Lab forecasts consolidation

While many in health care lament cutbacks in government reimbursements, one Fort Myers laboratory says the cuts provide opportunities for acquisitions.

Cancer-testing firm NeoGenomics says it is scouting to buy rival labs that have been hit hard by the reimbursement cuts. For example, the government's Medicare program for older people slashed one popular cancer test by 45% in 2014 and 20% this year, and commercial insurers promptly followed suit.

“NeoGenomics has been able to weather the storm by getting much more efficient, but we know that smaller labs and hospital systems are increasingly considering closing some lab operations,” says Douglas VanOort, chairman and CEO of NeoGenomics, in a transcript of a call with investors on SeekingAlpha.com. “While this has been painful for the industry on a longer term basis, we believe there will be opportunities for efficient high-quality providers like NeoGenomics to gain market share.”