A hospital typically does a proscribed number of laboratory tests in-house. They are often stat and frequently routine. Though less frequently requested tests could be performed on site, they are usually sent to a reference lab where tests are pooled together in order to take advantage of economies of scale. Since hospitals have to send out tests, the co-tenancy model presented by MCL is imminently practical. It makes sense to release tests that are not routine yet not truly esoteric from one laboratory for higher volume and better pricing.

Unlike relationships with fee-based reference laboratories, MCL co-tenants actually have partial ownership of the assets of a state-of-the art laboratory. Ongoing pursuit of additional co-tenant owners provides additional savings. Testing on behalf of each co-tenant is done using their share of the equipment, reagents and staff. Each co-tenant has the autonomy to utilize the lab assets to meet their own needs, to market the testing under their organization and to bill all testing conducted on their behalf. Co-tenancy successfully addresses the priorities of both pathologists and financial executives, delivering superior quality, excellent service and the lowest possible cost.

Here’s the bottom line. Co-tenancy equals ownership. Instead of buying outsourced laboratory services and showing it as an expense, co-tenants can purchase testing at the lowest cost per unit and reflect the difference on their own profit and loss statement. MCL functions as an extension of each co-owner’s on site laboratory. The profit that MCL creates is now an engine that each member hospital can use for its own purpose; the expansion of facilities, the purchase of capital equipment or the hiring of personnel.

About the author: Steve Zawacki is the Chief Financial Officer at Warde Medical Laboratory.