Idexx Laboratories: In-house vs Reference Labs for Independent Practices

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What do you think are the main challenges in increasing the penetration of diagnostic testing during wellness visits?

There are two significant issues. One is client acceptance, which involves various factors. Veterinarians need to feel comfortable recommending it, and clients need to perceive value in the testing. We've been doing wellness testing for about eight to 10 years, and partnering with a lab provider for a pilot study helped us a lot. We tested 100 pets we thought were healthy, and around 20% had some form of sub-clinical illness. This narrative helped convince our team of the testing's importance, which in turn helped with client acceptance. The team were able to say, Jamie's dog, for example, came in and she didn't think it was sick and then we did a test and we had some results that were concerning.

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How has the relevance of diagnostic testing revenue evolved in your hospital over the years? What do you think the future trend will be?

I don't think there have been dramatic changes. The last time we had a significant change in revenue was when we initiated wellness testing. Before that, we hadn't been doing it. I don't have a specific percentage, but we saw a substantial increase when we made it a priority and recommended it for all patients. Aside from that, the percentage of revenue has remained consistent in our practice. I don't anticipate dramatic shifts. There will always be opportunities to introduce new tests, which could be additive. However, I assume that 12% of our revenue is a stable number and will continue to be so for years to come.

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Would it make sense to work with IDEXX for the practice information management system as well, so you can benefit from bundled discounts and avoid dealing with multiple providers?

Yes and no. We are evaluating our options because our existing agreement with IDEXX expires next month, and we had a four-year agreement with them. Historically, we've switched providers, going from IDEXX to Antech and back to IDEXX. We might switch back to Antech this time because they tend to be very competitive. If I were to renew with IDEXX, they might give me good rates, but if I'm willing to switch, I can get more incentives from the competitor. Another significant factor is our membership of VMG, that group purchasing organization I mentioned, which has selected one lab as their preferred provider. We get competitive pricing because of that, and we've used it as a negotiating tactic. Even though IDEXX isn't the preferred provider for my group, we've been able to get compelling pricing from Antech, which IDEXX was willing to match and negotiate beyond.

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