LabCorp 2009 Annual Report Download - page 17

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n Dollar Health Care Market
A Conversation With LabCorp CEO Dave King
Some have suggested that clinical
laboratory testing is a mature
business. What’s your view?
I couldn’t disagree more. There are big
opportunities to grow our business. Our
position as the high-quality, low-cost
provider will fuel growth as the country
comes to grips with the need to reduce
health care costs. Developments in eso-
teric testing will reveal tests that can help
doctors and patients in new ways. We
also have an aging population that is living
longer, and their utilization of testing is
going to grow as their medical needs
increase. In addition, LabCorp has a great
track record of deploying cash to fund
acquisitions that generate increased
opportunities, and I expect that to
continue. Finally, there is still a great
deal of fragmentation in our industry, with
hospital labs and several thousand small
independents comprising a signifi cant
portion of the market. We’re well positioned
to gain a larger share of that market.
You’ve often noted that laboratory
testing represents less than three
percent of health care spending, but
infl
uences 70 to 80 percent of health
care decisions. How can LabCorp’s
solutions make those medical
decisions more cost effective?
It’s remarkable that administrative costs
account for seven percent of total health
care spending, while laboratory testing
represents less than half that amount. So,
we start out with a great value proposition.
Payers recognize the economic benefi t that
testing provides – especially in screening,
wellness and preventive medicine. For
them, it makes sense to invest in a
relatively inexpensive lab test that may
help prevent progression of disease, which
could cost tens of thousands of dollars
to treat. Our outcome improvement
programs for kidney stones and chronic
kidney disease are an extension of that
value proposition. We are proving that
this programmatic approach can achieve
measurable results to keep patients
healthier longer and reduce the need
for hospitalization, surgery and other
expensive treatments.
Dave King
Chairman and Chief Executive Offi cer
LABORATORY CORPORATION OF AMERICA 15LABORATORY CORPORATION OF AMERICA 15