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The Rochester Consortium.

J Marchwinski1, S S Sullivan, J B Castillo

  • 1Strong Memorial Hospital, Rochester, NY, USA.

Clinical Laboratory Management Review : Official Publication of the Clinical Laboratory Management Association
|August 5, 1996
PubMed
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Six Rochester hospitals formed a laboratory services consortium to secure managed-care contracts. This collaboration successfully competed with national labs and secured capitated agreements with two health maintenance organizations.

Area of Science:

  • Healthcare Management
  • Clinical Laboratory Science
  • Health Economics

Background:

  • Hospitals face increasing financial pressure from shrinking healthcare budgets.
  • National commercial laboratories pose significant competition to local hospital-based laboratories.
  • Managed-care contracts require cost reduction and alternative payment models.

Purpose of the Study:

  • To describe the formation and success of a hospital laboratory consortium.
  • To evaluate the cooperative model's ability to secure managed-care contracts.
  • To assess the consortium's strategy for competing with national laboratories.

Main Methods:

  • Six Rochester hospitals formed a cooperative laboratory services consortium.
  • The consortium successfully bid on referral laboratory testing contracts.

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  • Negotiated exclusive, capitated payment agreements with two health maintenance organizations.

    • Main Results:

    • The consortium effectively competed against national commercial laboratories.
    • Secured exclusive contracts with two managed-care organizations.
    • Achieved cost reduction and transitioned to a capitated payment model.

    Conclusions:

    • A cooperative hospital laboratory consortium can successfully compete with national entities.
    • This model enables community-wide laboratory services under managed-care arrangements.
    • The consortium provides a viable cooperative model for other hospitals facing similar competition.