Clinical laboratory services represent one of the highest healthcare expenditures in North America, yet the United States and Canada represent different scenarios in the way clinical services are rendered. The market for clinical lab services in Canada was an estimated $10.33 billion in 2017 whereas in the United States it was an estimated $78.33 billion for the same year. Heavily influenced by the Protecting Access to Medicare Act (PAMA) reimbursement cuts, US laboratories are expanding their revenue streams to collaborate with retail clinics and eCommerce channels to increase their testing footprint. Today’s market is ripe for mergers and acquisitions. The private market is heavily concentrated between two reference laboratories, Quest Diagnostics and LabCorp.

This report analyzes the market for clinical laboratory services in North America across 3 main segments: hospital laboratories, physician office laboratories, and specialty/independent laboratories. In Canada, regional public laboratories are also analyzed. Revenue forecasts for the period 2018–2022 have been carefully studied to understand the impact of PAMA and the upcoming reimbursement cuts. The study also includes competitive profiles of top vendors serving the United States and Canada for laboratory testing and gives an in-depth analysis of winning strategies for laboratories to survive in a future that is governed by value-based healthcare. Since the market is ripe for mergers and acquisitions, a detailed M&A analysis for the period 2017–2018 is included.

In Canada, lab services as well as any innovation pertaining to the introduction of new tests are heavily dependent on Ministry of Health (MoH) funding. Some provinces are more open than others (e.g., Ontario is more open to innovation and introduction of new tests when compared to Quebec.). Ontario, British Columbia, and Quebec are the major markets within Canada. Although similar in the flow of funds and governance by their respective MoHs, it is important to note there is a huge pricing difference observed for clinical tests in each Canadian province. There are downsides to the clinical lab services market in Canada given that several medically necessary tests remain uninsured and not paid for by the MoH. These are covered through private insurance. Also, a substantial amount of outsourcing occurs for genetic testing (sent to the United States, mostly) because of an inadequate strategy for this type of testing.

Other areas covered in this research are challenges and drivers impacting the clinical lab services market in the United States and Canada; new business models and alternate revenue channels; winning strategies for clinical labs to combat reimbursement pressure; actionable growth opportunities for companies; and major lab chains by country.

Author: Divyaa Ravishankar