth as well.
Because of our footprint, breadth, and courier capabilities, we can rapidly deliver tests locally. We can perform highly sophisticated reference lab testing for our clients in state. Our strategy is to make Indiana one of the healthiest states, not just where our footprint is, and our outreach lets us do that.
Guillermo Martinez-Torres, what is your reaction to this? Your system has grown, but you also face competitors coming into the market that are also consolidating provision of care.
Guillermo Martinez-Torres, MD, president and chief physician executive, NorDx, Scarborough, Me.: Yes, that is correct. That’s the new normal. We’ve been in a highly competitive environment since I’ve been here, and we have to react accordingly. I’m working with Dartmouth and University of Vermont to form a Northeast collaborative to find ways to wall off the competition. We have the same threat in Vermont as we have in New Hampshire and Maine. It’s the same set of players. The more we work together and collaborate, the tighter the wall we can build.
I remind the team that we have to demonstrate our value to the health system every day, and luckily we’re able to do so. We have an aggressive growth strategy to demonstrate value and continue growing that value.
Gaurav Sharma, Henry Ford has been involved in significant expansion. Getting bigger, beyond just increasing the number of lab tests you’re performing, seems to be key to all this. What are your thoughts?
Gaurav Sharma, MD, system vice chair of clinical pathology, division head of regional laboratories, and medical director of the outreach laboratory, Henry Ford Health: I agree. The key phrase is “It’s the economy.” We can’t lose sight of the broader economic forces around us or where those trends are headed. There are three things to keep in mind beyond the lab.
One is we are increasingly living in uncertain global economic conditions, which makes it strategically important to work with fewer, more reliable diagnostic instrument partners.
The second is demographics. In Southeast Michigan, demographics are changing. Population out-migration in Michigan has slowed. The population is aging. We have employees who live across the border, so changes in border logistics and other external factors may affect our operations.
The last is AI. AI will be both transformative and disruptive. It will change existing roles while creating new ones. When I think of a lab in 2030, we have to plan for an economy and a demographic that will be different from what we have now. We may have leaner teams, but with AI those teams will be able to do much more. The question is whether we are preparing now to accommodate that shift.