Another factor in assessing whether a market is competitive is the determination of whether: 1) members of the market have imposed barriers to entry to keep newcomers from entering the market; 2) the nature of the market itself has imposed such barriers; or 3) newcomers are fairly easily able to enter the market. As the discussion on concentration patterns indicates, newcomers have entered the independent laboratory market. Using the 1972, 6200 figure and the 1975 figure of 7,654, 1,454 independent laboratories entered the market in those three years alone. Those who have studied the barriers to entry in this market have found them to be governmentally rather than industry-imposed. Thus, Wesley J. Liebler, former Director of Planning and Evaluation of the Federal Trade Commission has noted that the FTC Bureau of Competition characterized the barriers to entry as follows: "The major barriers are institutional. State and federal laws and regulations have made it increasingly difficult to enter the laboratory field." 37/ He also notes that the "OPEE recommends that the Bureau of Competition exhaustively investigate these artificial barriers and report to the Commission. ... We should call any unjustified restrictions imposed by HEW to the attention of that agency and take steps to obtain their removal." 38/ The governmentally imposed barriers about which the Bureau spoke stemmed from licensure programs. A new governmentally 37/ Memorandum to the Commission from Wesley J. Liebler, Director of Planning and Evaluation, re Bureau of Competition, Budget Category C-Health Care (1/22/75). Reprinted at BNA Antitrust and Trade Regulation Reporter No. 723 (7/22/75) p. 3. 38/ Ibid, p. 3-4. imposed barrier takes the form of certificate of need laws. Joe Sims, Deputy Assistant Attorney General for the Antitrust Division, has noted these new barriers and has questioned whether restricting the entry of new competitors into the health care industry through the use of certificate of need laws will make the inflation plaguing the industry worse rather than better. 39/ Barriers to entry into the independent laboratory market come from the government rather than from the market members or the nature of the industry. These barriers will be raised higher if Congress includes independent laboratories in certificate of need requirements. The more extensive the barriers to entry, the less competitive the market is likely to be. Thus, imposing the additional significant barrier of the certificate of need program on an otherwise competitive market will surely diminish that level of competition that is a hallmark of the independent laboratory market. 39/ Speech on Health Care and Regulatory Reform delivered before the National Health Lawyers Association Seminar on Antitrust in the Health Care Field, December 12, 1977. ACLA's goal in preparing this position paper was to demonstrate that the independent laboratory is competitive. Independent laboratories compete between and among themselves for laboratory testing business. This competition has resulted in varying price levels, small price increases, some price decreases and increasing numbers of competitors despite the rapidly escalating expenses laboratories must incur. Hand-in-hand with this price competition has come service competition and technological developments that have brought increasing efficiencies to the provision of testing services, have made formerly esoteric and expensive tests widely available as a routine matter and have offered the test purchaser an ever widening choice of provider, a choice that can be made on the basis of price, service or both. This description of the independent laboratory market is itself a description of competition. The description illustrates the benefits of competition and explains the reasons for preserving competition wherever it is found. ACLA urges both the Department of Health, Education and Welfare and the Congress to acknowledge the competitive market in which independent laboratories operate and to encourage its continuation by exempting independent laboratories from the certificate of need program. APPENDIX I KEYS TO CHARTS Table No. 2 Lab 1 Lab 2 Lab 3 Lab 4 Lab 5 Lab 6 Lab 7 Lab 8 Lab 9 Lab 10 Lab 11 Lab 13 Lab 14 Lab 15 Lab 16 Lab 17 Lab 18 Lab 19 Lab 20 Lab 21 Lab 22 Lab 23 Lab 24 Lab 25 Abel Labs, Inc., Columbia, Maryland MML/Solano, Berkeley, California Laboratory Procedures (Upjohn), Decatur, Georgia Associates in Laboratory Medicine, Inc., Tucson, Arizona Smith Kline Laboratories, Creve Coeur, Missouri Inc. Central Medical Laboratories, Dallas, Texas Diagnostic Sciences, Morris Plains, New Jersey Superior Medical Laboratories, Inc., Miami, Florida Northwest Laboratories, Oklahoma City, Oklahoma Table No. 3 Sunnyside Laboratory, New York, New York Professional Diagnostic Laboratory, New York, New York MetPath Inc., New York, New York Philadelphia Medical Laboratory Lab 1 Lab 2 Lab 3 Lab 4 Lab 5 Lab 6 Lab 7 Lab 8 Table No. 4 Lab 1 Lab 2 Lab 3 Lab 4 Lab 5 Lab 6 Lab 7 Lab 8 Lab 9 Lab 10 Upjohn, King of Prussia, Pennsylvania KCRL (Div. of Roche Lab.), Brooklyn, New York Central Health Lab., Levittown, New York Bio-Chemical Procedures, Hillside, New York A&R Medical Laboratories, Inc., New York, New York Alpone Clinical, New York, New York Park Madison, New York, New York Drekter-Heister Med. Lab., New York, New York da AMERICAN DENTAL ASSOCIATION WASHINGTON OFFICE SUITE 1004 1101-17TH STREET NW • WASHINGTON DC 20036 • PHONE 202-833-3036 March 1, 1978 The Honorable Edward M. Kennedy Chairman Subcommittee on Health and Scientific Committee on Human Resources 4230 Dirksen Senate Office Building Washington, D. C. 20510 Dear Senator Kennedy: I am writing on behalf of the American Dental Association to express the Association's views concerning the amendments to the National Health Planning and Resources Development Act proposed in S. 2410 and S. 2551 which you introduced on behalf of the Administration. I request that this letter be made a part of the record of the hearings which your Subcommittee held on S. 2410. Since enactment of the National Health Planning and Resources Development Act the American Dental Association has done more than merely observe its implementation. We have attempted to participate to the fullest extent. Among a number of programs we have undertaken I would mention the three Regional Conferences concerning the health planning law which we financed and sponsored in 1977. The dental profession has not ignored P.L. 93-641. We have been doing our best to work with this complex law during a trying period of initial organization. This process of organization is far from complete. When we testified on this legislation in 1974 we recognized that well structured health planning is an important element in improving the availability and quality of health care. We also expressed deep concern, which we still have, over unjustified federal intervention in health planning and regulation. We opposed unduly broad discretionary powers in the hands of the Secretary of HEW, permitting him to override |