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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Popularity of Direct-To-Consumer Genetic Tests Still Growing, Regardless of Concerns from Provider and Privacy Organizations

For blood brothers Quest and LabCorp this is good news, since the two medical laboratory companies perform most of the testing for the biggest DTC genetic test developers

Should clinical laboratories be concerned about direct-to-consumer (DTC) genetic tests? Despite alerts from healthcare organizations about the accuracy of DTC genetic testing—as well as calls from privacy organizations to give DTC customers more control over the use of their genetic data—millions of people have already taken DTC tests to learn about their genetic ancestry. And millions more are expected to send samples of their saliva to commercial DTC companies in the near future.

This growing demand for at-home DTC tests does not appear to be subsiding. And since most of the genetic testing is completed by the two largest lab companies—Quest Diagnostics (NYSE:DGX) and Laboratory Corporation of America (NYSE:LH)—other medical laboratories have yet to find their niche in the DTC industry.

Another factor is the recent FDA authorization allowing DTC company 23andme to report the results of its pharmacogenetic (PGx) test directly to customers without requiring a doctor’s order. For these reasons, this trend looks to be gaining momentum and support from federal governing organizations.

How will clinical pathology laboratories ultimately be impacted?

Data, Data, Where’s the Data?

Dark Daily has reported on DTC genetic testing for many years. According to MIT’s Technology Review, 26 million people—roughly 8% of the US population—have already taken at-home DNA tests. And that number is expected to balloon to more than 100 million in the next 24 months!

“The genetic genie is out of the bottle. And it’s not going back,” Technology Review reports.

The vast majority of the genetic information gathered goes into the databases of just four companies, with the top two—Ancestry and 23andMe—leading by a wide margin. The other two major players are FamilyTreeDNA and MyHeritage, however, Ancestry and 23andMe have heavily invested in online and television advertising, which is paying off.


In an op-ed response to a NYT editorial that warned readers to avoid 23andMe’s DTC genetic testing, 23andMe CEO and co-founder Anne Wojcicki (above) wrote, “We believe that consumers can learn about genetic information without the help of a medical professional, and we have the data to support that claim.” The FDA agreed and in February approved 23andMe to report pharmacogenetic test results directly to its customers. How this will play out for clinical laboratories remains to be seen. (Photo copyright: Inc.com.)

As more people add their data to a given database, the likelihood they will find connections within that database increases. This is called the Network Effect (aka, demand-side economies of scale) and social media platforms grow in a similar manner. Because Ancestry and 23andMe have massive databases, they have more information and can make more connections for their customers. This has made it increasingly difficult for other companies to compete.

Quest Diagnostics and LabCorp do the actual gene sequencing for the top players in the DTC genetic testing sector. The expected wave of new DTC genetic test costumers (74 million in the next 24 months) will certainly have a beneficial revenue impact on those two lab companies.

Why the Explosion in Genetic Testing by Consumers?

In 2013, just over 100,000 people took tests to have their DNA analyzed, mostly using Ancestry’s test, as Dark Daily reported. By 2017, that number had risen to around 12 million, and though Ancestry still had the majority market share, 23andMe was clearly becoming a force in the industry, noted Technology Review.

Given the reports of privacy concerns and the difficulty removing one’s genetic data from the Internet once it is online, why are people so eager to spit in those little tubes? There are several reported reasons, including:

And now there are several health-related reasons as well. For example, the study of pharmacogenetics has led clinicians to understand that certain genes reveal how our bodies process some medications. The FDA’s clearance allows 23andMe to directly inform customers about “genetic variants that may be associated with a patient’s ability to metabolize some medications to help inform discussions with a healthcare provider. The FDA is authorizing the test to detect 33 variants for multiple genes,” the FDA’s press release noted.

Controversy Over DTC Genetic Tests

The use of DTC genetic tests for healthcare purposes is not without scrutiny by regulatory agencies. The FDA removed 23andMe’s original health test from the market in 2013. According to Technology Review, the FDA’s letter was “one of the angriest ever sent to a private company” and said “that the company’s gene predictions were inaccurate and dangerous for those who might not fully understand the results.”

23andMe continues to refine its DTC tests. However, the debate continues. In February of this year, the New York Times (NYT) editorial board published an op-ed warning consumers to be wary of health tests offered by 23andMe, saying the tests “look for only a handful of [genetic] errors that may or may not elevate your risk of developing the disease in question. And they don’t factor into their final analysis other information, like family history.”

Anne Wojcicki, CEO and co-founder of 23andMe, responded with her own op-ed to the NYT, titled, “23andMe Responds: Empowering Consumers.” In her letter, Wojcicki contends that people should be empowered to take control of their own health, and that 23andMe allows them to do just that. “While 23andMe is not a diagnostic test for individuals with a strong family history of disease, it is a powerful and accurate screening tool that allows people to learn about themselves and some for the most common clinically useful genetic conditions,” she wrote.

Nevertheless, privacy concerns remain:

  • Who owns the results, the company or the consumer?
  • Who can access them?
  • What happens to them a year or five years after the test is taken?
  • When they are sold or used, are consumers informed?

Even as experts question the accuracy of DTC genetic testing in a healthcare context, and privacy concerns continue to grow, more people each year are ordering the tests. With predictions of 74 million more tests expected in the next 24 months, it’s certain that the medical laboratories that process those tests will benefit.

-Dava Stewart

Related Information:

More than 26 Million People Have Taken an At-Home Ancestry Test

How a DNA Testing Kit Revealed a Family Secret Hidden for 54 Years

23andMe Sells Data for Drug Search

Why You Should Be Careful About 23andMe’s Health Test

23andMe Responds: Empowering Consumers

Police Are Using Genetic Testing Companies to Track Down Criminals

The Problems with Ancestry DNA Analyses

FDA Authorizes 23andMe to Report Results of Direct-to-Consumer Pharmacogenetics Test to Customers without a Prescription, Bypassing Doctors and Clinical Laboratories

Erasing ‘DNA Footprint’ from the Internet Proves Difficult for Consumers Who Provide Data to Genetic Testing Companies

FDA Authorizes First Direct-To-Consumer Test for Detecting Genetic Variants That May Be Associated with Medication Metabolism

Chairman and CEO David Abney Explains UPS’ Drive Toward Drone Technology

UPS’ program on WakeMed Hospital’s Raleigh campus in N.C. is first drone delivery service cleared by FAA for commercial purposes

UPS (NYSE:UPS) Chairman and CEO David Abney emphasizes patients, not packages, in the company’s new drive toward drone technology in medical laboratory specimen transport and logistics.

Abney closed Day 1 sessions of the 24th Annual Executive War College on Lab and Pathology Management (EWC) which continues through Thursday in New Orleans.

“Healthcare is a strategic imperative for us,” Abney said. “We deliver a lot of important things, but lab [shipments] are critical, and they’re very much a part of patient care.”

UPS entered the healthcare sector in 2000 with its acquisition of Livingston HealthCare. In 2016, the company acquired Marken, a move that Abney said, “sent a clear message to our customers that we were taking healthcare and clinical trials very seriously.”

UPS Chairman and CEO David Abney (above) explained the company’s new drive toward drone technology in medical laboratory specimen transport and logistics. Abney closed Day 1 sessions at the 24th Annual Executive War College on Lab and Pathology Management. (Photo copyright: DARK Daily.)

Clinical Laboratory Specimens Delivered by Drone

With healthcare deliveries already a big part of UPS’ ground business, the company now moves lab specimens by drone on WakeMed’s hospital campus in Raleigh, N.C. The effort marks the first commercial daily drone service to be cleared by the Federal Aviation Administration (FAA) for lab specimen transport, and it is made possible through UPS’s new partnership with Menlo Park, Calif.-based Matternet.

Matternet Founder and CEO Andreas Raptopoulos described how the new technology is impacting turnaround time, specimen stability, and viability. The “Future of Lab Logistics” session at EWC, featuring Raptopoulos and Shannon DeMar, Senior Marketing Manager Healthcare Strategy at UPS in Atlanta, Ga., brought questions about FAA regulations, risk mitigation, and more. Laboratory leaders are looking at how to take their logistics to the next level.

On-Demand/Same-Day Delivery of Medical Lab Samples

The UPS/Matternet program represents a major milestone for unmanned aviation in the United States, according to UPS, in a recent release. Currently, the majority of medical samples and specimens are transported across WakeMed’s expanding health system by courier cars. The addition of drone transport provides an option for on-demand and same-day delivery, the ability to avoid roadway delays, increase medical delivery efficiency, lower costs, and improve the patient experience.

North Carolina Department of Transportation (NCDOT), which is working to leverage drones to expand healthcare access for the residents of North Carolina, supported Matternet in conducting first-round test flights using the company’s drone technology on WakeMed’s campus in August 2018 as part of the FAA’s Unmanned Aircraft System (UAS) Integration Pilot Program (IPP).

More to Come at EWC 2019

How drones, sensors, and new technologies are poised to increase the quality and accuracy of specimen transport and logistics represented just a slice of the first full day of sessions at Executive War College. UPS is an official partner and sponsor.

Also speaking at the 24th Annual Executive War College on Lab and Pathology Management:

Evolving market trends are creating both concern and opportunities for the clinical laboratory industry. New sources of revenue are essential at a time when fee-for-service prices for lab tests are decreasing.

Early registration is already open for 2020 Executive War College, happening April 28-29, in New Orleans.

Liz Carey

Related Information:

WakeMed Uses Drone to Deliver Patient Specimens

24th Annual Executive War College on Lab and Pathology Management

UPS Drones Are Now Moving Blood Samples Over North Carolina

UPS Partners with Matternet to Transport Medical Samples Via Drone Across Hospital System in Raleigh, N.C.

Shrinking Reimbursements and Increasingly Complex Regulations Will Squeeze Profits and Harm Valuations of Clinical Laboratories That Fail to Strengthen Their Strategic Positions

Operational efficiencies, strong management teams, and successful outreach business are key clinical laboratory success in today’s era of mergers and acquisitions

Fierce economic headwinds are taking aim at the entire pathology industry, as shrinking Medicare reimbursement rates, shifting federal regulations and compliance requirements, and changing care models squeeze profit margins and threaten valuations of most clinical laboratories and anatomic pathology groups.

The reimbursement rate changes mandated by the Protecting Access to Medicare Act of 2014 (PAMA), which took place January 1, 2018, loom as the most immediate danger to the long-term financial health and viability of medical diagnostic laboratories.

“Medicare reimbursement rates to labs providing essential testing services are estimated to drop by $670 million this year, and additional reductions scheduled for 2019 and 2020 will cut payments by nearly 30% for many tests critical to caring for Medicare beneficiaries,” noted Julie Khani, President of the American Clinical Laboratory Association (ACLA), in “Patient Care Is Put to the Test as Clinical Laboratory Services Are Hit With a One-Two Punch in Rate Cuts,” an article she penned for the ACLA website.

“For some labs, such as rural hospitals and labs serving patients in skilled nursing facilities—which already have significantly higher operating costs—this could be a death knell that would precede a devastating loss of patient access to necessary testing services,” she concluded.

Assessing Financial Solvency to Survive Impending Mergers and Acquisitions

The ACLA has filed a lawsuit against the U.S. Department of Health and Human Services (HHS) for what it called a “flawed and misguided” implementation of the law. For now, however, the roll out of reimbursement rates cuts will continue, an ACLA blog post reports.

As a result, post-PAMA pressures combined with other factors are forcing clinical laboratory leaders to consider their strategic options, including:

  • Reorganizing;
  • Restructuring;
  • Merging/consolidating with another laboratory; and,
  • Selling.

As GenomeWeb pointed out prior to PAMA’s implementation, “All clinical labs in the U.S.—from the largest reference labs to in-hospital labs to physician-practice labs—will be touched by the changes to varying degrees.”  The future, GenomeWeb predicts, “may be a market with fewer independently operated small and regional labs, as well as fewer outreach labs owned by hospitals. Instead, such operations could become part of [Quest Diagnostics’] and LabCorp’s networks.”

This changing landscape means laboratories need to be assessing their financial solvency and maximizing their valuation even if they are not currently candidates for either side of the merger and acquisition equation. Failing to anticipate and respond to unfolding changes could leave laboratory executives courting a financial reckoning.

Pathway to Driving Valuation for Your Laboratory

To help clinical laboratory owners, CEOs, administrators, and pathologists understand the forces driving today’s mergers, acquisitions, and joint ventures—and to guide their future decision-making—Dark Daily is presenting a new webinar at 1:30 p.m. EASTERN on Thursday, June 28, 2018, titled, “The Pathway to Driving Valuation for Your Laboratory: Your Roadmap to Achieving Success, and How to Sustain Growth Despite a Changing Lab Environment.”

One speaker is Vicki DiFrancesco, Chief Strategy Officer, XIFIN, San Diego. DiFrancesco has an insider’s understanding of mergers and acquisitions and 25 years of executive leadership experience. Prior to joining XIFIN, DiFrancesco served as President and CEO of Pathology Inc., the West Coast’s premier women’s health laboratory, which was acquired by LabCorp in March 2016.

The other speaker is David Nichols, Founder and President at Nichols Management Group (NMG) in York Harbor, Maine. NMG provides laboratory consulting services for healthcare organizations. Since its founding in 1988, NMG has provided expertise in improving overall effectiveness and in implementing such strategies as sales force development, market planning, compliance/financial auditing, and in selected cases, hands-on management responsibilities by working onsite with senior personnel in each area of need.

During their 90-minute presentation, you will learn:

  • Market factors creating financial challenges for your laboratory;
  • How revenue compression and compliance issues are driving merger and acquisition activity;
  • Steps to optimizing your lab’s reimbursements, a key to improving financial performance;
  • Revenue cycle management’s importance as a valuation driver;
  • Strategies to significantly improve your market position;
  • Components of an effective compliance program and why compliance is so important to laboratory valuation;
  • Value drivers that attract buyers, such as profitable growth, a strong compliance program, competent management teams, EBITDA, cash flow and gross margins; and,
  • Specific challenges that should be addressed in any merger or consolidation plan.

David Nichols (left), Founder and President at Nichols Management Group (NMG); and Vicki DiFrancesco, Chief Strategy Officer, XIFIN, will share vital insights and share critical strategies that clinical laboratories can immediately use to drive valuations and prepare for current and future financial challenges. (Photo copyright: Dark Daily.)

To register for this critical webinar, use this link  (or copy and paste this URL into your browser: https://www.darkdaily.com/product/the-pathway-to-driving-valuation-for-your-laboratory-your-roadmap-to-achieving-success-and-how-to-sustain-growth-despite-a-changing-lab-environment/.)

Despite the financial pressure on many existing laboratories, the medical laboratory industry continues to play a vital role in the healthcare system, with clinical laboratory tests guiding more than 70% of all medical decisions made by healthcare providers, according an ACLA fact sheet.

The industry also contributes more than $100 billion in annual economic impact and produces more than 622,400 jobs. While the role of diagnostic laboratories will continue to grow in an era of personalized medicine, only laboratories that optimize their strategic position in response to the changes taking place may be left standing when the predicted industry consolidation is complete.

—Andrea Downing Peck

Related Information:

The Pathway to Driving Valuation for Your Laboratory: Your Roadmap to Achieving Success, and How to Sustain Growth Despite a Changing Lab Environment

Patient Care Is Put to the Test as Clinical Laboratory Services Are Hit with a One-Two Punch in Rate Cuts

ACLA PAMA Lawsuit Complaint Against CMS

Recent NILA Report Highlights Harmful Impacts of Misguided PAMA Implementation on Labs and Seniors

The PAMA Effect: Consolidation of Clinical Labs Expected as Legislation Set to Take Effect

Conference Ends with Optimistic Outlook for Laboratories

Clinical Laboratory Testing: Life Saving Medicine Starts Here

With Reduced Reimbursement from Medicare, Anatomic Pathology Groups and Clinical Laboratories Must Learn to Optimize Collections from Managed Care Payers to Stabilize Financials and Survive the Industry Shift

As PAMA brings estimated Medicare reimbursement cuts of up to 30% over the next three years to a range of typically high-volume tests and diagnostics, medical laboratories that wish to stay competitive must understand the needs of managed care payers and learn how to optimize collections, reduce denials, and communicate value effectively or risk their financial health

In what experts have called the biggest financial upheaval for the healthcare industry in three decades, the onset of new Medicare Part B Clinical Laboratory Fee Schedule (CLFS) reductions based on the Protecting Access to Medicare Act (PAMA)—and their continued decrease over coming years—places the financial integrity of clinical laboratories and anatomic pathology groups of all sizes in peril.

Recent years have seen major shifts in consolidation, automation, and efficiency analysis to help streamline both workflows and cashflows. However, the threat from the current and coming cuts to Medicare lab test prices will be particularly acute for smaller independent laboratories and hospital/health system lab outreach programs. These labs will continue to feel added strain due to reduced reimbursement across 25 of the most common tests billed to Medicare.

The Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG) predict that the cuts enacted on January 1, 2018, alone will result in Medicare payments to labs falling by a total of $670 million just in 2018. This amount is almost 70% greater than the $400 million in fee cuts the federal agency had predicted in statements it published last year. (See Dark Daily, “For Top 20 Tests, CMS to Cut Payment by 28% in 2018-2020,” October 9, 2017.)

And, that doesn’t account for subsequent cuts, which are estimated to reach nearly 30% over the next three years.

Cost of Service Disparities/In-Network Status Further Impact Clinical Labs

If the CLFS reductions weren’t enough, labs face another threat—managed care and commercial payers aligning with big national laboratories and narrowing networks in an attempt to lower costs and provide maximum return for both patients and shareholders. For smaller and independent laboratories, this represents a double threat.

In the first situation, larger laboratories can offer services at lower costs due to increased automation, batch processing, and other scale advantages. This means that while the lower CLFS rates will impact the financial integrity of larger labs, the actual margin lost is less than that of smaller laboratories and facilities that face higher costs to perform tests and provide services.

Compounding the situation, commercial and managed care payers searching out the best value for their patients and shareholders tend to narrow their networks by excluding many independent clinical lab companies and hospital lab outreach programs, amplifying this inherent disparity and skewing the advantage away from independent providers yet again.

Higher cost providers without a clear understanding of promoting their value to payers could have trouble obtaining in-network status. Yet, failing to obtain in-network status may reduce overall test quantities, further raise prices, and make smaller labs less competitive with larger national laboratories—a dangerous cycle with today’s competitive laboratory landscape.

Shifting Focus and Optimizing Managed Care Reimbursements

As the financial stability of Medicare reimbursements wanes, it is imperative that laboratories look to new methods to further increase efficiency and stabilize cashflows. Once a smaller portion of laboratory revenue, managed care organizations and commercial payers will be of increased importance as overall reimbursement rates continue to shrink in the face of healthcare reform and value-based care.

Unfortunately, many laboratories assume that by simply providing requested services they are due reimbursement from commercial payers. In the age of value-based care this is no longer the case and considered an outdated mindset—one that can lead to endless audits, increased recoupment costs, and which could drastically impact successful collection from managed care and commercial payers. (See Dark Daily, “Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands,” October 16, 2015.)

Special June 26 Webinar: Improving Managed Care Reimbursement Efficiency

Understanding not just what these payers are attempting to achieve for their organization—but also how they structure requirements and processes to support their goals—is an essential element of succeeding in this previously smaller share of the marketplace.

For those interested in learning more about critical concerns regarding managed care payers in the post-2018 CLFS landscape, Pathology Webinars is hosting a 90-minute webinar on Tuesday, June 26, 2018, at 2:00 PM Eastern.

The webinar will include presentations from two experts on a range of topics including:

  • Actionable steps to absorb the loss of Medicare revenue due to the impact of the 2018 CLFS reductions;
  • How managed care payers process network status and payments;
  • Who in the managed care chain of command should receive your value proposition;
  • How to better align your value propositions, policies, and workflows with the requirements of managed care and commercial payers; and,
  • Understanding the roles managed care payers expect clinical laboratories and anatomic pathologists to play in managing and reducing unnecessary testing.

The first speaker, Frank Dookie, MBA, will provide an inside look at:

  • How managed care payers function;
  • Their requirements and workflows; and,
  • What they look for when considering network status for a laboratory.

Dookie is a laboratory professional who has worked on the payer side for 28 years. He is passionate about the role that diagnostics play or can play in healthcare, and has spent his career working for instrumentation providers, clinical laboratories, the intermediary space between laboratories and managed care companies, and managed care companies.

The second speaker, Michael Snyder, will bring the entire payment process into sharp focus. He will cover:

  • Optimizing the collection process;
  • Identifying the purpose of each step, each review, and each team member involved; and,
  • Critical points laboratories must address to ensure payment.

Snyder is the Senior Vice President of Network Operations for Avalon Healthcare Solutions, LLC, a firm that provides comprehensive benefit management services to the health plan industry and has more than 30 years’ experience in clinical laboratory management.

Frank R. Dookie, MBA (left), Contracting Executive with a major managed care company in Woodbridge, N.J.; and Michael Snyder (right), Senior Vice President with Avalon Healthcare Solutions in Flemington, N.J., will provide critical insights and actionable details for clinical laboratory and anatomic pathology group leaders who want to ensure future revenues.

An Essential Opportunity to Improve Your Reimbursements

This critical webinar offers anatomic pathology groups and medical laboratory managers essential information and actionable next steps to immediately leverage the potential of managed care payers. Additionally, it provides insider insight to laboratories straining to retain financial integrity as reduced reimbursements and increased regulatory burdens strain budgets and cashflows.

To register for the webinar and see further details about discussion topics, use this link  (or copy and paste the URL into your browser: https://pathologywebinars.com/current/managed-care-an-insiders-guide-to-improving-your-reimbursement-efficiency-with-strategies-that-work-626/).

As further Medicare payment reductions over the next three years drive reimbursements even lower, understanding how to capture the positive attention of payers—while working within the rules and policies driving their reimbursement decisions—will be an essential element of successful laboratory management and growth. Register now!

—Jon Stone

Related Information:

Continued ‘Aggressive Audit Tactics’ by Private Payers and Government Regulators Following 2018 Medicare Part B Price Cuts Will Strain Profitability of Clinical Laboratories, Pathology Groups

Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands

Tougher Lab Regulations and New Legal Issues in 2018: More Frequent Payer Audits, Problems with Contract Sales Reps, Increased Liability for CLIA Lab Directors, Proficiency Testing Violations, and More

Coming PAMA Price Cuts to Medicare Clinical Lab Fees Expected to Be Heavy Financial Blow to Hospital Laboratory Outreach Programs

What Every Lab Needs to Know about the Medicare Part B Clinical Laboratory Price Cuts That Take Effect in Just 157 Days, on Jan. 1, 2018

Medicare Clinical Laboratory Price Cuts and Cost-cutting Predicted to be 2018’s Two Biggest Trends for Medical Laboratories in the United States

Direct-to-Consumer Clinical Laboratory Test Developer, EverlyWell, Receives $1 Million in Funding from Shark Tank Investor

Direct-to-consumer medical laboratory testing company gets a major shot in the arm as developers find ready investors and increasing consumer demand

Clinical laboratory tests, usually performed without fanfare, were thrust into the limelight during a recent episode of Shark Tank, an American reality TV show on which aspiring entrepreneurs compete for the attention and partnership funds of various investors.

EverlyWell, a direct-to-consumer (DTC) company that offers at-home lab tests without lab visits or doctor referrals, obtained a $1-million line of credit from Lori Greiner, one of Shark Tank’s participating entrepreneurs, according to MobiHealthNews. EverlyWell has consumers collect their own specimens at home, which are then sent to a medical laboratory testing facility.

Based in Austin, Texas, EverlyWell was founded in 2015 by Julia Taylor Cheek, CEO, with an aim to “make lab tests accessible, simple, and meaningful,” according to a news release. Cheek is also a Venture Partner with NextGen Venture Partners and formerly the Director of Strategy and Operations with the George W. Bush Institute.

“It’s incredible for the industry that we were selected and aired on a show like Shark Tank. It really shows the intersection of what’s happening in consumer healthcare and the high cost in healthcare and that people are really responding to new solutions,” Cheek told MobiHealthNews.

“I think the product is brilliantly crafted,” Greiner stated during the episode’s taping, according to MobiHealthNews. “It’s really nice; it’s really easy. It’s super clear. I think the state of healthcare in our country now is so precarious. I think this gives people an empowered way … to know whether or not they have to go find a doctor,” she concluded.

Greiner offered the $1 million line of credit (with 8% interest) in exchange for a 5% equity stake in EverlyWell, explained Austin360. According to SiliconHillsNews, she did so after reviewing certain EverlyWell financial indicators, including:

  • $2.5 million in revenue in 2016;
  • $5 million expected revenue in 2017; and
  • 20% monthly growth rate.

Julia Cheek, CEO and Founder of EverlyWell (above), in a news release following her success on reality show Shark Tank, said, “We’re leading a major shift in the consumer health marketplace by bringing the lab to consumers’ doorsteps, and we are moving quickly to expand our channels, launch innovative tests, and deliver a world-class customer experience.” (Photo copyright: Forbes/Whitney Martin.)

Physician Review Still Part of Home-testing Process

EverlyWell lists 22 home lab tests on its website and a market share that encompasses 46 states. Shoppers can search for specific tests based on symptoms or by test categories that include:

  • General Wellness;
  • Men’s Health;
  • Women’s Health;
  • Energy and Weight; and
  • Genomic Test (through a partnership with Helix, a personal genomics company).

The most popular test panels include:

  • Food sensitivity;
  • Thyroid;
  • Metabolism;
  • Vitamin D; and,
  • Inflammation.

Prices range from $59 for a glycated hemoglobin (HbA1c) test (found under the general wellness category) to $399 for a women’s health testing kit. EverlyWell explains that it has no insurance contracts for these diagnostic tests, which do not require office or lab visits.

The testing process, according to EverlyWell’s website, proceeds as follows:

  • After ordering and paying online, kits arrive at the customer’s home;
  • The consumer self-collects a sample (such as blood spots, dried urine, or saliva) and returns it by prepaid mail to a medical laboratory that partners with EverlyWell. The company notes that it works with CLIA (Clinical Laboratory Improvement Amendment)-certified laboratories;
  • A board-certified doctor reviews the lab results; and,
  • A report is available online in a few days.

“Our goal is not to remove the importance of physician review. It’s to make the experience easier for the consumer,” Cheek told Texas CEO Magazine. “We designed a platform that is all about access and empowering consumers to have access to and monitor their own health information,” she continued.

Texas CEO Magazine explained that Cheek was inspired to create the company following “a bad personal experience with health and wellness testing that sent her to seven different specialists, cost $2,000 out of pocket, and left her with pages of unreadable results.”

Since then, the three-year old start-up company has garnered more than $5 million in venture capital, noted the news release.

Many Choices in Direct-to-Consumer Lab Company Market

EverlyWell is not the only player in the DTC clinical laboratory test space. According to MedCityNews, there are at least 20 other DTC lab test companies in the market including:

  • 23andMe;
  • Laboratory Corporation of America (LabCorp);
  • Mapmygenome;
  • Pathway Genomics;
  • Quest Diagnostics (Quest);
  • Sonora Quest Labs;
  • Theranos; and others.

The direct-to-consumer lab test market grew from $15 million to about $150 million in 2015 and includes both large and small clinical laboratory test developers, noted Kalorama Information.

Clearly, the DTC testing market is expanding and garnering the attention of major developers and investors alike. This growing demand for home-testing diagnostics could impact anatomic pathology groups and smaller clinical laboratories in the form of reduced order testing and decreased revenue.

—Donna Marie Pocius

Related Information:

Mail-Order Lab Test Startup EverlyWell Makes Million Dollar Deal on ABC’s Shark Tank

EverlyWell Raises Additional Capital, Bringing Total to $5 Million

This Austin Entrepreneur Scored Historic Deal on Shark Tank

Austin-based EverlyWell Lands Deal on Shark Tank

Innovative Texas Businesses: Empowering Consumers; Julia Cheek’s EverlyWell’s Health and Wellness Testing

Meet the Start-up Revolutionizing the Lab Testing Industry

20 Key Payers in the Direct-to-Consumer Lab Testing Market

Direct-to-Consumer Services Put Down Roots in US Lab Testing Market

Clinical Pathology Laboratories Should Expect More Direct-to-Consumer Testing

Sales of Direct-to-Consumer Clinical Laboratory Genetic Tests Soar, as Members of Congress Debate How Patient Data Should be Handled, Secured, and Kept Private

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