Henry Schein’s Gary Dennis explains how understanding clinical value, reimbursement shifts and compliance challenges allows medical distribution reps to become indispensable partners.
The physician office lab is evolving as practices face tighter margins, changing reimbursement, staffing challenges and increasing pressure to deliver care efficiently. At the same time, advances in point-of-care technology are making more diagnostic testing possible closer to the patient, creating new opportunities for practices to diagnose and treat without relying heavily on reference labs.
For medical distribution sales reps, that changing landscape creates an opportunity to do more than take orders.
In the following Repertoire Magazine story, Gary Dennis, Senior Director, Laboratory Services at Henry Schein Medical, discusses the trends reshaping the physician office lab, the growing role of point-of-care testing and why reps who understand the clinical and business value of diagnostic products can become trusted advisers to their customers.
Economics and compliance reshape the lab market
Dennis pointed to economics and regulatory compliance as two of the biggest pressure points for physician office laboratories. Reimbursement for many routine tests has remained flat or declined, while the cost of consumables, reagents, testing and labor continues to rise. At the same time, the potential return of PAMA in January 2027 could create additional reimbursement pressure.
For practices deciding whether to perform testing in-house or send it to an independent or reference laboratory, the economics can be complicated. A successful physician office lab requires more than simply having the equipment available.
“The practices that do well are the ones that know their cost per reportable result, understand their payer mix and match their test menu to the patients they actually see,” said Dennis.
Respiratory testing illustrates how practices can respond to those pressures. Depending on their payer mix, some primary care practices may emphasize molecular or antigen testing where reimbursement is more favorable. That kind of analysis can help offset some of the broader reimbursement challenges facing physician office labs.
Compliance presents another challenge. Even practices operating under a certificate of waiver have responsibilities, including following package inserts, running controls, documenting staff competency and tracking lot numbers and expiration dates. Practices performing moderately complex testing face additional requirements, including inspections, proficiency testing and personnel qualifications.
For many smaller practices, the challenge is not a lack of commitment to compliance, but a lack of time and resources. Staff turnover can make the problem even more difficult, particularly when medical assistants move between primary care and urgent care settings.
“Compliance gaps usually aren’t about intent, but about bandwidth,” Dennis said. For practices offering point-of-care testing, maintaining quality and compliance requires ongoing attention alongside the financial considerations of running the lab. “This is why we have teamed up with Colaborate, a full-service management consulting firm dedicated to serving independent and hospital-based medical laboratories. Together our goal is to help clinical laboratories across the U.S. maintain compliance, enhance operational efficiency and increase financial sustainability.”
Staffing is another pressure point for physician office labs, and the challenge extends beyond traditional laboratory personnel. Dennis said fewer young people are entering laboratory technician and medical laboratory technician programs, while turnover among primary care staff can disrupt testing programs.
That turnover can have a direct impact on whether practices continue performing tests in-house. If a staff member trained to operate a point-of-care analyzer leaves and the replacement does not receive adequate training, the practice may simply stop using the technology and return to sending specimens to a reference lab.
“When you lose that staff member and they don’t get retrained the right way … they stop using the products and revert back to sending tests out.” Dennis said.
The result can be longer turnaround times and additional patient visits, while practices lose some of the ability to diagnose and treat during the same encounter. For Dennis, maintaining a point-of-care testing program requires more than purchasing the right equipment. Ongoing training and staff competency are essential to making sure the technology continues to deliver value.
Chronic disease and infectious disease testing gain momentum
As physician practices look for ways to improve chronic disease management and meet value-based care requirements, diagnostic testing is becoming an increasingly important part of the equation. Dennis points to diabetes and cardiovascular testing as areas of opportunity, particularly as HEDIS measures and Star Ratings increasingly influence how practices are rewarded or penalized for managing patients.
A1C testing is one example. Dennis estimates that roughly 65% of A1C tests are still sent to outside laboratories rather than performed in the physician office, potentially limiting the ability to make immediate treatment decisions.
“How are you going to manage that chronic disease patient if you’re not able to run the test or you’re not running the test?” Dennis said.
Infectious disease testing is another area seeing significant growth. Dennis said Henry Schein’s medical business has seen infectious disease testing increase roughly 26% to 28% over the prior year, citing growing interest in tests for conditions including CT/NG, syphilis, HIV and hepatitis C.
The appeal is not simply convenience. Point-of-care testing can give providers results during the patient encounter, allowing them to diagnose and, when appropriate, begin treatment without relying on patients to return for results.
Testing at the point of care
Despite economic pressures, advances in diagnostic technology are making it possible for physician offices to perform more testing at the point of care. Dennis noted infectious disease testing has been a particularly active area, with CLIA-waived options for conditions such as CT/NG, syphilis and trichomoniasis becoming increasingly available.
“There’s still an education component from the provider’s standpoint,” Dennis said. Providers need to understand not only that these technologies exist, but how they can fit into their practices and improve patient care.
The expansion goes beyond infectious diseases. Dennis points to advances in complete blood count testing as another example of how technology is bringing sophisticated diagnostics closer to the patient. He said Henry Schein is excited about its exclusive agreement with CytoChip, which offers a cartridge-based, five-part CBC designed for the CLIA-waived setting.
More broadly, Dennis said the post-COVID environment has accelerated diagnostic innovation and helped challenge the traditional “send it to the reference lab” model. New point-of-care platforms are increasingly capable of delivering performance comparable to more traditional laboratory testing.
True advisors
The changing lab market gives sales reps an opportunity to move beyond products and become true advisers to their physician-office customers. That starts with understanding the clinical, financial and operational issues practices are facing, then using manufacturer partners and product knowledge to help connect those issues to potential solutions.
Dennis cautions against waiting for customers to identify a product on their own. By the time a physician calls asking for a specific test or analyzer, he says, the research has likely already been done. A consultative approach means getting ahead of that conversation by understanding the practice, its patient population and its clinical priorities.
That approach can also be tailored to individual specialties. An OB/GYN practice may have very different diagnostic needs from an oncology practice, for example. For reps, the opportunity is to develop enough expertise to recognize those differences and bring relevant solutions to the conversation.
“It’s about building that craft and investing your time in those areas,” Dennis said.
Key Takeaways
- Financial & Regulatory Strain: Tighter margins, reimbursement shifts, and strict compliance demand that practices carefully align test menus with costs.
- Staffing Vulnerabilities: High turnover and inadequate retraining often cause practices to abandon point-of-care equipment for reference labs.
- Expanding POC Capabilities: Advances in CLIA-waived technology enable immediate, same-encounter diagnosis and treatment for infectious and chronic diseases.
- Consultative Rep Opportunity: Sales reps can move beyond order-taking by guiding practices through the financial and clinical realities of diagnostics.