Operations ended last week after reports suggested the end came as a result of misalignment of goals among investors in a lab company many considered to be successful
One contributing factor the surprise announcement that the owners of Claritas Genomics were closing the clinical laboratory company may have been the struggle to get payers to reimburse its genetics test claims. If true, it is the latest market sign of how health insurers are making it difficult for labs to get paid for proprietary molecular diagnostic assays and genetic tests.
With no official announcement, Claritas Genomics quietly ended operations effective on Friday, Jan. 19. That evening, a spokeswoman for Claritas Genomics’ majority owner, Boston Children’s Hospital (BCH), confirmed for Dark Daily that the lab was closed and said no reason was given for the closing. More details may be forthcoming this week, she added.
As of the close of business on Tuesday, there was still no word from the genetics testing company founded in 2013. GenomeWeb was the first to report that Claritas Genomic’s diagnostic laboratories no longer do any testing. According to GenomeWeb, Brian Quirbach, former Clinical Testing Coordinator at Claritas Genomics, and part of the lab’s client services team, confirmed that the last day of business was Friday, Jan. 19. The BCH spokeswoman said the GenomeWeb article was accurate.
Asked if there had been a precipitating event at Claritas, if the company had experienced any serious business trouble, if it had struggled to get paid, or if payers were slow in paying, the spokeswoman declined to comment. Instead, she referred to the GenomeWeb article, saying it was mostly accurate.
Claritas Genomics a Casualty of Clinical Laboratory Price Wars
According GenomeWeb, Claritas was like other genetic testing laboratories that have long struggled to get health insurers to pay for rare disease tests. Also, Claritas and other genetic and molecular testing labs suffer financially as a direct result of the ongoing price wars among competing genetic testing lab companies.
“As a small company, it also wasn’t able to offer testing that did not come with potential patient payment obligations, which larger laboratories with better resources or payer contracts can do,” the GenomeWeb article noted.
According to GenomeWeb’s sources, Claritas had a reputation for delivering highly-accurate test results. The reason for this level of performance, the article noted, was Claritas’ use of two sequencing platforms, which lowered false-positive rates. The testing lab combined low false-positive rates with interpretations from WuXi NextCode. The clinical expertise available at BCH gave Claritas the best diagnostic exome in the industry in terms of technical quality and diagnostic power, one source told GenomeWeb.
The decision to close the company, the source noted, was a result of misalignment between investors at WuXi NextCode and BCH. Other sources speculated that Claritas and WuXi NextCode were considering a merger, which did not happen, GenomeWeb reported.
Ultimately, the source stated, BCH held the controlling interest and made the business decision to close the clinical laboratory company. And that the decision was unrelated to the lab’s quality.
Claritas’ clients were told, according to GenomeWeb, to download all test results and data by Thursday, Jan. 18, and that the lab’s operations manager would be available for a few weeks to answer customers’ questions.
Genetic Tests Developer for Pediatrics and Hereditary Disorders
Claritas, which was headquartered in Cambridge, Mass., had about 30 employees. When it was founded as a partnership between BCH and Life Technologies, its goal was to develop genetic and genomics-based diagnostic tests, primarily for pediatric patients with hereditary disorders.
In 2014, Dark Daily’s sister print publication The Dark Report (TDR) reported on the development of Claritas Genomics as an in-hospital lab that became independent. For 15 years, the lab operated as the genetic diagnostic laboratory at 396-bed BCH, we reported. (See The Dark Report, “Claritas Is Example of New Lab Business Model,” June 13, 2014.)
“As one of the hospital’s CLIA-certified laboratories, it provided the advanced molecular diagnostic testing services used by the hospital,” said Patrice M. Milos, PhD, who was Claritas Genomic’s CEO at the time.
At the 2014 Executive War College in New Orleans, Patrice Milos, PhD, then President and CEO, Claritas Genomics, spoke with Adam Slone, CEO, Slone Partners, about her path to becoming CEO of Claritas Genomics, how to foster a strong company culture, and what traits she looks for in a leadership team. Click on the photo above to watch the video interview. (Video copyright: Sloan Partners.)
In the early days of Claritas Genomics, BCH was challenged to provide the capital and resources needed for the molecular lab to grow, Milos said. “This was due to the rapid pace of genetic discovery, ongoing advances in gene sequencing technologies, and the difficult financial environment in healthcare,” she recalled. “Thus, to make it easier for the lab to grow, the hospital spun out the lab and created Claritas Genomics in February 2013.”
Informatics Tools to Support Clinical Use of Genetic Data
Further, this MVP was significant because Claritas benefited by generating cash flow, which it could use to acquire the gene sequencing system and staff expertise in next-generation sequencing (NGS) technologies. And, it developed the informatics infrastructure needed to collect, store, and analyze large volumes of genetic data, TDR reported.
Two months later, in December 2013, Claritas entered into a partnership with Cerner Corp. of Kansas City, Mo., to build the tools and connectivity systems needed to integrate NGS-based diagnostic testing into healthcare data systems. Specifically, the companies said they would develop a system “for molecular diagnostics that is tailored to NGS workflows, which are more complex and generate much more data than traditional molecular diagnostic tests.”
At the time, Milos explained the role that Claritas would play in this partnership. “In terms of this collaboration, one barrier to the use of genomics in medicine is the challenge of integrating the complex information derived from large-scale genomic measurements into a patient’s medical record and clinical practice,” he said. “Our mutual goal is to develop the informatics tools that support clinical use of genetic data.”
Claritas also was working with other pediatric institutions, such as Cincinnati Children’s Hospital, to advance clinical knowledge in a number of ways. “For example, we are facilitating a research network by connecting patients with experts who can provide care and by licensing assays from the hospitals where the discoveries that lead to diagnostic tests are made,” Milos said. “Also, in this business model, we can receive investment from outside sources, such as we have from two of our Series A investors, Life Technologies and Cerner.”
The abrupt closure of Claritas Genomics makes this clinical laboratory company the latest to disappear from the marketplace. The mystery factor in this case is why a company viewed by many as establishing a credible reputation for itself came to such a sudden end.
It’s all about convenience and offering consumers multiple services at a single location. That’s why certain clinical laboratory tests will soon be offered at CVS Health Minute Clinics
As predicted, operators of rapid clinics located in retail pharmacies and other retail stories are adding additional clinical services. In the case of CVS Health, it recently announced plans to add certain clinical laboratory testing services to its Minute Clinic locations.
Consumer demand is driving these decisions. After all, who doesn’t want to save time and money these days? Combining errands into as few trips as possible means getting more at each location. This imperative drove big-box stores Walmart (NYSE:WMT) and Target (NYSE:TGT) to combine their household lines with grocery products all under one roof, and customers loved it!
Thus, it was no surprise when pharmacy chains got in on the act by adding rapid care clinics to retail stores that already included health and beauty products, pharmaceuticals, and limited grocery items. This important trend has been written about by Dark Daily in previous e-briefings.
Now, during a second quarter earnings call, CVS Health revealed that they plan to expand their offerings at Minute Clinic locations to include services intended to help consumers manage chronic health conditions. The move could be considered part of the same trend—providing customers with more options at each visit. However, there’s more to it. The new services aim at empowering chronic disease suffers through population health management tools. For patients and caregivers of chronic disease patients, this could be quite beneficial.
But how will this impact medical laboratories and pathology groups, when patients realize they can employ tools that monitor their chronic conditions at convenient locations where they can likely fulfill other needs as well? Might this impinge on revenues from tests and specimen gathering procedures traditionally performed at clinical laboratories?
Demand for Low-Cost Quality Care Driving Growth in Retail Clinics
There are currently more than 1,100 Minute Clinics located inside CVS stores in 33 states and the District of Columbia. Headquartered in Woonsocket, R.I., CVS expects an escalation in the need for their Minute Clinic services due to:
· A shortage of primary care physicians;
· An increase in chronic diseases; and
· The aging US population.
CVS Health’s initial service offerings will help diabetes patients:
· Monitor glucose levels;
· Adhere to medication schedules, and,
· Modify their lifestyles through education.
During the next two years, CVS plans to add similar services at their Minute Clinic locations for other chronic conditions, including:
The Minute Clinics operate seven days a week, with half of their patients seen in the evenings and weekends—times when most traditional medical offices are closed. CVS Health plans to open an additional 150 Minute Clinic locations within the next year.
Patients waiting to be seen by nurse practitioner Marti Wolfson (right) at a Minute Clinic in La Mesa, CA. CVS announced that it will introduce certain clinical laboratory testing services to its chain of rapid care clinics located in CVS retail pharmacies. (Photo copyright: San Diego Union Tribune/John Gastaldo.)
According to a report from the Robert Wood Johnson Foundation and Manatt Health Solutions, there are more than 1,800 retail clinics in the United States and CVS Minute Clinics hold more than 50% of the market. Access to walk-in appointments, convenience, extended hours of service, lower costs, and having no primary source of care are the most common reasons given by people who utilize services at the clinics.
Retail clinics account for 10.5 million healthcare visits annually, which represent about 2% of primary care encounters in the country. The number of retail clinics in the US increased by 900% between 2006 and 2014 and is expected to continue to climb.
VA Now Referring Vets to Retail Clinics in Phoenix Area
In April, CVS Health, the Department of Veterans Affairs (VA), and TriWest Healthcare Alliance joined forces to improve access to health services for veterans in the Phoenix area. This initiative allows healthcare professionals at the Phoenix VA to refer veterans to Minute Clinic for minor health conditions.
“This new public-private collaboration between CVS, TriWest, and the VA is an important step forward in enhancing choice and flexibility in veterans’ healthcare,” Senator John McCain noted in a CVS Health press release. “I’ve long believed that veterans in need of routine healthcare services should not have to wait in line for weeks to get an appointment when they can visit community health centers like Minute Clinic to receive timely and convenient care.”
Because of this collaboration, 120,000 veterans living in the Phoenix area may now receive care, when appropriate, at the 24 Minute Clinic locations in the metropolitan area.
“Our number one priority is getting veterans access to care when and where they need it. The launch of this partnership will enable VA to provide more care for veterans in their neighborhoods,” stated Baligh Yehia, MD, MPP, MSc, in the CVS Health press release. Yehia is Senior Medical Director at Johns Hopkins Medicine, and Deputy Undersecretary for Health at the US Department of Veterans Affairs.
As retail clinics become more popular a growing number of medical laboratory test samples that traditionally came from office-based physicians may originate from these clinics. Clinical laboratory outreach, physician support, and patient education programs have never been more critical.
Studies show home-based hospital acute care results in fewer medical laboratory and diagnostic tests
Home-based hospital care (HBHC) is a care delivery model that is evolving at a rapid pace. To be effective, HBHC must improve patient outcomes while avoiding the expenses associated with an inpatient stay at a hospital.
However, 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, this would reduce the volume of inpatient testing while increasing the number of outpatient/outreach specimens.
Evidence is accumulating in favor of HBHC. New research shows that a New Mexico home-based hospital care (HH) program demonstrated cost savings and equal or better patient outcomes and patient satisfaction for acutely-ill patients compared to similar patients receiving in-hospital care. These new findings affirm similar results from a 2005 study of HBHC. (more…)
Veterans Administration calls it a “genomics game changer” and is now building a treasure trove of data for health researchers, including pathologists
Imagine a massive data repository that contains the blood specimens and genetic information of thousands of individuals, along with a detailed medical history for each patient that may reach back as far as 20 years! Such a data repository, long the dream of many pathologists and clinical laboratory scientists, will soon become a reality.
Efforts to improve transparency still don’t include clinical pathology lab data
Veterans, their family members and their healthcare providers can now go online to compare the performance of their local Department of Veterans Affairs (VA) hospital against other VA hospitals. This new service launched just last year.
That is when the VA opened its Hospital Compare website to the public. This important step is consistent with the VA’s declared intent to achieve total transparency in veteran’s healthcare. Pathologists and clinical laboratory managers will want to check out this website to see how the quality performance of different VA hospitals is presented to patients and the public. (more…)