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Solving Diagnostic Lab Industry Problems

Our Proposed Solutions.

In this post we plan to tell you what can be done to manage the problems that were discussed in the last post.

The chief problems that we identified with the lab sector in our last blog post were:

1. Monopoly

2. No Rating Systems

3. Low Competition

4. No Rate Transparency

5. No Discounts

We would like to discuss the possible solutions for these problems in this week’s post.

1. As for Monopoly. Labs only have monopoly till people do not know of other viable (maybe even better) options, which is almost always the case thanks to a lack of profiling of these labs. But what if? There was a system that had a ready to go list of laboratories indexed by the quality of their services and their proficiency at carrying them out. A system that lets you know about all the laboratories around you and all of the options that you really have vis-à-vis what you thought you had.

2. No Rating Systems– imagine being in a school where you were never tested, questioned or had to work at all. Would you ever work knowing that you could not fail? Without a valid rating system that is what the sectors work ethic has become. But what if? There existed a system where you could rate a particular lab based on the quality of service that you have received. And the cumulative ratings were there for everyone to refer to and draw their own judgement for a service

3. No Rate Transparency- in the last blog post we talked about how any test cost anywhere between 50-200% of their actual value. That sort of inconsistency is a norm that is just not valid now. But what if? There was a system that had a comprehensive list for various tests across various laboratories. A system that ensured you never had to be ill informed of the current market scenario.

4. Low competition- we mentioned earlier that the low competition environment in the sector was not because of lack of availability but for the lack of information among clients regarding the current facilities in the market. But what if? There was a system that acted as a power leveller for all the big and small players in the market, the only thing the system would consider would be how efficient (or inefficient) the lab was in people’s opinions and experience. That would break even the laziest of services out of their rut, giving rise to a high competition environment, which is always good for any sector.

5. No Discounts- now we have already told you that path lab charges are negotiable on the margin just like any service. And you might still feel that it would be weird to negotiate with labs. But what if? There was a system that offered you discounts for standard tests without you having to ask for them or breaking your status quo.

And what if? We told you that such a system was already on its way to you, for you, soon.

Problems with the diagnostic labs industry in India

The diagnostic labs is without a doubt the most unorganized and almost chaotic business structure there is currently. All that is about to change. But, in order for things to change we must first identify the core problems associated with the industry.

The core problems that we have so far identified are as follows-

1. Monopoly – Most path labs have monopolies in their geographic locations. The reason for this being the lack of organised information among the general people regarding location of other more efficient laboratories. This also allows these monopolized laboratories to sometimes quote extravagant prices for simple tests.

2. No Rating Systems – As is true with all organized industries service ratings are indispensable for the customer to draw his/her own judgement for the services rendered by the provider. Currently there are no indexed ratings for path labs, this, in our opinion has led to dissonance. Isn’t it ridiculous that every time you have to eat at a restaurant you check the restaurant ratings and reviews online, but have nothing to refer to when it concerns your health?

3. Low competition – Without competition, no sector can thrive. And unfortunately this sector is one of the lowest competition industries in the market, not for lack of availability, but lack of information. People just do not know where they can get a better price or service than their neighborhood lab.

4. No Rate transparency – Since there are no published rates for most path labs, the test rates could vary from 50%-200% of the actual test cost. And this is without an assurance of quality.

5. Most laboratories do not offer sample collection facilities, contrary to popular belief this is a pretty basic facility offered by most labs. Which labs? People mostly do not know.

6. Just like any other service, lab rates are negotiable on the margin, but most labs do not negotiate, primarily because of the aforementioned monopoly. Secondarily, because people don’t even know that this is possible.

7. Because of these parameters new laboratories that might a have better work ethic than their older and are better established counterparts, do not get business because of customer loyalty to inefficient labs.

Like we said all these parameters are going to change pretty soon. How? Keep watching this space.