Bundled payments, physician employment, and unconventional competitors are cannibalizing the volume-based business model that for decades has defined laboratory medicine. And labs have little room within their customary confines—the three percent of health system spending they directly account for—to play a central role in American medicine’s transformation.

TriCore Reference Laboratories CEO Khosrow Shotorbani, MT(ASCP), put the matter succinctly to a group of laboratory leaders and other health care experts who met in Santa Fe, NM, this spring to tackle the conundrum of how to move from volume to value.

“The question is,” Shotorbani said, “how do we survive in the future? If there is no margin, there is no mission.”

Altering the discourse and, ultimately, the practice of laboratory medicine is the ambitious goal of the invite-only brainstorming sessions among two dozen heavy hitters in health care. The think-tank-style venture, dubbed Project Santa Fe, includes leaders from five of the most innovative clinical laboratory operations in the country: TriCore; the Henry Ford, Geisinger, and Kaiser Permanente Northern California health systems; and New York’s Northwell Health (formerly known as North Shore-LIJ Health System).

The project brings to mind the R&D that took place just 30 miles away in Los Alamos, NM, where more than 70 years ago the scientists of the Manhattan Project raced to beat the world’s totalitarian powers in developing a nuclear weapon. Project Santa Fe participants, too, see themselves in a contest where time is of the essence. What’s needed to beat the clock before fee-for-service dies, they say, is an enterprising, aggressive strategy that aims for a wholly new understanding of the laboratory’s role in medicine. Call it lab 2.0.

The lede for my  cover story in the July issue of CAP TODAY. Read the whole shebang.