Los Angeles, CA (PRWEB) July 03, 2013
Diagnostic and medical laboratories are an integral part of medical evaluation and treatment. They provide healthcare practitioners with information about the onset, severity and cause of patients' physical ailments. While the Diagnostic and Medical Laboratories industry has long been an essential component of healthcare, the aging population and the ongoing move toward preventative care have further boosted revenue growth in recent years. During the five years to 2013, revenue is expected to rise at an average rate of 1.8% annually to $48.5 billion. Although revenue growth contracted in 2012, it has since rebounded and is expected to rise 2.5% in 2013. While the aging population has bolstered demand, it has also posed some challenges to the industry. “Laboratories are facing a shortage of skilled labor as baby boomers, who make up a significant portion of the industry workforce, retire and fewer individuals pursue healthcare professions,” says IBISWorld industry analyst Anna Son. As such, employment has decreased at a marginal 0.6% annualized rate, reaching 252,493 employees over the five years to 2013. The shortage of skilled labor has forced operators to boost salaries as a way to entice people into the field and retain current employees. However, the rising use of automation and standardization in laboratories has helped mitigate wage costs.
The market for analytic and diagnostic services will continue to grow at a rapid pace in the five years to 2018. Scientific advances will continue to yield new and improved service capabilities, and the aging US population will require more and better laboratory testing and diagnostic imaging services. Additionally, the healthcare reform legislation of 2010 will continue taking effect during the next five years, which will be a net benefit to the industry; greater access to insurance is expected to boost demand, shrinking out-of-pocket costs for laboratory services. The trade-off for the industry will be Medicare reimbursement cuts. Even though reimbursement cuts will put downward pressure on operating profit margins, mounting interest in high-margin genetic testing and esoteric tests will push operating profit to about 12.5% of revenue by 2018. Consolidation will lead to larger operators, which will help reduce costs and maintain bargaining power. The number of industry operators is projected to decrease at an annualized 1.6% to 22,347 over the next five years.
The Diagnostic and Medical Laboratories industry has a low level of concentration, with the top four players accounting for about 29.7% of industry revenue in 2013. However, the top two players – Quest Diagnostics and Laboratory Corp of America – control many of the markets in which they operate. Over the past five years, consolidation has increased, particularly in the laboratory segment, but the industry remains highly fragmented. According to Son, the laboratory business model is based on highly fixed costs, which means there are significant benefits to being large and having higher volumes. About 20.0% to 22.0% of the costs are variable (primarily supplies and bad debt); though more sizeable operators can purchase supplies at a discount. For example, Laboratory Corp of America purchases directly from manufacturers, and because of its large bulk orders, is typically able to achieve about 20.0% pricing discounts. For more information, visit IBISWorld’s Diagnostic & Medical Laboratories in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry provides analytic services to identify or determine the nature and cause of a disease or injury through evaluation of a patient’s history, examination and data. These services are provided to healthcare providers or to patients on referral from health practitioners.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.