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Clinical Laboratories and Pathology Groups

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BioReference Laboratories’ Unique Journey during the COVID-19 Pandemic Described in ‘Swab,’ a New Book by former BRLI CEO Jon Cohen, MD

Certainly every clinical laboratory in the United States has a unique story about dealing with the challenges of the SARS-CoV-2 outbreak, but only BioReference did testing for multiple professional sports leagues and the cruise ship industry

Few would challenge the assertion that the nation’s clinical laboratories (along with public health officials) were caught flat-footed when the SARS-CoV-2 coronavirus reached the United States in the winter of 2021. Even as the federal Centers for Disease Control and Prevention (CDC) and some labs rushed to develop reliable medical laboratory tests for COVID-19 in the early weeks of the outbreak, the demand for tests far outstripped supply in this country for many months.

This was the moment when the pandemic’s need meant lab testing opportunity for medical laboratories across the nation. This was particularly true for Elmwood Park, New Jersey-based BioReference Laboratories, Inc. (BRLI), a division of OPKO, Inc. BioReference found itself in the nation’s first pandemic hot zone—New York City and surrounding counties.

Not only was this lab company geographically in the center of the first overwhelming surge of COVID-19 cases, but its management team had important relationships across government and business. For that reason, its management team was pulled into the earliest planning sessions by government officials at the city, state, and federal level.

Consequently, in the earliest days of the outbreak, BioReference was one of the nation’s first labs to help organize and support drive-through COVID-19 specimen collection centers. Its management team went on to accomplish many notable firsts in the lab’s response to the pandemic. All of this is described in the recently-published book “Swab–Leadership in the Race to Provide COVID Testing to America.”

As CEO of BioReference Laboratories during the time of the COVID-19 pandemic in 2020 and 2021, physician Jon R. Cohen, MD (above), energized his clinical lab’s management team and staff to rise to a series of unique challenges, ranging from helping set up the nation’s first drive-through COVID-19 sampling sites in New York City to performing testing for professional sports leagues, such as the NBA, the NFL, and the NHL. (Photo copyright: New York Foundling, Inc.)

Harnessing the Creativity and Energy of a Clinical Lab Staff

The book’s author is Jon R. Cohen, MD, who was CEO of BioReference Laboratories throughout the course of the pandemic. Cohen is now CEO of Talkspace, a virtual behavioral health company.

“Swab” documents BioReference lab’s response to the SARS-CoV-2 pandemic and tells the tale of how the lab company harnessed the creativity of its managers and lab scientists to speedily build up daily test volumes at a time when automation, analyzers, test kits, collection supplies, and reagents were in short supply.

Clinical laboratory professionals interested in lab management will gain valuable insights from Cohen’s approach to writing “Swab.”

While describing BioReference lab’s many innovative COVID-19 testing services, Cohen also provides readers with the management lessons and insights he used to impart needed skills to the company managers, while also inspiring BioReference Lab’s staff to devote the extra effort necessary to deliver COVID-19 testing in novel ways and in unusual settings.

When New York City hospitals were overwhelmed by cases in the earliest days of the pandemic, Cohen’s personal contacts with political leaders came into play. Just a few years earlier, Cohen had run for statewide office as a Democrat. He had friendships with the New York City Mayor Bill de Blasio, with the New York State Governor Mario Cuomo, and with Senators Charles Schumer and Kirsten Gillibrand.

Cohen’s Lab Had a Seat at Government Planning Tables

As these government officials convened various task forces to address the pandemic, Cohen describes how BioReference had a seat at the table and a voice in viable ways to organize specimen collection and COVID-19 testing literally overnight and on an unprecedented scale.

The pandemic’s early days in late February, March, and April of 2020 were only the first challenges to be overcome by the management at BioReference. “Swab” describes a remarkable progression of innovative SARS-CoV-2 testing programs initiated by Cohen and his team. Each of these testing programs was tailored to the specific needs of different industries. No other clinical laboratory organization in the United States was as successful at serving this range of clients. For example:

  • For the last eight games of the National Basketball Association’s 2020 season and playoffs, BioReference created and managed the NBA’s “biosecure bubble” program at Disney World in Orlando. Over the course of 172 games, 150,000 SARS-CoV-2 tests were performed with zero-positivity.
  • The National Football League watched the NBA play in its bubble that summer. BioReference got the call and worked with NFL management to provide COVID-19 tests. For the 2020 season, in support of 268 games played across the United States, BioReference performed 1.23 million tests for 5,000 players, coaches, and staff, with an infection rate of less than 1%.
  • Along with the NBA and NFL, BioReference provided SARS-CoV-2 testing for professional soccer and hockey, the Winter X Games, and the US men’s and women’s Olympic soccer teams.
  • One of the lab company’s more complex SARS-CoV-2 testing programs involved the cruise ship industry. In 2021, BioReference established sites in 13 ports around the US and the Caribbean. The lab placed staff on as many as 24 cruise ships at one time.
  • Of course, testing for schools, colleges, universities, and employers was part of BRLI’s testing services over the course of the COVID-19 pandemic as well.

Creativity of Clinical Lab Managers and Staff

As the examples above illustrate, “Swab” will give readers a ringside seat in how BioReference Laboratories harnessed the creativity and skills of its management team and staff to address the unprecedented demands for timely, accurate COVID-19 testing from the very beginning of the pandemic through its waning months.

Cohen writes with an accessible style and provides readers with an easy-to-read narrative of his lab company’s journey through the pandemic. Each of the book’s 10 chapters ends with a “Leadership Reflection” that Cohen uses to describe the management methods he utilized to keep BRLI’s thousands of employees on task and on time, so that the end result month after month was “mission accomplished.”

In today’s digital age, the statement “this book is available at a bookstore near you” may not be applicable. What is true is that author Jon R. Cohen’s “Swab–Leadership in the Race to Provide COVID Testing to America” can be ordered at Amazon.com, Alibris.com, and other web-based booksellers. 

—Robert L. Michel

Related Information:

Company Testing NBA Players in Bubble Seeks ‘Greater Good’

The Lab Powering Pandemic Sports

NBA to Primarily Use Rapid Tests for COVID-19 in 2021-22

NFL COVID-19 Testing Program Avoids Using Local Resources, Medical Personnel

BioReference Laboratories Capitalizes on Increasing Demand for Rapid POC SARS-CoV-2 Tests

NFL COVID-19 Testing Program Avoids Using Local Resources, Medical Personnel

The NBA Bubble Is Safe So Far. But the League’s Lessons Won’t Work for Schools and Businesses

What Key Laboratory Leaders Will Learn at This Week’s 2023 Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management

Executives and pathologists from many of the nation’s most prominent clinical laboratories are on their way to the Crescent City today to share best practices, hear case studies from innovative labs, and network

NEW ORLEANS—This afternoon, more than 900 lab CEOs, administrators, and pathologists will convene for the 28th Annual Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management conference. Three topics of great interest will center around adequate lab staffing, effective cost management, and developing new sources of lab testing revenue.

Important sessions will also address the explosion in next-generation sequencing and genetic testing, proposed FDA regulation of laboratory-developed tests (LDTs), and innovative ways that clinical laboratories and pathology groups can add value and be paid for that additional value.

All this is happening amidst important changes to healthcare and medicine in the United States. “Today, the US healthcare system is transforming itself at a steady pace,” explained Robert L. Michel, Editor-in-Chief of The Dark Report and Founder of the Executive War College. “Big multi-hospital health systems are merging with each other, and payers are slashing reimbursement for many medical lab tests, even as healthcare consumers want direct access to clinical laboratory tests and the full record of their lab test history.

“Each of these developments has major implications in how clinical laboratories serve their parent organizations, offer services directly to consumers, and negotiate with payers for fair reimbursement as in-network providers,” Michel added. “Attending the Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management equips lab leaders with the tools they’ll need to make smart decisions during these challenging times.”

Executive War College

Now in its 28th year, the Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management convenes April 25-26 in New Orleans. Executive War College extends to a third day with three full-day workshops: LEAN fundamentals for lab leaders, a genetic testing program track, and a digital pathology track. Learn more at www.ExecutiveWarCollege.com. (Photo copyright: The Dark Intelligence Group.)

Challenges and Opportunities for Clinical Laboratories

With major changes unfolding in the delivery and reimbursement of clinical services, clinical laboratory and pathology practice leaders need effective ways to respond to the evolving needs of physicians, patients, and payers. As The Dark Report has often covered, three overlapping areas are a source of tension and financial pressure for labs:

  • Day-to-day pressures to manage costs in the clinical laboratory or pathology practice.
  • The growing demand for genetic testing, accompanied by reimbursement challenges.
  • Evolving consumer expectations in how they receive medical care and interact with providers.

Addressing all three issues and much more, the 2023 Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management features more than 80 sessions with up to 125 lab managers, consultants, vendors, and in vitro diagnostic (IVD) experts as speakers and panelists.

Old-School Lab Rules Have Evolved into New-School Lab Rules

Tuesday’s keynote general sessions (to be reported exclusively in Wednesday’s Dark Daily ebriefing) will include four points of interest for clinical laboratory and pathology leaders who are managing change and pursuing new opportunities:

  • Positioning the lab to prosper by serving healthcare’s new consumers, new care models, new payment models, and more, with Michel at the podium.
  • How old-school lab rules have evolved into new-school lab rules and ways to transition the lab through today’s disrupters in healthcare and the clinical laboratory marketplace, with Stan Schofield, Managing Principal of the Compass Group.
  • The growing trend of clinical laboratory-pharmacy relationships with David Pope, PharmD, CDE, Chief Pharmacy Officer at OmniSYS, XIFIN Pharmacy Solutions.
  • Generating value by identifying risk signals in longitudinal lab data and opportunities in big data from payers, physicians, pharma, and bioresearch, with Brad Bostic, Chairman and CEO of hc1.

Wednesday’s keynote sessions (see exclusive insights in Friday’s Dark Daily ebriefing) explore:

Wednesday’s keynotes conclude with a panel discussion on delivering value to physicians, patients, and payers with lab testing services.

Clinical Labs, Payers, and Health Plans Swamped by Genetic Test Claims

Attendees of the 2023 Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management may notice a greater emphasis on whole genome sequencing and genetic testing this year.

As regular coverage and analysis in The Dark Report has pointed out, clinical laboratories, payers, and health plans face challenges with the explosion of genetic testing. Several Executive War College Master Classes will explore critical management issues of genetic and genomic testing, including laboratory benefit management programs, coverage decisions, payer relations, and best coding practices, as well as genetic test stewardship.

This year’s Executive War College also devotes a one-day intensive session on how community hospitals and local labs can set up and offer genetic tests and next-generation sequencing services. This third-day track features more than a dozen experts including:

During these sessions, attendees will be introduced to “dry labs” and “virtual CLIA labs.” These new terms differentiate the two organizations that process genetic data generated by “wet labs,” annotate it, and provide analysis and interpretation for referring physicians.

State of the Industry: Clinical Lab, Private Practice Pathology, Genetic Testing, IVD, and More

For lab consultants, executives, and directors interested in state-of-the-industry Q/A and discussions concerning commercial laboratories, private-practice pathology, and in vitro diagnostics companies, a range of breakout sessions, panels, and roundtables will cover:

  • Action steps to protect pathologists’ income and boost practice revenue.
  • Important developments in laboratory legal, regulatory, and compliance requirements.
  • New developments in clinical laboratory certification and accreditation, including the most common deficiencies and how to reach “assessment ready” status.
  • An update on the IVD industry and what’s working in today’s post-pandemic market for lab vendors and their customers.
  • Federal government updates on issues of concern to clinical laboratories, including PAMA, the VALID Act, and more.

Long-time attendees will notice the inclusion of “Diagnostics” into the Executive War College moniker. It’s an important addition, Michel explained for Dark Daily.

“In the recent past, ‘clinical laboratory’ and ‘anatomic pathology’ were terms that sufficiently described the profession of laboratory medicine,” he noted. “However, a subtle but significant change has occurred in recent years. The term ‘diagnostics’ has become a common description for medical testing, along with other diagnostic areas such as radiology and imaging.”

Key managers of medical laboratories, pathology groups, and in vitro diagnostics have much to gain from attending the Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management, now in its 28th year. Look for continued coverage through social media channels, at Dark Daily, and in The Dark Report.

Clinical laboratories are invited to continue the conversations by joining the Executive War College Discussion Group and The Dark Report Discussion Group on LinkedIn.

Liz Carey

Related Information:

Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management Agenda

Six Important Themes to Help Labs Succeed

Executive War College Press

The Dark Report

Dark Daily eBriefings

The Dark Report Discussion Group

Executive War College Discussion Group

Nearly One Million Patient Records of Hospitals, Health Clinics, Medical Laboratories, and other Providers Stolen in Ransomware Attack on Medical Records Company

Clinical labs should proactively investigate how a vendor will respond to a data security incident and how quickly, says expert

Clinical laboratory managers in New York and surrounding areas should be aware that  almost one million protected health information (PHI) records from as many as 28 healthcare providers appear to have been stolen from a medical records company that services these providers.

Practice Resources LLC (PRL), a company that provides billing services for dozens of hospitals and medical providers in Central New York, announced in August they were the target of a ransomware attack that occurred on April 12 of this year. The Syracuse-based organization stated that hackers may have captured personally identifiable information (PII) such as names, home addresses, treatment dates, health plan numbers, and internal account numbers of 934,138 patients.

The data breach affected the patient records of dozens of medical providers and the clinical laboratories that service them, as well as physical therapists, pediatricians, gynecologists, orthopedic surgeons, and more.

Dark Daily’s sister publication The Dark Report covered a similar 2019 data breach in “Labs Should Heed Lessons from Huge Data Breach.”

Jim Giszczak, JD

“When a lab’s vendor has some type of breach, the lab entity that provided the compromised information could have some liability related to the breach,” explained Jim Giszczak, JD (above), McDonald Hopkins, in an interview with The Dark Report over a similar data breach in 2019. “That’s why every lab should be proactive and do a review to understand each vendor’s policies, procedures, training, and response in the event of a breach. Because your lab needs to know how a vendor will respond to a data security incident, and importantly, how quickly it will respond, it’s critical for lab officials to review the contracts they have with vendors that acquire, or have access to, PHI.” (Photo copyright: McDonald Hopkins.)

Not a Scam

“Unfortunately, it’s not a scam,” stated David Barletta, President and CEO of PRL, in an interview with local Syracuse news WSYR. “This really did happen in April—there was a ransomware attack on our system. We brought in forensic accountants and forensic information teams to come and look at what happened.”

PRL sent out more than 940,000 letters to potential victims of the cyberattack in August, noting that some patients may receive more than one letter.

The complete list of “healthcare entities on whose behalf Practice Resources LLC is providing notice of data incident,” according to PRL, includes:

Although their investigation did not uncover any evidence that personal data was misused, PRL has arranged credit monitoring services free of charge for one year from the date of enrollment. The company is also offering proactive fraud assistance to help people with any questions or in case they become a victim of fraud.

“There were no patient social security numbers that were taken. No medical record information was taken,” Barletta told WSYR. “We really, just out of an abundance of caution, felt that it was necessary that we provide them with credit monitoring for a year—just in case.”

Hundreds of Thousands of Patients Affected by Breach

When PRL discovered the data breach, the company took immediate steps to secure its systems and scrutinize the nature and extent of the incident. They then hired a forensic team to investigate what patient data may have been accessed by the hackers, a process that took several months.  

“It does take a long time because each client has hundreds of thousands of patients maybe,” Barletta explained. “We have several large clients that really bore the brunt of this.”

According to Barletta, PRL bills about $450 million annually for its clients, which include some major institutions in Central New York. The New York state Attorney General’s office is investigating the hacking incident and delving into whether PRL’s data security was adequate. 

As a result of the breach, FamilyCare Medical Group, which serves more than 80 physicians and thousands of patients, lost all of its laboratory data, according to the group’s CEO, Mitchell Brodey, MD. They had to close their lab for several months while their computer system was rebuilt. During this time, all their lab work was sent to another laboratory for analysis, MSN reported

The PRL ransomware attack was what is commonly known as a third-party data breach. This type of breach occurs when sensitive data is stolen from a third-party vendor, or when their systems are used to access and steal sensitive information stored on other systems.

In the United States, the Federal Trade Commission (FTC) is responsible for enforcing federal privacy and data protection regulations. If a breach affects 500 or more individuals, the company must issue a press release and notify the FTC and all affected consumers within 60 days of the discovery of the breach.

Clinical Labs Should Proactively Review Member Agreements

In 2019, our sister publication The Dark Report covered a major data breach affecting more than 20 million patients. That breach occurred when hackers gained access to the data systems of a third-party bill collector and impacted four of the nation’s largest clinical laboratories:

At that time, The Dark Report asked James Giszczak, JD, Chair of the Litigation Department and Co-Chair of the Data Privacy and Cybersecurity Practice Group at McDonald Hopkins, to provide insight on what steps clinical laboratory leaders should take to avoid and handle data breaches.

“One important lesson from this data breach is how critical it is for clinical labs and pathology groups to be proactive in making sure they review their vendor agreements,” Giszczak stated. “In that review, labs need to know the specific measures each vendor is taking to protect the information the lab is providing to their vendors.”

Giszczak suggested that clinical laboratory leaders make sure they understand each vendor’s policies, procedures, training, and response in the event of a data breach. He reiterated that labs could have some liability related to the breach.

-JP Schlingman

Related Information:

Labs Should Heed Lessons from Huge Data Breach

Hackers May Have Breached Medical Billing Records of Nearly One Million CNY Patients

List of Healthcare Entities on Whose Behalf Practice Resources LLC Is Providing Notice of Data Incident

Practice Resources, LLC Announces Data Breach Impacting the Information of 924,138 Patients

PRL Data Incident Notification

Your Stories: The Letter from Practice Resources, LLC is Legit

Third Party Data Breach: How to Prevent and What to Do

Workplaces Must Screen Employees for COVID-19, Say Authorities in the US and Ontario, and This Trend Could Mean Big Business for Clinical Laboratories

As mandatory screenings for private industry workers increases, some states launch free COVID-19 testing for state employees, while engaging medical laboratories to provide such testing

Amid the SARS-CoV-2 pandemic, welcoming employees back to work is not as simple as opening the company’s doors. Businesses based in some areas of the US and Canada are being required by state and provincial governments to conduct employee COVID-19 screenings. For clinical laboratories, the increase in mandatory screening programs could mean an expanding market for employee testing programs and opportunities for lab outreach programs.

But companies and medical laboratories may also face legal and regulatory risks as workplaces reopen and people return.

For example, how do clinical laboratory managers ensure their labs have the information they need to respond to new rules and regulations, and do employers have recourse should an employee receive a COVID-19 test report with an incorrect result?

Not COVID-19 Screening Can Lead to Fines, Imprisonment

In Ontario, under O. Reg. 364/20: Rules for Areas in Stage 3, an amendment to the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, S.O. 2020, c. 17, workplaces are required to screen employees and visitors for COVID-19 before they enter office buildings, the Society for Human Resource Management (SHRM) reported.

An Ontario Ministry of Health COVID-19 Screening Tool for Workplaces (Businesses and Organizations) instructs businesses on questions to ask of “workers” and “essential visitors” who are being screened before entering a workplace. They include:

  • Is there existence of “new or worsening symptoms,” such as fever or chills, difficulty breathing, and cough?
  • Has the employee travelled outside Canada in the past 14 days?
  • Has the employee had close contact with other confirmed or “probable” COVID-19 cases?

A “probable” case is “a person with symptoms compatible with COVID-19 AND in whom laboratory diagnosis of COVID-19 is inconclusive,” according to a blog post by Justin P’ng, Employment and Labor Lawyer/Associate at international law firm Fasken in Toronto.

“Employers [in Ontario] must now specifically comply with the requirements of the Screening Tool and to implement such screening at any physical workplaces it operates in the province,” P’ng wrote. “Failure to comply can lead to significant penalties, including potentially fines and imprisonment under the legislation.”

It is possible the new requirements may ease Ontario workers’ minds about heading back to work during the pandemic. A Canadian workforce survey of employers and employees during July 2020 by PricewaterhouseCoopers (PwC) Canada found:

  • Most employers (78%) expect a return to the workplace in 2020.
  • Just one in five employees indicated they want to go back to the workplace full-time.

Michigan Makes Remote Work Mandatory

In the US, state rules enforced by the Michigan Occupational Safety and Health Administration (MIOSHA) require employers—for infection prevention reasons—to establish remote work programs for employees, unless it is not feasible for employees to work away from the workplace.

“The employer shall create a policy prohibiting in-person work for employees to the extent that their work activities can feasibly be completed remotely,” MIOSHA said.

Similar to the Ontario law, Michigan employers are also required to establish COVID-19 screenings. The MIOSHA rules direct employers to “conduct a daily entry self-screening protocol for all employees or contractors entering the workplace, including, at a minimum, a questionnaire covering symptoms and suspected or confirmed exposure to people with possible COVID-19, together with, if possible, a temperature screening.”

Michigan employers not in compliance with the state’s requirements for office work may be fined up to $7,000 per violation, a McDonald Hopkins Insights article noted.

Furthermore, anti-retaliation law in Michigan prohibits employers from terminating or “retaliating against” employees who oppose violation of the law or report COVID-19 “health violations,” the McDonald Hopkins Insights article added.

However, Michigan businesses may have protection under the COVID-19 Response and Reopening Liability Assurance Act. The law states a “person who acts in compliance with all federal, state, and local statutes, rules, regulations, executive orders, and agency orders related to COVID-19 that had not been denied legal effect at the time of the conduct or risk that allegedly caused harm is immune from liability for a COVID-19 claim.”

The law defines a “person” as “an individual, partnership, corporation, association, governmental entity, or other legal entity, including, but not limited to, a school, a college or university, an institution of higher education, and a nonprofit charitable organization. Person includes an employee, agent, or independent contractor of the person, regardless of whether the individual is paid or an unpaid volunteer.”

New York Launches Free RT-PCR Tests for Transit Employees

Meanwhile, in New York, free COVID-19 tests are now available on a voluntary basis to 2,000 frontline employees of the Metropolitan Transit Authority, a news release states.

BioReference Laboratories and Quest Diagnostics are performing the RT-PCR testing.

“Quality COVID-19 testing is critical to helping our nation’s frontline workers do their jobs as safely as possible,” Wendi Mader, Executive Director of Employer Population Health at Quest Diagnostics, said in the news release.

New Special Report Available on COVID-19 Employee Testing Programs

As the SARS-CoV-2 pandemic progresses, laws, regulations, and rules pertaining to COVID-19 employee testing and screening will likely continue to develop—and they will vary by area and by test type—making them a challenge to interpret, track, and ensure compliance.

Thus, to help medical laboratory managers and human resources professionals receive the critical, relevant information they need prior to launching COVID-19 testing programs, the Dark Intelligence Group has published a special report, titled, “How to Develop a COVID-19 Employee Testing Program: Essential Guidance on Legal, Risk Management, Regulatory, and Compliance Issues for Clinical Laboratories and Employers.”

Dark Daily Special Report - Covid-19 Employee Testing Program
This exclusive report offers guidance, best practices, and insights necessary to launch and operate high quality, compliant COVID-19 employee testing programs. Clinical laboratories and employers tasked with developing and maintaining coronavirus testing programs will gain critical insights and data from this invaluable special report. (Photo copyright: Dark Intelligence Group.)

Included in the report:

  • Ten regulatory essentials for launching a COVID-19 testing program
  • Test eligibility
  • Order requirements
  • Privacy
  • Contractual and liability issues
  • Infection prevention and OSHA compliance
  • Case studies

This information comes from attorneys at numerous law firms, including:

To access this timely and invaluable special report, click here, or go to: https://www.darkdaily.com/product/how-to-develop-a-covid-19-employee-testing-program-what-clinical-laboratories-need-to-know/ to download.

—Donna Marie Pocius

Related Information:

How to Develop A COVID-19 Employee Testing Program: Essential Guidance on Legal, Risk Management, Regulatory, and Compliance Issues for Clinical Laboratories and Employers

COVID-19 Screening is Mandatory in Ontario Workplaces

Ontario Workplaces Now Required to Screen for COVID-19

New Michigan COVID-19 Legislation

COVID-19 Response and Reopening Liability Assurance Act

Gov Cuomo Announces MTA to Launch Voluntary COVID-19 Screening Program for Frontline Employees

COVID-19 Triggers a Cash Flow Crash at Clinical Labs Totaling US $5.2 Billion in Past Seven Weeks; Many Labs Are at Brink of Financial Collapse

Limited availability of COVID-19 clinical lab tests is major topic at federal briefings and news stories, yet many of nation’s labs are laying off staff and at point of closing

Cash flow at the nation’s clinical laboratories has crashed, with revenues down by more than $5 billion since early March. This is the biggest financial disaster for the nation’s clinical laboratory industry in its 100-year history and it couldn’t come at a worse time for the American public and the US healthcare system.

At the precise moment when the nation needs clinical laboratories to begin performing millions of tests for SARS-CoV-2, the coronavirus that causes the COVID-19 illness, those same labs are watching their cash flow collapse.

Data from multiple sources gathered by The Dark Report, sister publication of Dark Daily, confirm that—beginning in early March and continuing through last week—clinical laboratories in the United States saw incoming flows of routine specimens decline by between 50% and 60%. During this same time, lab revenue fell by similar amounts.

Clinical Lab Industry Currently Losing $800 to $900 Million Weekly

To give this decline context, the healthcare system spends about $80 billion annually on medical laboratory testing. Thus, labs across the US generated about $1.5 billion in revenue each week during 2019 and into 2020. By April 5, the decline in routine lab specimen volumes reached 55% to 60%. Since then, the clinical lab industry now loses between $800 million and $900 million each week. Total revenue loss from previous levels is already estimated to be $5.2 billion, and it is growing by an additional $800 million to $900 million every week that patients stay away from hospitals and physicians’ offices.

In the eight weeks since the COVID-19 pandemic caused patients to cease coming to hospitals and visiting their doctors, incoming routine specimens and revenue fell by 60%, causing cumulative lost routine revenue of $5.2 billion for the clinical laboratory industry in the United States. Each week that the existing shelter-in-place directives are effective, labs lose another $800 million to $900 million. The Dark Report based these estimates on data provided by multiple companies working with lab billing/claims, middleware analytical solutions, and customer relationship management (CRM) and electronic health record (EHR) products. (Chart copyright: The Dark Intelligence Group, Inc.)

The recent dire financial condition of labs small and large has gone unremarked by federal healthcare officials at the daily White House COVID-19 Task Force briefings. National news sources have yet to report on this development and its implications for successfully expanding the availability and numbers of COVID-19 tests in response to the pandemic.

The rapid and deep decline in specimens and revenue is not limited to clinical laboratories. Biopsy cases referred to anatomic pathology groups have declined by 50% to 60%. Some subspecialty pathology labs saw case referrals drop by 80% or more.

The nation’s two biggest clinical laboratory companies confirmed similar declines in their normal daily flow of routine specimens. Both companies recently reported first-quarter earnings (which included the month of March).

Quest Diagnostics, LabCorp Each Disclose Volume Declines of 50% to 60%

During its Q1 2020 earnings conference call, Chairman, President, and CEO of Quest Diagnostics (NYSE:DGX), Steve Rusckowski, stated, “In April, volume declines continue to intensify as we are seeing signs that volume declines are bottoming out at around 50% to 60%.”

The drop-off in routine lab test referrals was the similar at LabCorp (NYSE:LH). “In our diagnostics business, at the end of the quarter, we experienced reductions in demand for testing of 50% to 55% versus the company’s normal daily levels,” explained Glenn Eisenberg, Executive Vice President and CFO during LabCorp’s Q1 2020 earnings call. “This reduction in demand impacted testing volume broadly but was more heavily weighted towards routine procedures.”

Interviews with independent clinical lab owners and the administrative directors of hospital and health system labs further confirm this rapid and dramatic decline in the number of routine specimens arriving in their labs. Fewer specimens mean fewer claims, which means less revenue to laboratories.

Two Different Financial Futures for ‘Have’ Labs and ‘Have Not’ Labs

What happens next to the clinical laboratory industry in the United States—and to its ability to continue ramping up the availability of adequate numbers of COVID-19 tests in major cities, small towns, and rural areas—will be a story of “haves” and “have nots.”

The “haves” are clinical labs that have access to money. These are publicly-traded lab companies, academic medical center labs, and the sophisticated labs of health networks that operate multiple hospitals. In each case, these organizations have capital reserves and access to loans that will probably enable them to sustain COVID-19 lab testing services at the large volumes required to respond to the pandemic.

Examples of “have” labs would range from public lab companies like LabCorp, Quest Diagnostics, Sonic Healthcare USA, and BioReference Laboratories to the labs of healthcare organizations such as Mayo Clinic, Cleveland Clinic, Geisinger Health, Advocate Aurora Health, and ARUP Laboratories.

The “have nots” will be:

  • clinical laboratories that are privately-owned;
  • clinical labs operated by community hospitals and rural hospitals that were not financially robust before the onset of the pandemic; and,
  • specialty lab companies that perform a specific number of proprietary diagnostic tests (and for which demand has collapsed as patients stopped seeing their doctors).

Medicare Led Payers in the ‘Lab Test Price Race to the Bottom’

Prior to the onset of the SARS-CoV-2 pandemic, the finances of the “have-not” labs were already shaky, with many on the verge of filing bankruptcy, closing, or selling to a bigger lab company. Much blame for the deteriorating finances at a large proportion of community lab companies, community hospital labs, and rural hospital labs can be attributed to the deep, multi-year price cuts to the Medicare Part B clinical laboratory fee schedule as mandated by the Protecting Access to Medicare Act of 2014 (PAMA).

Medicare’s multi-year cuts to lab test prices were immediately copied by most state Medicaid programs. During this period, private payers followed Medicare’s lead and enacted their own deep cuts to the prices they paid labs for both routine tests and molecular/genetic tests.

That is why—when the pandemic intensified in early March—the 50% to 60% drop in specimens and revenue that hit these labs starved them of essential cash flow. When polled, the owners and directors of these labs acknowledge layoffs of the majority of their staff in all departments. They also reported substantial delays—both in submitted lab test claims and in getting payment for those claims—because claims-processing departments at the labs and private health insurers are understaffed due to shelter-in-place directives.

COVID-19 Test Revenue Helps Only Labs Performing Those Tests

Revenue from COVID-19 testing is helping certain labs offset the revenue loss from fewer routine specimens. XIFIN, Inc., a San Diego company that provides revenue cycle management (RCM) services for clinical laboratories and pathology groups, analyzed the lab test claims for COVID-19 rapid molecular tests. It determined that labs performing these tests are generating enough revenue from these test claims to equal about 20% of their pre-pandemic revenue.

The chart above was prepared by XIFIN, Inc., of San Diego and is based on the changes XIFIN observed in the volume of routine clinical laboratory test claims generated by client labs on a weekly basis. In the first two months of 2020, routine lab test claims ran at expected levels until the first week of March. During the rest of March, routine lab test claims declined by 60%. During April, incoming routine lab test claims remained 55% to 60% below pre-pandemic levels. The shaded area shows the number of COVID-19 test claims coming into clinical labs. XIFIN says COVID-19 test claims make up about 20% of the decline in routine test specimens for those labs performing COVID-19 tests. The Dark Report estimates that the clinical laboratory industry has lost $800 million to $900 million in routine test revenue each week since March 23. Weekly revenue losses will continue at this rate until patients begin visiting their physicians and hospitals again perform elective services.  (Chart copyright: XIFIN, Inc.)

Many CLIA-certified community laboratories and hospital labs have the diagnostic instruments and experience to perform rapid molecular tests for COVID-19. But when contacted, they tell us that their suppliers do not ship them even minimal quantities of the COVID-19 kits, the reagents, and the consumables. Thus, they cannot meet the needs of their client physicians. Instead, they watch as these physicians refer COVID-19 tests to the nation’s largest labs. The supply shortage prevents these smaller labs from doing larger numbers of COVID-19 test for the patients in the communities they serve. It also prevents them from earning the revenues from COVID-19 testing that currently helps the nation’s “have” labs offset the decline in revenue from routine testing.

Congress, national healthcare policymakers, and state governors need to immediately address this situation. Each week that passes during the COVID-19 pandemic and the shelter-in-place directives drains another $800 million to $900 million in revenue from routine lab testing that previously flowed into the nation’s clinical laboratories.

‘Have-not’ Clinical Labs in Small Towns Will Quietly Shrink and Disappear

Without timely intervention and financial support, the nation’s network of ‘have not’ labs, which have so capably served towns away from big metropolitan centers and rural areas, will quietly begin shrinking. One at a time, labs in small towns will close or sell. Local lab facilities will be shuttered and specimens from small-town patients will be transported to big labs hundreds or thousands of miles away.

It is also true that the financial disaster besetting the nation’s clinical laboratory industry will have comparable dramatic consequences for the in vitro diagnostics (IVD) manufacturers that sell them automation, analyzers, reagents, and other supplies. Since early March, IVD manufacturers watched as the pandemic caused orders for new instruments to collapse. During these same weeks, their clinical lab customers ceased ordering routine test kits at pre-pandemic levels. Dark Daily will cover the challenges confronting the IVD and other diagnostics industries in future e-briefings.

Announcing Free COVID-19 STAT Intelligence Briefings for Clinical Labs

With the COVID-19 pandemic creating chaos in nearly every aspect of healthcare, business, and society, clinical labs and their suppliers need timely intelligence and analysis about the innovations and successes achieved by their peers. This week, Dark Daily and The Dark Report are launching COVID-19 STAT Intelligence Briefings (Copy and paste this URL into your browser: https://www.covid19briefings.com). This comprehensive service is free and will cover four basic areas of needs for clinical laboratories as they ramp up COVID-19 testing:

  • Daily and weekly COVID-19 testing dashboards to guide every lab’s short-term planning;
  • Proven steps for labs to introduce and validate COVID-19 tests (both rapid molecular tests and serology tests);
  • Getting paid for COVID-19 testing to ensure every lab’s financial stability and clinical quality; and
  • Legal and regulatory updates for labs doing COVID19 tests to ensure full compliance.

Also, to help clinical laboratory leaders deal with the coming wave of COVID-19 serology tests, we are producing a free webinar led by James O. Westgard, PhD, FACB, and Sten Westgard, Director of Client Services and Technology, of Westgard QC, Inc.

Quality Issues Your Clinical Laboratory Should Know Before You Buy or Select COVID-19 Serology Tests,” will take place on Thursday, May 21, at 1:00 PM EDT. For details and to register, copy and paste this URL into your browser: https://www.darkdaily.com/webinar/quality-issues-your-clinical-laboratory-should-know-before-you-buy-or-select-covid-19-serology-tests.

Each week that the SARS-CoV-2 pandemic continues, and strict shelter-in-place directives are in place, the clinical laboratory industry loses another almost $900 million in revenue from lower volumes of routine testing. No industry can survive when its incoming revenue collapses by 50% to 60% for sustained periods of time.

Will Congress Recognize the Need for a Financial Rescue of ‘Have-not’ Labs?

Thus, it is incumbent on Congress, elected officials, and healthcare policymakers to recognize the financial consequences of the pandemic to the nation’s clinical laboratories. That is particularly true of the ‘have-not’ clinical labs. They do not have the same access to decisionmakers in government as billion-dollar lab companies.

And yet, these labs located in small communities and rural areas often are the only local labs that can do STAT testing in a couple of hours, and where clinical pathologists are personally familiar with local physicians and patients.

These “have-not” labs are vital healthcare resources. They should receive the help they need to get through this unprecedented crisis that is the COVID-19 pandemic.

—Robert L. Michel
Editor-in-Chief

Related Information:

Quality Issues Your Clinical Laboratory Should Know Before You Buy or Select COVID-19 Serology Tests

COVID-19 STAT Intelligence Service: Resources and Help for Labs During the SARS-CoV-2 Pandemic

COVID-19 Disruptions of Supply Chains Are One More Challenge for Clinical Laboratories to Bring Value to Hospitals and Healthcare Networks

FDA Issues First Approval for At-Home COVID-19 Test to LabCorp’s Pixel; Other Clinical Laboratory-Developed At-Home Test Kits May Soon Be Available to General Public

Serological Antibody Tests a ‘Potential Game Changer’ and Next Phase in Efforts to Combat the Spread of COVID-19 That Give Clinical Laboratories an Essential Role

A Tale of Two Countries: As the US Ramps Up Medical Laboratory Tests for COVID-19, the United Kingdom Falls Short

Medical Laboratories Need to Prepare as Public Health Officials Deal with Latest Coronavirus Outbreak

Antibody Tests Were Supposed to Help Guide Reopening Plans. They’ve Brought More Confusion than Clarity

Is the Coronavirus Antibody Test a Magic Bullet—Or False Hope?

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