Quest Diagnostics 2000 Annual Report Download - page 22

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healthcare costs, led to revenue and profit declines within the laboratory testing industry, which in turn led to industry
consolidation, particularly among commercial laboratories. As a result of these dynamics, fewer but larger commercial
laboratories have emerged which have greater economies of scale, new and rigorous programs designed to assure
compliance with government billing regulations and other laws, and a more disciplined approach to pricing services.
These changes, principally led by us, have resulted in improved profitability and a reduced risk of non-compliance with
complex government regulations. At the same time, a slowdown in the growth of managed care and decreasing influence
by managed care organizations on the ordering of clinical testing by providers has led to renewed growth in testing
volumes and further improvements in profitability during 2000.
We believe that during the next several years, the industry will continue to experience growth in testing volume
due to the following factors:
• general aging of the United States population;
• increasing focus on early detection and prevention as a means to reduce the overall cost of healthcare and
development of more sophisticated and specialized tests for early detection of disease and disease
management;
• increasing volume of tests for diagnosis and monitoring of infectious diseases such as AIDS and hepatitis C;
• research and development in the area of genomics, which is expected to yield new genetic tests and
techniques;
• increasing affordability of tests due to advances in technology and cost efficiencies;
• increasing volume of tests as part of employer sponsored comprehensive wellness programs;
• increasing awareness by consumers of the value of clinical laboratory testing and increasing willingness of
consumers to pay for tests that may not be covered by third party payers; and
• a slowdown in the growth of managed care and decreasing influence by managed care organizations on the
ordering of clinical testing by providers as managed care organizations impose fewer controls on providers
and patients.
Business Strategy
Our mission is to be recognized by our customers and employees as the best provider of comprehensive and
innovative diagnostic testing, information and related services. The principal components of this strategy are to:
•Capitalize on Our Leading Position Within the Laboratory Testing Market: We are the leader in our core
clinical laboratory testing business and the only truly national provider of clinical laboratory testing services.
Our network of approximately 1,300 patient service centers, 150 rapid response laboratories and principal
laboratories in approximately 30 major metropolitan areas enable us to serve managed care organizations,
hospitals, physicians, employers and other healthcare providers and their patients throughout the United
States. We believe that customers will increasingly seek to utilize laboratory testing companies that have a
nationwide presence and offer a comprehensive range of services and that, as a result, we will be able to
profitably enhance our market position.
•Become a Leading Provider of Medical Information: We believe that we have the largest private clinical
laboratory results database in the world. This database continues to grow as we perform tests related to over
100 million requisitions involving approximately 80 million patients each year. We believe that this database
has substantial value since a significant portion of all healthcare decisions and spending are impacted by
laboratory testing results. Large customers of clinical laboratories are increasingly interested in integrating our
clinical laboratory data with other healthcare information to answer quality, marketing and financial related
questions. In addition, pharmaceutical manufacturers are increasing their use of the data to expand their
marketing efforts, as well as to promote disease management. In order to meet these emerging needs for
medical information, our Quest Informatics division has developed a portfolio of information products
including Internet-based health and information services that provide customers secure access to our extensive
database, along with medical and analytical expertise. We also provide customized services for