Medical Laboratories | April 2023

Medical Laboratories

Medical laboratories, which include diagnostic and clinical laboratory services, provide the foundation for accurate and timely disease diagnosis, prevention, and control to improve patient health and safety.

Diagnostic laboratories perform testing and analysis for hospitals and healthcare professionals to identify, treat, control, and prevent disease and injury for individuals and populations. Clinical laboratories run tests on samples to gain more information about disease diagnosis, treatment, and prevention. They also work closely with hospitals and focus primarily on patient health.

The Clinical Laboratory Improvement Amendments (CLIA) require clinical laboratories to be certified by the Centers for Medicare and Medicaid Services (CMS) before they can accept human samples for diagnostic testing. Laboratories can obtain multiple types of CLIA certificates, based on the kinds of diagnostic tests they conduct.

The three federal agencies responsible for CLIA include CMS, the Food and Drug Administration (FDA), and the Centers for Disease Control and Prevention (CDC). Each agency has a unique role in assuring quality laboratory testing. The Clinical Laboratory Improvement Advisory Committee (CLIAC), managed by the CDC, provides scientific and technical advice and guidance to the Department of Health and Human Services. The Committee includes diverse membership across laboratory specialties, professional roles (laboratory management, technical, physicians, nurses), and practice settings (academic, clinical, public health).

In total, CLIA covers approximately 320,000 laboratory entities. The objective of the CLIA program is to ensure quality laboratory testing.

Market Outlook: Growth

According to IBIS World, medical laboratories are a $75 billion industry, with 2.4% annualized market size growth from 2018-2023.

The industry is witnessing growth due to such factors as an increasing burden of chronic diseases and the growing demand for early diagnostic tests. North America leads the clinical laboratory market and accounted for the largest revenue share of 39.57% in 2021, owing to the high burden of chronic diseases in the region.

Diagnostic & Medical Laboratories in the U.S., Market Size 2005-2023

Clinical Lab Service Types & Key Players

According to Grand View Research, the bioanalytical & lab chemistry services segment accounted for the largest revenue share of more than 52.0% in 2022. These labs use a wide range of techniques and technology platforms to fulfill diagnostic needs and are an essential tool in drug discovery and development.

The key players operating in the industry are focusing on geographic expansion, partnerships, and strategic collaborations with other companies, particularly in emerging and economically favorable regions. Prominent players operating in the global clinical laboratory market include:

• QIAGEN
• Quest Diagnostics
• OPKO Health, Inc.
• Abbott Laboratories
• Siemens Medical Solutions USA, Inc.
• NeoGenomics Laboratories
• Fresenius Medical Care
• ARUP Laboratories
• Sonic Healthcare
• Laboratory Corporation of America Holdings (LabCorp)

Potential Claims

The CDC estimates 40,000 to 80,000 deaths occur each year from preventable diagnostic errors. Among the most common diagnostic errors occurring in laboratories:

• Wrong diagnosis: false negatives, false positives, misdiagnosis
• Misinterpretation or lack of understanding of genetic data
• Other breaches of standard of care

A recent study in the Annals of Health Law and Life Sciences examined, from a legal perspective, whether a clinical genetics laboratory is a healthcare provider and the legal duties that labs owe to the individuals who seek their services. The potential tort liability of labs depends, in part, on whether clinical laboratories are considered healthcare providers for purposes of medical malpractice statutes.

Underwriting Considerations

Underwriters rely heavily on the type of lab or its specialization. There are three types of medical labs: reference labs, hospital labs, and ambulatory labs. Within each is a wide range of subtypes, which include, among others:

• Reproductive
• Blood bank or serology
• Clinical chemistry
• Clinical microbiology
• Histopathology and cytopathology
• Genetic testing
• Endocrinology
• Hematology
• Histology
• Immunology
• Molecular biology
• Parasitology
• Paternity
• Serology
• Toxicology
• Urology
• Virology

Reference labs in particular depend on the types of laboratory machines and instruments in use; the types and number of laboratory technicians; the qualifications and experience level of the laboratory director and pathologists; the rates of accuracy and reliability of tests being performed; the lab accreditation from various bodies including CLIA; and the quality assurance and risk management protocols in place.

ProAssurance Miscellaneous Medical is part of our Specialty Underwriting division, which provides coverage on an excess and surplus basis. We can provide customized risk management solutions and liability insurance products and services related to medical laboratories as well as general issues related to improvement in clinical laboratory quality and laboratory medicine practice.

Resources

CMS: Clinical Laboratory Improvement Amendments (CLIA)

CDC: Clinical Laboratory Improvement Advisory Committee (CLIAC)

CDC: Division of Laboratory Systems

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