Medical laboratories are already using gene sequencing as part of a global effort to identify new variants of the coronavirus and their genetic ancestors
Thanks to advances in genetic sequencing technology that enable medical laboratories to sequence organisms faster, more accurately, and at lower cost than ever before, clinical pathology laboratories worldwide are using that capability to analyze the SARS-CoV-2 coronavirus and identify variants as they emerge in different parts of the world.
The US Centers for Disease Control and Prevention (CDC) now plans to harness the power of gene sequencing through a new consortium called SPHERES (SARS-CoV-2 Sequencing for Public Health Emergency Response, Epidemiology, and Surveillance) to “coordinate SARS-CoV-2 sequencing across the United States,” states a CDC news release. The consortium is led by the CDC’s Advanced Molecular Detection (AMD) program and “aims to generate information about the virus that will strengthen COVID-19 mitigation strategies.”
The consortium is comprised of 11 federal agencies, 20 academic institutions, state public health laboratories in 21 states, nine non-profit research organizations, and 14 lab and IVD companies, including:
Abbott Diagnostics
bioMérieux
Color Genomics
Ginkgo Bioworks
IDbyDNA
Illumina
In-Q-Tel
LabCorp
One Codex
Oxford Nanopore Technologies
Pacific Biosciences
Qiagen
Quest Diagnostics
Verily Life Sciences
‘Fundamentally Changing How Public Health Responds’
Gene sequencing and related technologies have “fundamentally changed how public health responds in terms of surveillance and outbreak response,” said Duncan MacCannell, PhD, Chief Science Officer for the CDC’s Office of Advanced Molecular Detection (OAMD), in an April 30 New York Times (NYT) article, which stated that the CDC SPHERES program “will help trace patterns of transmission, investigate outbreaks, and map how the virus is evolving, which can affect a cure.”
The CDC says that rapid DNA sequencing of SARS-CoV-2 will help monitor significant changes in the virus, support contact tracing efforts, provide information for developers of diagnostics and therapies, and “advance public health research in the areas of transmission dynamics, host response, and evolution of the virus.”
The sequencing laboratories in the consortium have agreed to “release their information into the public domain quickly and in a standard way,” the NYT reported, adding that the project includes standards for what types of information medical laboratories should submit, including, “where and when a sample was taken,” and other critical details.
Even in its early phase, the CDC’s SPHERES project has “made a tangible impact in the number of sequences we’re able to deposit and make publicly available on a daily basis,” said Pavitra Roychoudhury, PhD (above), Acting Instructor and Senior Fellow at the University of Washington, and Research Associate at Fred Hutchinson Cancer Research Center, in an e-mail to the NYT. “What we’re essentially doing is reading these small fragments of viral material and trying to jigsaw puzzle the genome together,” said Roychoudhury in an April 28 New York Times article which covered in detail how experts are tracking the coronavirus since it arrived in the US. (Photo copyright: LinkedIn.)
Sharing Data Between Sequencing Laboratories and Biotech Companies
The CDC announced the SPHERES initiative on April 30, although it launched in early April, the NYT reported.
According to the CDC, SPHERES’ objectives include:
To bring together a network of sequencing laboratories, bioinformatics capacity and subject matter expertise under the umbrella of a massive and coordinated public health sequencing effort.
To identify and prioritize capabilities and resource needs across the network and to align sources of federal, non-governmental, and private sector funding and support with areas of greatest impact and need.
To improve coordination of genomic sequencing between institutions and jurisdictions and to enable more resilience across the network.
To champion concepts of openness, standards-based analysis, and rapid data sharing throughout the United States and worldwide during the COVID-19 pandemic response.
To provide a common forum for US public, private, and academic institutions to share protocols, methods, bioinformatics tools, standards, and best practices.
To establish consistent data and metadata standards, including streamlined repository submission processes, sample prioritization criteria, and a framework for shared, privacy-compliant unique case identifiers.
To align with other national sequencing and bioinformatics networks, and to support global efforts to advance the use of standards and open data in public health.
Implications for Developing a Vaccine
As the virus continues to mutate and evolve, one question is whether a vaccine developed for one variant will work on others. However, several experts told The Washington Post that the SARS-CoV-2 coronavirus is relatively stable compared to viruses that cause seasonal flu (influenza).
“At this point, the mutation rate of the virus would suggest that the vaccine developed for SARS-CoV-2 would be a single vaccine, rather than a new vaccine every year like the flu vaccine,” Peter Thielen, a molecular biologist at the Johns Hopkins University Applied Physics Laboratory, told the Washington Post.
Nor, he said, is one variant likely to cause worse clinical outcomes than others. “So far, we don’t have any evidence linking a specific virus [strain] to any disease severity score. Right now, disease severity is much more likely to be driven by other factors.”
Fast improvements in gene sequencing technology have made it faster, more accurate, and cheaper to sequence. Thus, as the COVID-19 outbreak happened, there were many clinical laboratories around the world with the equipment, the staff, and the expertise to sequence the novel coronavirus and watch it mutate from generation to generation and from region to region around the globe. This capability has never been available in outbreaks prior to the current SARS-CoV-2 outbreak.
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.
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.
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.
As CMS price transparency rules go into effect, and demand grows for publishing provider charges, consumers are becoming aware of how widely healthcare prices can vary
With the COVID-19 Coronavirus pandemic saturating the news, it is easy to forget that clinical laboratories regularly conduct medical tests for influenza, the common cold, and other illnesses, most of which are affordable and covered by health insurance. So, how did a common throat culture and blood draw result in a $25,865 bill?
That was the question a New York City woman asked after a
doctor’s visit for a sore throat that resulted in a five-figure charge. This
should not simply be dismissed as another example of hidden prices in clinical
laboratory testing or the true cost of medical procedures shocking a healthcare
consumer. The issue is far from new.
For example:
An Indiana girl’s snake bite at summer camp in 2019 resulted in a $142,938 bill, which included $67,957 for four vials of antivenin and $55,578 for air ambulance transport, reported Kaiser Health News (KHN);
In 2019, Dark Daily highlighted a New York Times article showing the insurer-negotiated price of a common blood test could range from $11 to $952 in different major cities;
In 2018, Dark Daily spotlighted a Kaiser Health News story about a $48,329 bill for outpatient allergy testing; and
In 2013, Dark Daily reported on a patient’s $4,317 bill for blood work done at a Napa Valley medical center, which a national lab would have performed for just $464.
Prices Vary Widely Even Within Local Healthcare Markets
As the push for price transparency in healthcare increases, exorbitant patient bills—often tied to providers’ chargemaster pricing—add to that momentum. Consumers now recognize that prices can vary widely for identical healthcare procedures, including clinical laboratory and anatomic pathology group tests and procedures.
However, on January 1, 2021, price transparency will get a major boost when the Centers for Medicare and Medicaid Services (CMS) final rule requiring hospitals to post payer-negotiated rates for 300 shoppable services goes into effect. Clinical laboratory managers and pathologists should be developing strategies to address this changing healthcare landscape.
Until price transparency is the norm, examples of outrageous pricing are likely to continue to make headlines. For example, National Public Radio’s (NPR) December 2019 “Bill of the Month,” titled, “For Her Head Cold, Insurer Coughed Up $25,865,” highlighted a recent example of healthcare sticker shock.
New York city resident Alexa Kasdan’s sore throat resulted in a $28,395.50 clinical laboratory bill (of which her insurer paid $25,865.24) for a “smorgasbord” of DNA tests aimed at explaining her weeklong cold symptoms. NPR identified the likely causes for the sky-high charges. In addition to ordering DNA testing to look for viruses and bacteria, Kasdan’s doctor sent her throat swab to an out-of-network lab, with prices averaging 20 times more than other medical laboratories in the same zip code. Furthermore, the lab doing the analysis, Manhattan Gastroenterology, has the same phone number and locations as her doctor’s office, NPR reported.
In contrast, NPR learned that LabCorp, Kasdan’s in-network laboratory provider, would have billed her Blue Cross and Blue Shield of Minnesota insurance plan about $653 for “all the ordered tests, or an equivalent.”
Ranit Mishori, MD, MHS, FAAFP (above), Professor of Family Medicine at the Georgetown University School of Medicine and Senior Medical Advisor for Physicians for Human Rights, maintains patients should not hesitate to question doctors about the medical tests they order for them. “It is okay to ask your doctor, ‘Why are you ordering these tests, and how are they going to help you come up with a treatment plan for me?’” Mishori told NPR. “I think it’s important for patients to be empowered and ask these questions, rather than be faced with unnecessary testing, unnecessary treatment and also, in this case, outrageous billing.” (Photo copyright: Primary Care Collaborative.)
Hospitals Can ‘Jack-up’ Prices
The Indiana girl’s snake bite at summer camp last year became another example of surprisingly high medical bills. Nine-year-old Oakley Yoder of Bloomington, Ind., was bitten on her toe at an Illinois summer camp. The total bill for treating the suspected copperhead bite was $142,938, which included $67,957 for four vials of antivenin and $55,578 for air ambulance transport, KHN reported.
The summary of charges her parents received from Ascension St. Vincent Evansville hospital included $16,989.25 for each vile of anti-venom drug CroFab, five times as high as the average list price for the drug. Until recently, KHN reported, CroFab was the only antivenom available to treat pit viper bites, which created a monopoly for the drug maker’s expensive-to-manufacture product. Though the average list price for CroFab is $3,198, KHN noted hospitals can “jack-up the price.”
While Yoder’s family had no out-of-pocket expenses thanks to a supplemental insurance policy through the summer camp, Yoder’s father, Joshua Perry, JD, MTS, Professor of Business Law and Ethics at Indiana University Kelley School of Business, knows his family’s outcome is unusual.
“I know that in this country, in this system, that is a
miracle,” he told KHN.
The push for healthcare price transparency is unlikely to
wane. Clinical laboratory leaders in hospitals and health networks, as well as
pathologists in independent clinical laboratories and anatomic pathology groups,
should plan for a future in which consumers demand the ability to see pricing
information before obtaining services, and regulations require it.
Centers for Medicare and Medicaid Innovation is considering adding clinical laboratory services to bundled payments in its proposed Oncology Care First model
CMMI, an organization within the Centers for Medicare and Medicaid Services (CMS), is charged with developing and testing new healthcare delivery and payment models as alternatives to the traditional fee-for-service (FFS) model. On November 1, 2019, CMMI released an informal Request for Information (RFI) seeking comments for the proposed Oncology Care First (OCF) model, which would be the successor to the Oncology Care Model (OCM) launched in 2016.
“The inefficiency and variation in oncology care in the
United States is well documented, with avoidable hospitalizations and emergency
department visits occurring frequently, high service utilization at the end of
life, and use of high-cost drugs and biologicals when lower-cost, clinically
equivalent options exist,” the CMMI RFI states.
With the proposed new model, “the Innovation Center aims to build on the lessons learned to date in OCM and incorporate feedback from stakeholders,” the RFI notes.
How the Oncology Care First Model Works
The OCF program, which is voluntary, will be open to
physician groups and hospital outpatient departments. CMMI anticipates that
testing of the model will run from January 2021 through December 2025.
It will offer two payment mechanisms for providers that
choose to participate:
A Monthly Population Payment (MPP) would apply
to a provider’s Medicare beneficiaries with “cancer or a cancer-related
diagnosis,” the RFI states. It would cover Evaluation and Management (EM)
services as well as drug administration services and a set of “Enhanced
Services,” including 24/7 access to medical records.
Of particular interest to medical laboratories, the RFI also
states that “we are considering the inclusion of additional services in the monthly
population payment, such as imaging or medical laboratory services, and seek
feedback on adding these or other services.”
In addition, providers could receive a
Performance-Based Payment (PBP) if they reduce expenditures for patients
receiving chemotherapy below a “target amount” determined by past Medicare
payments. If providers don’t meet the threshold, they could be required to
repay CMS.
Practices that wish to participate in the OCF model must go through an application process. It is also open to participation by private payers. CMS reports that 175 practices and 10 payers are currently participating in the 2016 Oncology Care Model (OCM).
“We want better quality care for patients,” explained Lara Strawbridge, MPH (above), Director of the CMMI Division of Ambulatory Payment Models, during a US Department of Health and Human Services public listening session on Nov. 8. “We hope that at the same time, costs are maintained or reduced.” The new OCF payment model will feature a Monthly Population Payment mechanism that could include reimbursements for medical laboratory services, which has some medical laboratory organizations concerned. (Photo copyright: Center for Medicare and Medicaid Innovation.)
Medical Lab Leaders Concerned about the CMMI OCF Model
One group raising concerns about the inclusion of medical laboratory service reimbursements in the Monthly Population Payment scheme is the Personalized Medicine Coalition. “Laboratory services are crucial to the diagnosis and management of many cancers and are an essential component of personalized medicine,” wrote Cynthia A. Bens, the organization’s senior VP for public policy, in an open letter to CMMI Acting Director Amy Bassano. “We are concerned that adding laboratory service fees to the MPP may cause providers to view them as expenses that are part of the total cost of delivering care, rather than an integral part of the solution to attain high-value care,” Bens wrote.
She advised CMMI to “seek further input from the laboratory
and provider communities on how best to contain costs within the OCF model,
while ensuring the proper deployment of diagnostics and other laboratory
services.”
Members of the coalition include biopharma companies, diagnostic companies, patient advocacy groups, and clinical laboratory testing services. Lab testing heavyweights Quest Diagnostics (NYSE:DGX) and Laboratory Corporation of America (NYSE:LH) are both members.
CMS ‘Doubles Down’ on OCM
The proposal received criticism from other quarters as well. “While private- and public-sector payers would be well served to adopt and support a VBP [value-based payment] program for cancer care, we need to better understand some of the shortcomings of the original OCM design and adopt lessons learned from other successful VBP models to ensure uptake by providers and ultimately better oncology care for patients,” wrote members of the Oncology Care Model Work Group in a Health Affairs blog post. They added that with the new model, “CMS seems to double down on the same design as the OCM.”
Separately, CMMI has proposed a controversial Radiation
Oncology (RO) alternative payment model (APM) that would be mandatory for
practices in randomly-selected metro areas. The agency estimates that it would
apply to approximately 40% of the radiotherapy practices in the US.
These recent actions should serve to remind pathologists and
clinical laboratories that CMS continues to move away from fee-for-service and
toward value-based care payment models, and that it is critical to plan for
changing reimbursement strategies.
Expanding healthcare services into communities is expected to increase orders for clinical laboratory tests, promote precision medicine, and lower overall costs
Clinical
laboratories continue to adapt to servicing providers in non-traditional
healthcare settings. These include freestanding urgent care centers as well as
mini-clinics in retail locations. Dark Daily has covered this trend
extensively in previous
e-briefings.
To secure a share of this new market, national retailers,
pharmacy chains, and grocery stores are increasing their health and medical
service offerings and forging partnerships with other organizations, such as
tech developers.
One such recent partnership involves Walgreens Boots Alliance Inc.
(NYSE:WBA) and the Microsoft
Corporation (NASDAQ:MSFT). In January, both parties announced a joint
venture to develop new healthcare solutions that will improve patient outcomes while
lowering cost through research and development, funding, and technology.
“Our strategic partnership with Microsoft demonstrates our
strong commitment to creating integrated, next-generation, digitally-enabled
healthcare delivery solutions for our customers, transforming our stores into
modern neighborhood health destinations, and expanding customer offerings,”
said Stefano
Pessina, Executive Vice Chairman and Chief Executive Officer of Walgreens,
in a Microsoft press
release.
Through this partnership, Walgreens plans to provide personalized healthcare (aka, precision medicine) by connecting its customers to pertinent health information through digital devices and in-store expert advice. The goal is to proactively engage patients in their own care to improve medication adherence, reduce emergency room visits, decrease hospital readmissions, and provide customers with lifestyle management solutions.
In addition, the two companies will share each other’s
market research and work with consumers, payers, providers, and pharmaceutical
manufacturers to devise solutions that improve health outcomes while lowering
costs.
“[Walgreens Boot Alliance] will work with Microsoft to harness the information that exists between payers and healthcare providers to leverage, in the interest of patients and with their consent, our extraordinary network of accessible and convenient locations to deliver new innovations, greater value, and better health outcomes in healthcare systems across the world,” Pessina said in the press release.
As part of this partnership, Walgreens will move the majority of its IT infrastructure onto Microsoft Azure, a cloud computing and artificial intelligence (AI) platform. Walgreens also will provide Microsoft 365 to more than 380,000 employees and stores located throughout the world. Microsoft 365 is a business solution which bundles Windows 10 and Office 365 with advanced security features.
Other Walgreens Collaborations That Provide Healthcare at
Retail Locations
Walgreens also announced several collaborations with other
companies to become more competitive and secure their share of the healthcare
market.
Through its partnership with Chicago-based VillageMD, a national provider of primary
care clinics, Walgreens will open five primary care clinics next to Walgreens
stores in the Houston area. These clinics, called “Village Medical at Walgreens,”
will offer customers comprehensive primary care services, pharmacists, nurses,
and social workers.
“This collaboration with VillageMD demonstrates our ongoing commitment to create neighborhood health destinations that bring affordable healthcare services to customers and provide a differentiated patient experience to the communities we serve,” stated Patrick Carroll, MD (above), Chief Medical Officer, Clinical Programs and Alliances, Walgreens, in a Walgreens press release. “VillageMD has a strong track record nationally of improving outcomes and reducing the cost of healthcare through their transformative primary care model.” (Photo copyright: Walgreens.)
Another collaboration involves Verily Life
Sciences, a research arm of Alphabet Inc. (NASDAQ:GOOG), Google’s parent company. The
agreement is for multiple projects to improve health outcomes for patients with
chronic illnesses. The two companies will be exploring the use of technology, such
as sensors, and software to help prevent, manage, screen, and diagnose disease
with the ultimate goal of deploying those technologies at Walgreens retail
locations.
“The
continued rise in chronic diseases today can be costly to patients as well as
to our healthcare system,” Pessina told Business
Wire. “Working with Verily, we’ll look at how we can best support
integrated and value-based care to meet our patients’ needs, as well as
opportunities to address other chronic conditions over time.”
Service Agreements with LabCorp and Quest
In 2018, Walgreens
announced a significant expansion of their collaboration with LabCorp, to increase the number of patient
service center (PCS) locations within Walgreens stores. The two companies
agreed to open at least 600 additional LabCorp-at-Walgreens facilities across
the US over the next four years. At the time of the announcement, LabCorp operated
17 facilities at Walgreens in Florida, Colorado, North Carolina, and Illinois.
Along the same lines, Quest
Diagnostics (NYSE:DGX) also has opened hundreds of patient-serviced centers
within various food and drug retail stores throughout the US, which Dark
Daily reported in 2017.
“Healthcare is too complicated, too big, and if I can say, a
little too messy,” Pessina told Digital
Commerce 360. “We cannot be helpful to our patients if we don’t team up
with many, many different, practically all, the players in this industry.”
CVS HealthHubs Offer Blood Testing, Health Screenings,
and Other Services
To remain competitive, CVS also is trying new ways to
capitalize on the growing healthcare market.
In February, CVS announced
the creation of three newly designed stores in the Houston area as pilot
projects. These stores, called HealthHubs,
will include expanded health clinics with medical laboratories for blood
testing and health screenings. They’ll also feature dieticians, respiratory
specialists, and dedicated space to assist customers with the management of
some chronic health conditions, as well as wellness rooms for yoga classes and
health seminars.
“We’re pleased and surprised pleasantly with the ecosystem
of healthcare that we’ve created here and how approachable it is, how much
people are interested in it, and there are certain things we can take to all
stores,” Kevin
Hourican, Executive Vice President, CVS Health and President, CVS Pharmacy,
told Becker’s
Hospital Review.
With more retailers
adding an ever-increasing number of healthcare services to their offerings, the
number of medical laboratory tests available at those locations will likely
also increase. Although this trend may boost competition for clinical
laboratories, it could also benefit them by creating new opportunities to
provide value-added services to their clients.
