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Obamacare is both good and bad for lab business

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BioReference Laboratories Inc. CEO Marc Grodman says the Affordable Care Act should boost his business by adding patients. But he is also bracing for lower reimbursements.

Grodman said ongoing confusion over the ACA mandates, worsened by the bumpy rollout of online exchanges and controversy over cancelled and reinstated policies, could make it harder on laboratories and other providers when dealing with insurance carriers.

“One of the unintended consequences is that payers will take umbrage from this and try to put pressure on providers” in the form of lower reimbursements, he said. “That's something we're going to have to face going forward.”

Grodman added that it's early to make a definitive judgment. The Elmwood Park company won't see if the ACA rollout has impacted revenue until its current quarter ends Nov. 30. Company revenue is up 16 percent year to date, a trend that Grodman says helps endure headwinds.

“I'd rather be facing this as a growing company than as a static company,” he said.

Declining reimbursements are nothing new to laboratories and other providers. Madison-based laboratory Quest Diagnostics last month reported a 1.9 percent drop in third-quarter operating revenue, partly because of reimbursement pressures, including Medicare cuts.

CEO Stephen Rusckowski told investors in a conference call last month that Quest views the ACA as a long-term benefit because it will increase the number of insured persons. But he said it's taking longer than expected to realize the benefits because of problems caused by faulty exchanges, the administration's delay of the employer mandate and because many states haven't expanded their Medicaid programs.

“We still believe that, in the end, when people have insurance and have access to the health care system, it'll be net positive for this industry and net positive for us,” Rusckowski said.

Quest did land a new contract from QualCare, a Piscataway-based managed care provider, who on Nov. 18 selected Quest as its exclusive commercial lab.

QualCare said the move was directly related to the ACA's goal of providing higher quality at lower cost. QualCare said it was looking to lower spending on lab services; it consolidated from doing business with more than 20 labs to just one.

E-mail to: tomz@njbiz.com
On Twitter: @biztzanki

Write to the Editorial Department at editorial@njbiz.com

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