McEvoy and Farmer
Research on the business of cancer testing in The Americas, Asia & Europe


McEvoy & Farmer News

Funeral of 88342

Washington, December 9, 2013

Flags flew at half-staff over the shuttered offices of Ventana, Dako, Leica, BioCare, BioGenex, and Cell Marque today, as well as every lab in the country doing IHCs on a small scale.

Meanwhile, the champagne and crocodile tears flowed at Quest, LabCorp, Clarient, and Sonic.

And on Sunday sales professionals and pathologists from all over the country gathered at Washington’s First Church of the Perpetual Reimbursement to pay their last respects to one of the best beloved CPT codes of all time, the dear-departed 88342.

The eulogy excerpted below was delivered by 88342’s best friend and co-conspirator, 88361. Histotechs, Pathologists, Salesmen –

Lend me your ears. I come to bury 88342, not to praise him. The evil that codes do lives after them, the good is oft-interred with their denial letters.

88342 was a generous and big-hearted code. Those 30-something million slides put $2.5 billion into the coffers of American labs this year. And those labs shared the wealth with their suppliers by peeling off more than $700m of that sum for Ventana, Dako, Leica, and other needy manufacturers. The IHC system producers then tithed to Cell Marque, Epitomics, and a few other antibody producers. 88342 put a lot of your kids through college. So we who mourn today have an obligation to keep his spirit and memory alive.

And 88342 was such a smooth operator – did you notice how he created an annual market for HER-2 slides that is several times larger than the combined total of all breast, ovarian, and GI cases? Yep, you read that right. It took a lot of cajones on the part of labs and a lot of complacency on the part of insurers to make this happen, but without the leadership of my buddy 88342, utilization rates in the US would be downright rational (perish the thought!).

How could we expect our customers’ bean counters to stay asleep at the wheel forever? On the day before Thanksgiving, 88342 was brutally gunned down by government-affiliated assassins. And now we who remain on this earth have been sentenced to the dubious mercy of these two new enforcers – G0401 and G0402 – who promise to be far more tight-fisted than the old boss was. Now labs will only be getting $88.04 for the first antibody, then just $68.08 for all subsequent antibodies. They’ll gripe, but the fact is Quest and Labcorp have been accepting insurance contracts for less than either of those figures for years. Still, this will give all labs an excuse to squeeze their suppliers for another 20% or so on every slide.

You guys from Quest, LabCorp, and Clarient – yeah you guys smirking in the back there – you’re paying less than ten bucks a slide for your highest-volume IHCs, so cry me a river, will ya? As for you other 4,000 labs running small volumes – if you think you’re paying $30-40/slide, you’re really paying $40-50/slide, because the IHC companies are very good at obscuring the total cost of all the consumables and service. Sorry, but at least half of you are going to be priced out of the IHC business within three years.

While this won’t be pleasant for the big labs, they can make up for lower IHC margins with other items on their menus. But they probably won’t have to. Because what the CMS forgot to do was add a third enforcer, G0403, who would be the tough guy who only pays I-tunes kind of prices for every slide after the fourth or fifth.  Think Roche and Danaher and Agilent are just going to say to their IHC subsidiaries… “So sad, we understand, we’ll accept 20-25% lower revenues next year.” Not a chance. So we fully expect the rocket scientists at Ventana,  Leica, and Dako to come up with great reasons why your current 3-5 slide panel should be a 5-8 slide panel going forward.

Looks like we can expect to see fewer labs, running bigger panels on more cases, on bigger instruments, placed by fewer salesmen, serviced by smaller tech support teams. A couple of thousand instruments will now be spending their declining years on second-hand (and fully-depreciated) service in Asia and Latin America.

88342 – We hardly knew Ye’  – Rest in Peace. You will be sorely missed by everybody in the anatomic pathology community.

Chad McEvoy