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.”
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.
“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.”
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.”
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.
As the number of Hospital at Home programs increase, clinical laboratories will want to develop programs for collecting samples from patients where they live
Shortages of nurses and hospital staff, combined with pressure to lower the cost of care, are encouraging more institutions to implement hospital-in-the-home programs. One such project involves Oregon Health and Science University (OHSU), which last November began a Hospital at Home (HaH) program that enables certain patients to receive hospital-level care in the comfort of their own homes. Clinical laboratories servicing these programs will need to develop specimen collection and testing services in support of these patients.
The OHSU program can provide healthcare for eight patients simultaneously, and it has treated more than 100 patients at home since its inception. Although this number is only a small segment of OHSU’s 576 bed capacity, it does affect the overall healthcare provided by the hospital.
Under the program, basic services, such as the monitoring of vital signs—as well as some clinical laboratory work and routine imaging studies—are performed in the patient’s home. Individuals are transported to OHSU for more complex imaging or other procedures.
“Every patient we have in Hospital at Home is one who is not waiting in the emergency room or a hallway for a bed to become available in the hospital,” said Matthias Merkel, MD, PhD (above), Senior Associate Chief Medical Officer, Capacity Management and Patient Flow at OHSU, in a press release. In the same way clinical laboratories support telehealth programs, medical laboratories will need procedures for collecting specimens and testing patients participating in Hospital at Home programs as well. (Photo copyright: Oregon Health and Science University.)
OHSU’s HaH program utilizes advances in technology to connect at-home patients with physicians and nurses around the clock via a smart tablet. In addition, participating patients receive real-time monitoring and at least two daily in-person visits from nurses and paramedics that have been contracted by OHSU.
“It’s a better experience for patients, plus it increases our system’s capacity to provide care for all the people who need it,” said Darren Malinoski, MD, Chief Clinical Transformation Officer and Professor of Surgery at OHSU in the press release. “It allows us to make good on our promise to take care of the state as best we can.”
The current eligibility criteria to participate in OHSU’s Hospital at Home program include:
Patient must be over the age of 18.
Patient’s primary residence must be within a 25-mile radius of the OHSU hospital.
Inpatient hospitalization is initially required.
Patient must have a diagnosis that can be managed remotely, such as COVID-19, pneumonia, cellulitis, congestive heart failure, urinary tract infections, or pyelonephritis.
Malinoski feels that OHSU’s HaH program is ready to expand. In fact, he is so confident in it he enrolled his own 83-year-old mother as one of its first patients. While undergoing treatment for lung cancer, a routine clinical checkup exposed evidence of toxicity in her blood. Typically, she would have been directly admitted to the hospital for monitoring, but instead she was entered into the HaH program.
“It was unbelievable,” stated Lesley Malinoski in the press release. “I had the feeling of being well taken care of. I was in my own home. I could cook, I could rest—anything I wanted and still have all this care.”
“They didn’t just come in and run out,” she continued. “I felt like a celebrity.”
HaH programs around the country were made possible through a federal waiver granted by the federal Centers for Medicare and Medicaid Services (CMS) in November 2020 in response to the COVID-19 pandemic.
According to the American Hospital Association (AHA), “this care delivery model has been shown to reduce costs, improve outcomes, and enhance the patient experience.”
Prior to the waiver, there were only about two dozen hospitals across the US that had HaH programs. However, as of May 20, 2022, 227 hospitals in 35 states had received a HaH waiver from CMS. This number represents nearly 4% of all hospitals in the country, according to Health Affairs.
In “Two US Studies Show Home-based Hospital Care Lowers Costs while Improving Outcomes and Patient Satisfaction,” we reported on a hospital-based home care program that involved 323 patients at Presbyterian Healthcare Services in Albuquerque, N.M. We surmised that significant growth in the number of patients treated in home-based hospital care programs would directly affect hospital-based clinical laboratories and pathology groups. Among other things, it would reduce the volume of inpatient testing while increasing the number of outpatient/outreach specimens.
And in “Australia’s ‘Hospital in the Home’ Care Model Demonstrates Major Cost Savings and Comparable Patient Outcomes,” Dark Daily saw that wider adoption of that country’s Hospital in the Home (HITH) model of patient care would directly affect pathologists and clinical laboratory managers who worked in Australia’s hospital laboratories. We reported that more HITH patients would increase the need to collect specimens in patient’s homes and transport them to a local clinical laboratory for testing, and that because they are central to the communities they serve, hospital-based medical laboratories would be well-positioned to provide this diagnostic testing.
OHSU’s overall experience with their Hospital at Home program demonstrates that such a model can be a highly successful and cost-effective method of providing patient care. It is probable that in the future, more medical institutions will create similar programs in an effort to effectively serve as many patients as possible while ensuring shorter hospital stays and rendering better healthcare outcomes. As this happens, it will give hospital-based medical laboratories an opportunity to deliver value in home-based patient care.
Regulators and lawmakers are considering proposed changes to CLIA and PAMA involving medical laboratory services
Clinical laboratories and pathology groups should monitor a series of federal regulatory developments underway this fall. The proposals and documents will potentially affect how lab managers and staff do their jobs and how much Medicare reimbursement medical laboratories receive for certain diagnostic tests next year.
Among the initiatives under consideration are the following:
Below are details about these laboratory-related federal bills and regulatory documents that observant laboratory managers will want to track in the coming months.
“Clinical laboratories need to make sure that they have proper requisitions and documentation for genetic testing that involves telemedicine.” Danielle Tangorre, JD (above), a partner at law firm Robinson and Cole LLP in Albany, NY, told Dark Daily. (Photo copyright: Robinson and Cole LLP.)
CLIA Fee Increases and Testing Personnel Changes
The federal Centers for Medicare and Medicaid Services (CMS) is examining fee and personnel changes for CLIA. Officials from CMS are reviewing public comments on the proposal ahead of publishing a final rule.
Among other changes, the proposal would:
Institute a 20% across-the-board increase on existing fees.
Establish a biennial increase of CLIA fees for follow-up surveys, substantiated complaint surveys, and revised certificates.
Add doctoral, master’s, and bachelor’s degrees in nursing to qualify testing personnel for high and moderate complexity testing.
“The Practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
“The Telemedicine Company compensates the Practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the Practitioner as compensation based on the number of purported medical records that the Practitioner reviewed.
“The Telemedicine Company only furnishes items and services to Federal health care program beneficiaries and does not accept insurance from any other payor.
“The Telemedicine Company does not expect Practitioners (or another Practitioner) to follow up with purported patients nor does it provide Practitioners with the information required to follow up with purported patients (e.g., the Telemedicine Company does not require Practitioners to discuss genetic testing results with each purported patient).”
And more.
“In the telehealth space, the issue the OIG has flagged is that genetic tests are being ordered without patient interaction or with only brief telephonic conversations,” Danielle Tangorre, JD, a partner at law firm Robinson & Cole LLP in Albany, N.Y., told Dark Daily.
New Bill May Eliminate 2023 Medical Laboratory Payment Cuts Under PAMA
Medical labs and pathology groups face payment cuts of up to 15% for 800 lab tests on the Medicare Clinical Lab Fee Schedule (CLFS) on Jan. 1, 2023, as part of PAMA.
The bill proposes to move regulatory oversight of LDTs from CLIA to the federal Food and Drug Administration (FDA). Champions of the bill argue that FDA regulation is needed for in vitro clinical tests (IVCTs) because they are similar to medical devices and bring with them patient safety concerns.
The bill seemed ready for a Senate vote over the summer but stalled. On Sept. 30, Congress passed a short-term resolution to keep the federal government funded. During negotiation, the VALID Act was removed from the larger spending package, according to Boston law firm Ropes and Gray.
Expect discussion to renew in Congress about the VALID Act after the mid-term elections.
Clinical laboratory leaders and pathology group managers will want to closely monitor the progress of these four federal legislative and regulatory developments. Each of the possible actions described above would significantly change the status quo in the compliance requirements and reimbursement arrangements for both clinical laboratory testing and anatomic pathology services.
Healthcare industry watchdog Group Leapfrog says that if CMS suppresses the data “all of us will be in the dark on which hospitals put us most at risk”
For some time, hospitals and clinical laboratories have struggled with transparency regulation when it comes to patient outcomes, test prices, and costs. So, it is perplexing that while that Centers for Medicare and Medicaid Services (CMS) pushes for more transparency in the cost of hospital care and quality, the federal agency also sought to limit public knowledge of 10 types of medical and surgical harm that occurred in hospitals during the COVID-19 pandemic.
And even though the CMS announced in its August 1 final rule (CMS-1771-F) that it was “pausing” its plans to suppress data relating to 10 measures that make up the Patient Safety and Adverse Events Composite (PSI 90), a part of the Hospital-Acquired Condition (HAC) Reduction Program, it is valuable for hospital and medical laboratory leaders to understand what the federal agency was seeking to accomplish.
According to USA Today, medical complications at hospitals such as pressure ulcers and falls leading to fractures would be suppressed in reports starting next year. Additionally, CMS “also would halt a program to dock the pay of the worst performers on a list of safety measures, pausing a years-long effort that links hospitals’ skill in preventing such complications to reimbursement,” Kaiser Health News reported.
The proposed rule’s executive summary reads in part, “Due to the impact of the COVID-19 PHE on measure data used in our value-based purchasing (VBP) programs, we are proposing to suppress several measures in the Hospital VBP Program and HAC Reduction Program … If finalized as proposed, for the FY 2023 program year, hospitals participating in the HAC Reduction Program will not be given a measure score, a Total HAC score, nor will hospitals receive a payment penalty.”
In a fact sheet, CMS noted that its intent in proposing the rule was neither to reward nor penalize providers at a time when they were dealing with the SARS-CoV-2 outbreak, new safety protocols for staff and patients, and an unprecedented rise in inpatient cases.
“We want the public to have complete trust in the data and will only be providing data we have determined has a high confidence of credibility and accuracy,” said CMS Chief Medical Officer Lee Fleisher, MD (above), Director of the CMS Center for Clinical Standards and Quality in a statement, Axios reported. Clinical laboratory leaders would find it more difficult to compare the performance of their hospitals against peer hospitals, should this proposed rule take effect as written. (Photo copyright: Lee Fleisher.)
Groups Opposed to the CMS Proposal
Like healthcare costs, quality data need to be accessible to the public, according to a health insurance industry representative. “Cost data, in the absence of quality data, are at best meaningless, and at worst, harmful. We see this limitation on collection and publication of data about these very serious safety issues as a step backward,” Robert Andrews, JD, CEO, Health Transformation Alliance, told Fortune.
The Leapfrog Group, a Washington, DC-based non-profit watchdog organization focused on healthcare quality and safety, urged CMS to reverse the proposal. The organization said on its website that it had collected 270 signatures on letters to CMS.
“Dangerous complications, such as sepsis, kidney harm, deep bedsores, and lung collapse, are largely preventable yet kill 25,000 people a year and harm 94,000,” wrote the Leapfrog Group in a statement. “Data on these complications is not available to the public from any other source. If CMS suppresses this data, all of us will be in the dark on which hospitals put us most at risk.”
Leah Binder, Leapfrog President/CEO, told MedPage Today she is concerned the suppression of public reporting of safety data may continue “indefinitely” because CMS does not want “to make hospitals unhappy with them.”
AHA Voices Support
Meanwhile, the American Hospital Association noted that the CMS “has made this proposal to forgo calculating certain hospital bonuses and penalties due to the impact of the pandemic,” Healthcare Dive reported.
“We agree with CMS that it would be unfair to base hospital incentives and penalties on data that have been skewed by the unprecedented impacts of the pandemic,” said Akin Demehin, AHA Senior Director, Quality and Safety Policy, in a statement to Healthcare Dive.
Though CMS’ plans to limit public knowledge of medical and surgical complications have been put on hold, medical laboratory leaders will want to stay abreast of CMS’ next steps with this final rule. Suppression of hospital harm during a period of increased demand for hospital transparency could trigger a backlash with healthcare consumers.
From infant formula to contrast dye for CT scans, ongoing healthcare product shortages highlight continuing US supply chain and manufacturing issues
Medical laboratory directors and pathologists have firsthand knowledge of COVID-19 pandemic-driven supply chain issues, having faced backlogs for everything from pipettes and transport media to personal protective equipment (PPE). But the latest shortage impacting blood collection tubes is another example of why it is important to manufacture key products—including clinical laboratory tests, analyzers, and consumables—domestically.
On January 19, 2022, the federal Food and Drug Administration (FDA) issued a Letter to Healthcare Providers and Laboratory Personnel recommending “conservation strategies” to minimize blood collection tube use because of “significant disruptions” in supplies due to COVID-19-increased demand and “recent vendor supply challenges.”
“The FDA updated the device shortage list to include all blood specimen collection tubes (product codes GIM and JKA),” the letter noted.
This announcement followed a similar June 10, 2021, Letter to Healthcare Providers and Laboratory Personnel that stated the FDA was aware “that the US is experiencing significant interruptions in the supply of sodium citrate blood specimen collection (light blue top) tubes because of an increase in demand during the COVID-19 public health emergency and recent vendor supply challenges.”
A spokesperson for Becton-Dickinson (BD), a manufacturer of blood specimen collection products, told Forbes that the COVID-19 pandemic caused “the most unpredictable demand that BD has experienced in our company’s history.” The spokesperson added, “Worldwide, BD produced nearly a half a billion additional blood tubes in 2021 versus 2020 … Like every business across every industry around the world, BD is experiencing limited availability of and access to raw materials, shipping and transportation delays, and labor shortages, which hinders our ability to ramp production.”
“It’s also a challenge because we’ve moved to just-in-time (JIT) inventory across all sectors, including labs … They outdate just like food [and] are no longer fresh. [The product] is no longer reliable and you can’t use it. So, we can’t stockpile either,” Nielsen told Forbes.
Shortages Hit Other Critical Healthcare Sectors
But shortages of supplies and equipment have spread beyond the clinical laboratory. Intravenous contrast—which contains iodine and is used to improve the accuracy of CT scans and exclude life-threatening conditions such as cancer—has been in short supply since GE Healthcare shut down its manufacturing facility in Shanghai, China, during the city’s two-month pandemic lockdown that began in early April.
“This isn’t an ancillary tool. This is something that’s used many, many times every day for both lifesaving decisions in the setting of trauma and for managing cancer patients and determining the appropriate care for them,” he added.
US Rep. Rosa DeLauro (above), lamented the fact these vital products are not being made in sufficient quantities in the US. “In the wealthiest nation on Earth, there should be no reason doctors are forced to ration lifesaving medical scans to compensate for a shortage of material,” DeLauro told The New York Times. “We are seeing supply chains break down because of consolidated industries experiencing manufacturing shortages and offshoring American jobs to China.” Clinical laboratory managers have first-hand knowledge of the severity of supply shortages. (Photo copyright: CNN.)
GE Healthcare is one of four companies that supply iodine-containing contrast to the United States, but the other three manufacturers have been unable to scale-up and offset the shortage.
By June 14, 2022, the Shanghai facility had returned to 100% production capacity following the easing of local COVID restrictions, according to a GE Healthcare statement. But shortages remain.
“There is still the challenge of bringing the contrast media across the ocean and distributing it to healthcare facilities across the nation,” Nancy Foster, the American Hospital Association’s (AHA) Vice President of Quality and Patient Safety Policy, told CNN.
“The hospital association estimates that about half of all hospitals in the United States rely on GE for contrast dye to perform about 20 million scans a year, or about 385,000 scans each week,” CNN reported.
Critical Medical Products Must be Manufactured Domestically
“We’ve been having shortages throughout the pandemic. At the very beginning of the pandemic, it was PPE shortages,” Jain said. “Now, we have contrast shortages and formula shortages for babies.”
The infant formula crisis is the other headline grabbing news in recent weeks. Three companies—Abbott, Reckitt, and Gerber—manufacture 95% of the baby formula sold in the US, with Abbott controlling roughly 42% of the nation’s supply, CNN reported.
“Initially, this problem affected those who are on more specialized formulas or had nutritional issues,” Stephanie Seger, Director of Government Relations at Children’s Mercy Hospital in Kansas City, Mo., told CNN. ‘Then the gap, or the emptiness on the shelves, increased to the point where it’s now any formula. It’s now any parent of any baby.”
The Biden administration took steps in May to increase the supply of imported formula, but like the Intravenous contrast shortage, the problem has not been solved.
The COVID-19 pandemic has served to underscore the serious issues affecting supply chains for hospital, medical laboratory, and other critical supplies. While no quick fix has appeared on the horizon, the clinical laboratory industry should take steps now to work toward long-term solutions.
