Key elements of government contracting: an untapped resource for hospital outreach revenues.

Historically, hospitals hesitate to compete against commercial laboratories for public sector and managed care market opportunities that would increase a hospital's revenue base. Hospital laboratories perceive that they cannot compete in the scope and complexity of testing, the service requirements, or commodity pricing strategies of commercial laboratories. Since 1997, the Department of Pathology Laboratories at Virginia Commonwealth University Health System's Medical College of Virginia Hospitals and Physicians has been awarded major contracts with government agencies and managed care companies to provide laboratory services for local and regional networks. This article reviews the key elements and ongoing price and service strategies in a sequential, easily followed format that hospital outreach programs can use as a resource when expanding their sales effort into the public sector market. Readers instantly should realize the immediate financial rewards from public sector contracts that offset the industry's declining reimbursements from third party payers.