Getting the love you want from your lab(oratory)
Do you have terms of endearment for your lab, or are you no longer feeling the love? VHMA conducted a survey to find out how practices handle diagnostic testing: Is the practice in an exclusive relationship with a lab, in an open relationship or involved in some other type of arrangement? The survey was completed by 207 respondents, representing managers, hospital administrators and practice owners.
The majority—64 percent—have exclusive contracts with outside laboratories. And 40 percent have entered into long-term relationships of four to five years. One-year contracts are relatively rare.
Just how significant does a discount have to be for a practice to say to a lab, “I’m yours?”
Forty-four percent of respondents reported that their discounts were concentrated in the 6 to 22 percent range:
Surprisingly, 10 percent said that they were in a “friends without benefits” contact and reported no pricing discounts.
The benefits of the exclusive contract? Respondents said they were fond of:
> lab discounts available to staff and veterinarians
> discounted equipment purchases
> lab supplies and employee lab work
> limited annual price increases
> great customer service and access to the best available prices.
One respondent explained that an exclusive contract gives a practice leverage because as the contract expires, the laboratory “does not want us switching so we get incentives.”
Those citing drawbacks complained that contract periods are too long and the contract language too confusing. A number of respondents were dissatisfied with the price of lab services, noting that pricing isn't competitive and that companies fail to honor original pricing agreement.
Several managers described customer service as subpar because representatives were not providing the expected level of support and attention. One respondent noted that, “It’s worth it until service doesn’t live up to what you expected and then you have very little leverage to improve things.”
A contract is a contract, and the legal doctrine “caveat emptor” holds true—let the buyer beware. An exclusive contract may offer a practice advantages, but before giving your heart away, be clear about the terms and conditions.