Bio-Reference Laboratories

Your report is back from the laboratory -- with all the trimmings

Clinical laboratory testing is often cast as the commodity business of health care. Nobody needs a patent, after all, to do routine analysis of a patient's cholesterol or iron levels. But Bio-Reference Laboratories Inc. (BRLI ) of Elmwood Park, N.J., has discovered it can capture market share from gorillas like Quest Diagnostics Inc. (DGX ), which controls about 12% of the $36 billion market, by offering an unusual degree of personalized attention and diagnostic prowess in complex and higher-margin areas such as oncology and gene testing. It's a field that's expected to expand, thanks to an aging population, increasingly sophisticated technology, and more emphasis on early detection and monitoring of drug treatment.

The result is a fast-growing regional player that counts prison systems and leading cancer doctors in the New York area among its clientele. What unites such diverse groups is their desire for a greater level of attention than most of Bio-Reference's national rivals provide, from customized handling of tests to cumulative reporting that tracks disease trends, all at no extra charge. "We don't live in a world of proprietary technologies," notes Marc D. Grodman, the 52-year-old president, chief executive, and chairman who launched the laboratory business in 1987 after buying a lab in a doctors' complex in Wayne, N.J. "It's how you use the technology and deliver the service."

Grodman, an internist by training, admits that emphasizing a personal touch can cut into profitability. Bio-Reference, No. 16 on this year's list, spends about double the percentage on sales and marketing as the national labs, and has operating margins of roughly 10% -- a little more than half that of other big players.

But customers love the extra attention. Joanna Garcia, vice-president of network development at Prison Health Services Inc., which handles health care for 267,000 inmates across the country, notes that Bio-Reference doesn't charge extra to crunch data and prepare reports on health or disease trends that emerge from testing inmate populations. Those reports help Prison Health develop programs for disease management.

Grodman gets especially excited when he talks about new developments in oncology, where diagnosis increasingly extends beyond finding cancer to characterizing the specific genetic makeup of tumors. "We've taken the lab business to new frontiers," he says. That doesn't sound like a man who feels the only way that he can compete is on price.

By Diane Brady in New York

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