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Clinical Laboratories and Pathology Groups

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Laboratory Leaders at 2024 Annual Executive War College Discuss Critical Challenges Facing Clinical Laboratory and Pathology Managers for 2024 and Beyond

Trifecta of forces at work that will affect the clinical laboratory and pathology industries have been described as a ‘perfect storm’ requiring lab and practice managers to be well informed

Digital pathology, artificial intelligence (AI) in healthcare, and the perfect storm of changing federal regulations, took centerstage at the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management in New Orleans this week, where more than 1,000 clinical laboratory and pathology leaders convened over three days.

This was the largest number of people ever onsite for what has become the world’s largest event focused exclusively on lab management topics and solutions. Perhaps the highlight of the week was the federal Food and Drug Administration’s (FDA’s) announcement of its final rule on Laboratory Developed Tests (LDTs). Overall, the conference featured more than 120 speakers, many of them national thought leaders on the topic of clinical lab and pathology management. More than 65% of the audience onsite were executive level lab managers.

 “The level of interest in the annual Executive War College is testimony to the ongoing need for dynamic, engaging, and highly relevant conference events,” said Robert Michel (above), Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and founder of the Executive War College. “These in-person gatherings present great opportunities for clinical laboratory and pathology managers and leaders to network and speak with people they otherwise might not meet.” (Photo copyright: Dark Intelligence Group.)

Demonstrating Clinical Value

For those who missed the action onsite, the following is a synopsis of the highlights this week.

Lâle White, Executive Chair and CEO of XiFin, spoke about the future of clinical laboratory testing and the factors reshaping the industry. There are multiple dynamics impacting healthcare economics and outcomes—namely rising costs, decreasing reimbursements, and the move to a more consumer-focused healthcare. But it is up to labs, she said, to ensure their services are not simply viewed as a commodity.

“Laboratory diagnostics have the potential to change the economics of healthcare by really gaining efficiencies,” she noted. “And it’s up to labs to demonstrate clinical value by helping physicians manage two key diagnostic decision points—what tests to order, and what to do with the results.”

But even as labs find ways to increase the value offered to clinicians, there are other disruptive factors in play. Consumer-oriented tech companies such as Google, Apple, and Amazon are democratizing access to patient data in unforeseen ways, and Medicare Advantage plans are changing the way claims are processed and paid.

Redefining Human Data

Reynolds Salerno, PhD, Director of the Division of Laboratory Services for the federal Centers for Disease Control and Prevention (CDC) provided an update on the agency’s top priorities for 2024.

Clinical labs are fundamental components of the public health infrastructure. So, the CDC plans on focusing on delivering high-quality laboratory science, supported by reliable diagnostics and informatics for disease outbreaks and exposures, and engaging with public and private sector partners.

Salerno is an active member of the Clinical Laboratory Improvement Act Committee (CLIAC), which has been working on a number of initiatives, including revisions to the Clinical Laboratory Improvement Act (CLIA) that would change the definition of “materials derived from the human body” to include data derived from human specimens such as medical imaging, genetic sequences, etc.

New Molecular Testing Codes

The history of MolDX and Z-Codes were the topics discussed by Gabriel Bien-Willner, MD, PhD, Chief Medical Officer for healthcare claims and transaction processing company Palmetto GBA. Molecular testing is highly complex, and the lack of well-defined billing codes and standardization makes it difficult to know if a given test is reasonable and necessary.

Z-Codes were established to clarify what molecular testing was performed—and why—prompting payers to require both Z-Codes and Current Procedural Terminology (CPT) codes when processing molecular test claims. Medicare’s MolDX program further streamlines the claims process by utilizing expertise in the molecular diagnostics space to help payers develop coverage policies and reimbursement for these tests.

FDA Final Rule on LDT Regulation

Timothy Stenzel, MD, PhD, CEO of Grey Haven Consulting and former director of the FDA’s Office of In Vitro Diagnostics reviewed the latest updates from the FDA’s Final Rule on LDT (laboratory developed test) regulation. Prior to the FDA releasing its final rule, some experts suggested that the new regulations could result in up to 90% of labs discontinuing their LDT programs, impacting innovation, and patient care.

However, the final rule on LDTs is very different from the original proposed rule which created controversy. The final rule actually lowers the regulatory burden to the point that some labs may not have to submit their LDTs at all. The FDA is reviewing dozens of multi-cancer detection assays, some of which have launched clinically as LDTs. The agency is likely to approve those that accurately detect cancers for which there is no formal screening program.

Stenzel explained the FDA’s plan to down-classify most in vitro diagnostic tests, changing them from Class III to Class II, and exempting more than 1,000 assays from FDA review. He also discussed the highlights of the Quality Management System Regulation (QMSR). Launched in January, the QMSR bought FDA requirements in line with ISO 13485, making compliance easier for medical device manufacturers and test developers working internationally.

Looming Perfect Storm of Regulatory Changes

To close out Day 1, Michel took to the stage again with a warning to clinical laboratories about the looming “Perfect Storm” trifecta—the final FDA ruling on LDTs, Z-Code requirements for genetic testing, and updates to CLIA ’92 that could result in patient data being considered a specimen.

Laboratory leaders must think strategically if their labs are to survive the fallout, because the financial stress felt by labs in recent years will only be exacerbated by macroeconomic trends such as:

  • Staff shortages,
  • Rising costs,
  • Decreasing and delayed reimbursements, and
  • Tightening supply chains.

Lab administrators looking for ways to remain profitable and prosperous should look beyond the transactional Clinical Lab 1.0 fee-for-service model and adopt Clinical Lab 2.0, which embraces HEDIS (Healthcare Effectiveness Data and Information Set) scores and STAR ratings to offer more value to Medicare Advantage and other payers.

Wednesday’s General Session agenda was packed with information about the rise of artificial intelligence, big data, and precision medicine in healthcare. Taking centerstage on the program’s final day was Michael Simpson, President and CEO of Clinisys. Simpson gave a global perspective on healthcare data as the new driver of innovation in diagnostics and patient care.

Michel closed the conference on Wednesday by recapping many of these highlights, and then inviting his audience to the 30th annual Executive War College Diagnostics, Clinical Laboratory, and Pathology Management conference to be held on April 29-30, 2025, here at the Hyatt Regency New Orleans. Register now to attend this critical gathering.

—Leslie Williams

Related Information:

Executive War College: The Ultimate Event for Helping Solve Your Diagnostics, Clinical Lab and Pathology Management Challenges

Labs Should Prepare for Arrival of ‘Perfect Storm’

Executive War College 2025 Registration

Bankruptcies and Store Closings Are Signs of Tough Times Ahead for US Retail Pharmacy Chains

Plans by several national retail pharmacy chains to expand primary care services and even some clinical laboratory test offerings may be delayed because of financial woes

Times are tough for the nation’s retail pharmacy chains. Rite Aid Corporation, headquartered in Philadelphia, closed 25 stores this year and has now filed for bankruptcy. In a press release, the retail pharmacy company announced it has “initiated a voluntary-court supervised process under Chapter 11 of the US Bankruptcy Code,” and that it plans to “significantly reduce the company’s debt” and “resolve litigation claims in an equitable manner.”

Rite Aid may eventually close 400 to 500 of its 2,100 stores, Forbes reported.

Meanwhile, other retail pharmacy chains are struggling as well. CVS Health, headquartered in Woonsocket, Rhode Island, and Walgreens Boots Alliance of Deerfield, Illinois, are each closing hundreds of stores, according to the Daily Mail.

They are each experiencing problems with labor costs, theft, being disintermediated for prescriptions by pharmacy benefit managers (PBMs), and probably building too many stores in most markets.

This is a significant development, in the sense that Walgreens, CVS, and Walmart are each working to open and operate primary care clinics in their stores. This is a way to offset the loss of filling prescriptions, which has migrated to PBMs. Primary care clinics are important to the revenue of local clinical laboratories, but retail pharmacy chains do not yet operate enough primary care clinics in their retail pharmacies to be a major influence on the lab testing marketplace.

Jeffrey Stein

“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives, and accelerating the execution of our turnaround strategy,” said Jeffrey Stein (above), Rite Aid’s CEO/Chief Restructuring Officer, in a press release. Clinical laboratory leaders may want to closely monitor the activities of the retail pharmacies in their areas. (Photo copyright: Rite Aid.)

Multiple Pharmacy Companies at Financial Risk

Rite Aid Corporation (NYSE: RAD) confirmed it continues to operate its retail and online platforms and has received from lenders $3.45 billion in financing to support the company through the bankruptcy process. 

However, according to the Associated Press (AP), Rite Aid has experienced “annual losses for several years” and “faces financial risk from lawsuits over opioid prescriptions,” adding that the company reported total debts of $8.6 billion.

Additionally, the US Department of Justice (DOJ) filed a complaint “alleging that Rite Aid knowingly filled unlawful prescriptions for controlled substances,” explained a DOJ press release.

Rite Aid is not the only retail pharmacy brand dealing with unwelcome developments. Fortune reported last year that Walgreens and CVS paid a combined $10 billion to 12 states for “involvement in the opioid epidemic.”

Walgreens intends to close 150 US and 300 United Kingdom locations, its former Chief Financial Officer James Kehoe shared in a third quarter 2023 earnings call transcribed by Motley Fool.

And in a news release, CVS announced plans to close 900 stores between 2022 and 2024.

Pharmacy Companies’ Investment in Primary Care 

Though they are experiencing difficulties on the retail side, Walgreens and CVS have significantly invested in primary care.

In “Walgreens Continues Expansion into Primary Care as VillageMD Acquires Starling Physicians Group with 30 Locations in Connecticut,” we covered how Walgreens’ VillageMD primary care clinics business was expanding its footprint by acquiring Starling Physicians, a multi-specialty physicians group with 30 locations in Connecticut.

In that same ebrief, we reported on CVS’ acquisition of Oak Street Health, a Chicago-based primary care company, for $10.6 billion. CVS plans to have more than 300 healthcare centers by 2026.

“We looked at our business, and we said, ‘We’re seeing an aging population.’ We know people don’t have access to primary care. We know that value-based care is where it’s going. We know that there’s been a renaissance in home (care). So that’s kind of how we approached our acquisitions,” Karen Lynch, CVS Chief Executive Officer told Fortune.

Other Challenges to Retail Pharmacies

It could be that these major pharmacy chains are hoping entry into primary care will offset the loss of sales from prescriptions that have migrated to PBM organizations.

In addition to reimbursement challenges, retail pharmacies are reportedly experiencing:

  • High labor costs,
  • Competition from online, bricks-and-mortar, and grocery businesses, and
  • Effects from the work-at-home trend, among other struggles.

“I think there’s a number of challenges which are coming to a head. One, you have ongoing reimbursement pressure. The reimbursement level for drugs continues to decrease, so profit margin on the core part of the business is under pressure,” Rodey Wing, a partner in the health and retail practices of global strategy and management consulting firm Kearney, told Drug Store News.

Additionally, the pharmacy’s drug sales need to be high enough to retain pharmacists, who are difficult to recruit in a post-pandemic market, Drug Store News explained.

And in the retail space where products are displayed, some pharmacies struggle to compete with Amazon on convenience and with “dollar” stores on price. And with more people working from home, retail pharmacies are seeing less foot traffic, Drug Store News noted. 

Retail pharmacy companies also have competition from pharmacies conveniently situated in grocery and big-box stores, Forbes reported. These include: 

Walmart, for its part, reduced operating hours of pharmacies at more than 4,500 sites, Daily Mail reported.

Thus, medical laboratory leaders would be wise to keep an eye on market changes in their local retail pharmacies. Some locations are equipped with clinical laboratory services and a closure could give local labs an opportunity to reach out to patients and physicians who need access to a new testing provider.

—Donna Marie Pocius

Related Information:

Rite Aid Takes Steps to Accelerate Transformation and Position Company for Long-Term Success    

Drugstore Downsizing: CVS, Walgreens, and Rite Aid to Close Nearly 1,500 Stores

Pharmacy Chain Rite Aid Files for Bankruptcy Amid Declining Sales and Opioid Lawsuits

US Files Complaint Alleging Rite Aid Dispensed Controlled Substances in Violation of the False Claim Act and the Controlled Substances Act

Rite Aid Files for Bankruptcy in the Face of Massive Debts and ‘Potentially Significant’ Claims for Role in the Opioid Epidemic

Walgreens Boots Alliance Q3 2023 Earnings Call

CVS Health Announces Steps to Accelerate Omnichannel Health Strategy

CVS CEO Sees Changes Coming ‘Faster than a Freight Train’ for Medicare. She’s Betting Billions She Can Build a New American Healthcare System

Threats and Opportunities Facing Retail Pharmacy

As CVS Says It Will Close 900 Stores, Here Are Three More Big Pharmacy Chains Which Are Shutting Locations and Cutting Hours

Walgreens Continues Expansion into Primary Care as VillageMD Acquires Starling Physicians Group with 30 Locations in Connecticut

Understanding Gen Z’s Approach to Healthcare Helps Clinical Laboratories Learn How to Better Meet Their Needs

Healthcare providers of all types will benefit from acknowledging Gen Z’s preference for digital interactions, self-testing, and over-the-counter medications

Each generation has its own unique connection to how it manages its health, and the latest studies into the healthcare habits of Generation Z (aka, Gen Z or Zoomers) are providing valuable insight that savvy clinical laboratory managers and pathologists—in fact all healthcare providers—can use to better serve their Gen Z patients.

According to McKinsey and Company, Gen Z’s “identity has been shaped by the digital age, climate anxiety, a shifting financial landscape, and COVID-19.” And Pew Research states that Zoomers “are also digital natives who have little or no memory of the world as it existed before smartphones.”

As the largest demographic, “Gen Z stands 2.6 billion members strong. … Globally, they hold purchasing power of more than $500 billion and mobile buying power of $143 billion,” wrote Stacy Rapacon, Managing Editor at Senior Executive Media, in an article she penned for HP’s The Garage.

Meeting Gen Zers’ healthcare needs on their terms would seem to be a judicious choice.

Bernhard Schroeder

“Gen-Z’s buying power may exceed $3 trillion,” wrote Bernhard Schroeder (above), a clinical lecturer on integrated/online marketing at San Diego State University, in Forbes. “Their spending ability exceeds the gross domestic product of all but about 25 of the world’s countries.” Thus, it behooves healthcare leaders, including clinical laboratory managers and pathologists, to consider how best to approach treating Gen Z patients. (Photo copyright: San Diego State University.)

Gen Z Leads in Digital Healthcare Use, Self-testing, OTC Drugs

“Gen Z engages in every type of digital healthcare activity more than other generations,” a recent study by PYMNTS noted. A total of 2,735 consumers were surveyed, and though all reported using digital healthcare to some degree, Gen Z stood out.

Patient portal access was the highest digital method accessed by Zoomers (62%), followed by telemedicine appointment usage (55%), the PYMNTS report found.

Knowing the direction Gen Z is trending may lead clinical laboratory leaders to expect self-testing to be on the rise, and that hunch would be correct. “There are two converging trends; the rise of women’s health technology and increased use of at-home sample collection for diagnosis tests,” Clinical Lab Products reported.

“Ongoing innovation in these areas could significantly improve the accessibility of women’s health testing. It will also have repercussions for labs, potentially changing the way samples are received and processed, and the way results are distributed. The quantity and quality of samples may be impacted, too. It’s important for labs to be aware of likely developments so they can prepare, and potentially collaborate with the health technology companies driving change,” CLP noted.

Another area feeling the impact of Gen Z’s healthcare spending is the over-the-counter (OTC) drug market.

“Since the pandemic began, more Americans are paying closer attention to their symptoms and looking for easily accessible information about over-the-counter medications, especially for allergies, coughs, and headaches,” said Kim Castro, Editor and Chief Content Officer for US News and World Report, in a press release.

Zoomers Want Healthcare on Their Own Terms

Gen Z grew up with the internet, Amazon, Netflix, Google, and social media since birth.

“The ‘norm’ they experienced as children was a world that operated at speed, scale, and scope. They developed an early facility with powerful digital tools that allowed them to be self-reliant as well as collaborative,” anthropologist Roberta Katz, PhD, a senior research scholar at Stanford’s Center for Advanced Study in the Behavioral Sciences (CASBS) told Stanford News.

As digital natives, Gen Z can be more science and data driven and yet still expect to find health advice on YouTube or TikTok. According to an article published by Harvard Pilgrim Healthcare, “Gen Z is the first generation to grow up surrounded by digital devices, and they expect their health benefits to be digital, too. From choosing a benefits package to finding a provider, Gen Z wants to take care of their health on their own terms. And that may just include video chatting with a doctor from the back of an Uber.”

In its 2022 US Digital Health Survey, research firm Insider Intelligence found that “Half of Gen Z adults turn to social media platforms for health-related purposes, either all the time or often.”

“Gen-Z will make up 31% of the world’s population by 2021 and they have deeply formed perceptions and beliefs … This has led to an amazing change in the way Gen-Z is disrupting several industries simultaneously,” wrote Bernhard Schroeder (above), a clinical lecturer on integrated/online marketing at San Diego State University, in Forbes.

What Can Clinical Laboratories Learn from These Findings

Gen Z seeks accuracy and trustworthy information. “Gen-Zers’ natural penchant for skepticism and frugality—coupled with low levels of confidence in the US healthcare system—makes them less likely to trust providers, more likely to research prices before seeking care, and more apt to worry that their health insurance won’t cover their treatment,” Insider Intelligence noted.

According to Contract Pharma, “Gen Z is concerned with holistic health and self-care, rather than a one size fits all pharmaceutical approach. They share a hesitancy for traditional healthcare models but with very interesting differences. By understanding these differences, the consumer healthcare industry can focus on agile and distinctive brands to harness Gen Z’s tremendous purchasing power.”

Savvy clinical laboratory leaders can better serve their Gen-Z client physicians and patients by better understanding why Zoomers are more inclined to order their own lab tests (without a physician), collect their own specimens to send into labs, and/or collect their own specimens to do home testing (think COVID-19 self-test kits). Zoomers may need an entirely new business model from their healthcare providers, including clinical laboratories.

Kristin Althea O’Connor

Related Information:

What is Gen Z?

On the Cusp of Adulthood and Facing an Uncertain Future: What We Know about Gen Z So Far

How Gen Z is Redefining Their World through Technology

Gen Z Is ‘Generation Digital Health’ as 62% Use Digital Patient Portals

What Self-Sampling for Women’s Health Testing Means for Labs

US News Top Recommended Over-the-Counter Health Products

Gen Z Are Not ‘Coddled.’ They Are Highly Collaborative, Self-Reliant and Pragmatic, According to New Stanford-Affiliated Research

Who is Gen Z and How Are They Shaping the Future of Health Benefits?

Generation Z: Transforming Consumer Healthcare

Gen Z’s Take on Healthcare

US Generation Z Healthcare Behaviors

Walgreens Continues Expansion into Primary Care as VillageMD Acquires Starling Physicians Group with 30 Locations in Connecticut

Expect there to be more clinical laboratory testing at pharmacies as retail pharmacy chains expand their primary care offerings

Walgreens Boots Alliance (NASDAQ:WBA) of Deerfield, Illinois, continues to expand its primary care footprint with VillageMD’s latest acquisition of Starling Physicians, a multi-specialty physicians group with 30 locations in Connecticut, according to a VillageMD news release. Walgreens is the majority owner of VillageMD, which now has more than 700 medical centers, Healthcare Dive noted.

This deal continues the trend of corporations acquiring physician practices. Already, the majority of physicians are employees, not partners in a private practice physician group. Under corporate ownership, these physician groups often decide to change their clinical laboratory providers. For that reason, managers and pathologists at local medical laboratories will want to explore how they might provide daily lab testing services to the corporate owners of these primary care clinics.

The Hartford Business Journal called VillageMD’s acquisition of Starling Physicians—which is subject to a state investigation for possible certificate-of-need requirement—one of Connecticut’s “more high-profile healthcare merger and acquisition deals in Connecticut in recent years.”

Starling Physicians locations offer full primary care services, as well as specialties that include geriatrics, endocrinology, nephrology, ophthalmology, and cardiology.

The Starling Physicians group acquisition comes just a few months after  

VillageMD paid $8.9 billion for Summit Health-CityMD of Berkeley Heights, New Jersey, with primary care services in the Northeast and Oregon. Walgreens invested $3.5 billion in that transaction, a Summit Health news release noted.

These acquisitions by Walgreens/VillageMD provide opportunities for local clinical laboratories to serve the physicians in these practices, though the operations may have a different patient flow and work process than traditional family practice clinics located in medical offices around community hospitals.

Tim Barry

“Starling shares our vision of being a physician-led model and they provide care in a compassionate and exceptional way to all the patients they serve. By integrating primary care with specialty care, we are able to optimize access to high-quality care for our patients,” said Tim Barry (above), CEO and Chair of VillageMD in the news release. “This is a natural extension of our growth in the Northeast, including our recent acquisition of Summit Health-CityMD. Together, we are transforming the way healthcare is delivered in the United States.” Clinical laboratories in these areas will want to develop a strategy for serving the physicians practicing at these non-traditional locations. (Photo copyright: The Business Journals.)

Primary Care at Retail Locations a Growing Trend

Dark Daily and its sister publication The Dark Report have reported extensively on the growing trend by pharmacy chains and other retail superstores to add primary care services to their footprint.

In “By 2027, Walgreens Wants 1,000 Primary Care Clinics,” The Dark Report covered how Walgreens had disclosed that it would spend $5.2 billion to acquire a 63% interest to become the majority owner of VillageMD. Fierce Healthcare reported that “[Walgreens] planned to open at least 600 Village Medical at Walgreens primary-care practices across the country by 2025 and 1,000 by 2027.”

In “Retail Chain Pharmacies Add CLIA-Waived Point-of-Care Blood Testing and Other Preventive Health Services to Their In-store Offerings,” we reported how eTrueNorth, a pharmacy‐based clinical laboratory services network headquartered in Mansfield, Texas, had partnered with Walmart (NYSE:WMT), Winn-Dixie, Kroger (NYSE:KR), and other retailers to offer their employees CLIA-waived point-of-care testing, preventive health services, wellness screenings, and other medical laboratory testing services through its eLabNetwork chain of retail pharmacies.

And in “Walmart’s Health and Wellness Chief Discusses Retail Giant’s Move to Healthcare/Telehealth Provider, a Step with Implications for Clinical Laboratory Testing,” Dark Daily pointed out that clinical laboratories need strategies to serve customers accessing healthcare in non-traditional settings, particularly as Walmart and the national retail pharmacy chains continue to expand the clinical services offered in their retail stores.

VillageMD

VillageMD is a primary care provider with same-day appointments, telehealth virtual visits, in-home care, and clinical laboratory diagnostic testing such as blood tests and urinalysis. Many VillageMD practices are located in buildings next door to Walgreens sites throughout the United States. (Photo copyright: Walgreens.)

Other Retailers Investing in Primary Care

Other retailers have recently taken deeper dives into healthcare as well.

According to Forbes, “The acquisition comes amid a flurry of acquisitions across the US for doctor practices, which are being purchased at an unprecedented pace by large retailers like Walgreens Boots Alliance, CVS Health, Amazon, and Walmart. Meanwhile, medical care providers owned by health insurers like UnitedHealth Group’s Optum and Cigna’s Evernorth are also in the doctor practice bidding war.”

In “Walmart’s Health and Wellness Chief Discusses Retail Giant’s Move to Healthcare/Telehealth Provider, a Step with Implications for Clinical Laboratory Testing,” Dark Daily reported on Walmart Health’s acquisition of MeMD, which was subsequently renamed in May to Walmart Health Virtual Care.

And in February, CVS announced plans to acquire for $10.6 billion Oak Street Health, a Chicago-based primary care company with 169 medical centers across 21 states that plans to have more than 300 centers by 2026.

Do Clinical Laboratories Want Retail Customers?

The question of whether clinical laboratories should pursue retail customers is at this point academic. Consumer demand is driving the change and labs that don’t keep up may be left behind.

“The trend of putting full-service primary care clinics in retail pharmacies is a significant development for the clinical laboratory industry,” wrote Robert Michel, Editor-in-Chief of Dark Daily and The Dark Report. “These clinics will need clinical lab tests and can be expected to shift patients away from traditional medical clinic sites for two reasons—lower price and convenience—since this new generation of primary care clinics will be located around the corner from where people live and work.”

Thus, healthcare system laboratories or large reference labs may want to reach out to Walgreens, CVS, Amazon, and Walmart for test referrals. These and other large retailers are investing heavily in the belief that consumers will continue to seek convenience in their healthcare.   

—Donna Marie Pocius

Related Information:

VillageMD Acquires Starling Physicians and Broadens its Footprint in the Northeast

Regulator Opens Inquiry into VillageMD-Starling Physicians Deal

VillageMD Acquires Summit Health-CityMD, Creating One of the Largest Independent Provider Groups in the US

Clinical Laboratory Trends: By 2027 Walgreens Wants 1,000 Primary Care Clinics

Walgreens-backed VillageMD Acquires Connecticut Medical Group

Walmart’s Health and Wellness Chief Discusses Retail Giant’s Move to Healthcare

CVS Health to Acquire Oak Street Health

CVS Reports $2.3B Q4 Profit, Will Buy Oak Street Health

Amazon Signs Agreement to Purchase One Medical for $3.9 Billion, Aims to “Reinvent” Healthcare

Company also launches Amazon Clinic virtual healthcare services and announces it will terminate Amazon Care by end of year

Clinical laboratory leaders and pathologists may understandably struggle to keep abreast of Amazon’s moves in the healthcare space. For years, Amazon has tried to develop medical services that disrupt the US healthcare industry in the same way its digital book business upended traditional book publishing. It is clear that Amazon is heavily investing in healthcare ventures that deliver what it believes are better alternatives to existing primary care, clinical laboratory, and retail pharmacy options.

Now, the Seattle-based global e-commerce company has announced plans to acquire One Medical, a membership-based primary care organization, for $3.9 billion according to a news release.

Headquartered in San Francisco, One Medical has primary care offices in 12 major US markets and offers its members 24/7 virtual care, according to the company’s website.

Neil Lindsay

“We think healthcare is high on the list of experiences that need reinvention,” said Neil Lindsay (above), SVP of Amazon Health Services, in a news release announcing the planned acquisition of One Medical. “We love inventing to make what should be easy easier, and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” he added. However, clinical laboratory leaders have watched Amazon’s efforts to disrupt healthcare come and go. (Photo copyright: Advertising Age/Daniel Berman.)

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As One Medical Grows, Amazon Launches Virtual Care Clinic

“One Medical’s philosophy is rooted in quality care, patient-centered design, and a smart application of technology,” Greg Hayes, MD, District Medical Director for One Medical, Preston Center, Dallas, told Texas News.

For its part, One Medical, which currently has more than 125 clinic locations, sees opportunity to grow its services as part of Amazon (NASDAQ:AMZN). “Joining Amazon is a tremendous next step in innovating and expanding access to high-quality, high-value healthcare,” said Amir Dan Rubin, One Medical Chief Executive Officer, in a blog post.

One Medical (NASDAQ:ONEM) is the operating name for 1Life Healthcare, Inc., a chain of primary care clinics that has 815,000 members, a 14% increase over last year. According to a news release on the company’s third quarter 2022 financial results, its revenue was $261.4 million, up 73% over the same period last year. More than 8,000 companies and organizations work with One Medical, the company’s website notes.

Meanwhile, Amazon is also launching Amazon Clinic, a virtual health service “that delivers convenient, affordable care for common conditions” to people in 32 states, an Amazon news release states.

Amazon Clinic offers virtual care services for 20 common conditions including allergies, acne, migraines, and urinary tract infections. Patients complete a questionnaire through a message-based portal prior to meeting with clinicians.

Clinical laboratory managers and pathologists will want to note that Amazon Clinic will need medical laboratory testing performed to properly diagnose patients and determine the best treatments. Since Amazon Clinic will be a virtual care service, Amazon can be expected to explore such options as sending collection kits directly to individuals using the virtual care service, allowing them to collect needed samples that can be returned to traditional clinical laboratories for testing. Amazon’s existing courier and delivery service would make it easy for the internet giant to deliver either specimen collection kits or home-test kits to obtain the necessary diagnostic data.

Patients needing prescriptions can use the company’s online pharmacy Amazon Pharmacy, or other retail pharmacies, noted Becker’s Hospital Review.

“Amazon Pharmacy and One Medical (once the deal closes) are two key ways we’re working to make care more convenient and accessible. But we also know that sometimes you just need a quick interaction with a clinician for a common health concern. … That’s why today were also introducing Amazon Clinic, a message-based virtual care service,” Amazon said in its news release.

What’s Next for Amazon?

Separately, Amazon announced it will terminate Amazon Care at the end of 2022. Amazon Care is a virtual and in-home care service it launched in 2019.

In “Amazon Care Pilot Program Offers Virtual Primary Care to Seattle Employees; Features Both Telehealth and In-home Care Services That Include Clinical Laboratory Testing,” Dark Daily reported how Amazon was piloting Amazon Care as a benefit for its 53,000 Seattle-area employees and their families, and how it could indicate that the world’s largest online retailer was planning a move into the primary care space.

However, in a 2022 internal email, senior vice president of Amazon Health Services Neil Lindsay said Amazon Care wasn’t a sustainable, long-term solution for its enterprise customers, according to Fierce Healthcare.

“This decision wasn’t made lightly and only became clear after many months of careful consideration,” he said. “Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting and wasn’t going to work long-term.”

Will Amazon Provide Clinical Laboratory Services?

Now that Amazon is set with primary care, pharmacy, and virtual health services, might it next explore medical laboratory testing or other diagnostics relationships?

In “Amazon Now Interested in Home Testing Services,” Dark Daily’s sister publication The Dark Report noted that actions Amazon took during the COVID-19 pandemic suggest it may be “serious about clinical laboratory services.”

The Dark Report was alluding to US Food and Drug Administration (FDA) Emergency Use Authorization (EUA) of the Amazon Real-Time RT-PCR Test for Detecting SARS-CoV-2, which was to be performed at clinical laboratories “designated by STS Lab Holdco (a subsidiary of Amazon.com Services LLC) that are certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 42 U.S.C. §263a, and meet requirements to perform high complexity tests,” according to Healthcare Purchasing News.

However, on July 19, the FDA revoked its EUA of the Amazon test.

But this apparently has not slowed Amazon’s drive to gain a foothold in the primary care and virtual health services market. Therefore, clinical laboratory leaders should advance their outreach to healthcare providers who are caring for Amazon employees, customers, and soon patients, in new ways and offer their lab services.   

—Donna Marie Pocius

Related Information:

Amazon and One Medical Sign an Agreement for Amazon to Acquire One Medical

Amazon and One Medical Have Landed in Dallas

What is Amazon Clinic?

Amazon Care Shutting Down End of 2022

One Medical Announces Results for Third Quarter 2022

Update from One Medical on Agreement to be Acquired by Amazon

Amazon Clinic Makes Debut: Six Things to Know

Amazon Care Pilot Program Offers Virtual Primary Care to Seattle Employees; Features Both Telehealth and In-home Care Services that Include Clinical Laboratory Testing

Amazon Now Interested in Home Testing Services

Amazon Real-Time RT-PCR Test for Detecting SARS-CoV-2 Receives FDA EUA

Authorization and Revocations of Emergency Use of Certain In Vitro Diagnostic Devices for Detection and/or Diagnosis of COVID-19; Availability

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