News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups
Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups
Hosted by Robert Michel
Sign In

Quest Diagnostics and LabCorp Ink Deals to Put Patient Services Centers in Grocery Stores and Retail Pharmacies, But Not for the Same Reasons as Theranos

Aug 2, 2017 | Instruments & Equipment, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations

Agreements to open PSCs in the nation’s largest retail grocery and pharmacy chain stores shows a willingness by clinical laboratories to attract customers through convenience

Greater use of retail stores as the location for patient services centers (PSCs) may be an important new trend for the clinical laboratory industry. That’s because, historically, medical laboratories placed most of their patient service centers in hospital campuses or near medical office buildings.

However, in recent months, both of the nation’s billion-dollar lab companies signed deals with national retailers to put patient service centers in their stores. Dark Daily believes that the motivation for a lab company to put a PSC into a grocery store or retail pharmacy is to make it easier and more convenient for a patient to get their specimen collected at a location that is closer to their home or office. In other words, it is faster for the patient to get to their nearest grocery store for a blood draw than to travel to the hospital campus in their community.

Various news reports indicate that Quest Diagnostics (Quest) may be more active than Laboratory Corporation of America (LabCorp) in opening PSCs in grocery stores and retail pharmacies. Over the last four months, Quest has announced plans to open patient services centers with several retailers, particularly in the states of Texas and Florida. Similarly, in the past four weeks, LabCorp disclosed an agreement with Walgreens Boots Alliance (Walgreens).

Ground zero for this current interest in putting PSCs into retail stories is Phoenix, Arizona. In 2014, to serve its direct-to-consumer lab testing business model, Theranos had PSCs in about 40 Walgreen’s pharmacies. Pathologists and clinical laboratories will recall that in November, 2015, Sonora Quest Laboratories of Phoenix opened a patient service center (PSC) in a Scottsdale, Ariz., supermarket owned by Safeway. It was the first PSC Sonora Quest had opened in collaboration with a grocery store chain, but it was not the last. Less than a year later, Sonora Quest and Safeway expanded their operations by opening additional PSCs in stores throughout the Grand Canyon State.

At the same time Sonora Quest was stepping into the retail blood-drawing business, Theranos of Palo Alto, Calif., was exiting it after opening 40 PSCs in Walgreens pharmacies, most of them in Arizona. However, before leaving the lab-testing business altogether, the embattled company put a lot of effort into educating consumers about the benefits of purchasing lab tests without a physician’s order. Theranos had even supported a bill (HB2645) the Arizona State Legislature passed that allowed patients to order tests without a physician’s requisition.

Now, in 2017, Quest Diagnostics (NYSE:DGX) appears interested in following a similar strategy as Theranos and Sonora Quest by developing Quest-branded PSCs in retail chain stores. On its website, Quest states that in the past several years it has opened 106 PSCs in Albertsons, Randalls, Safeway, Tom Thumb, and Vons retail stores in nine states.

Quest Moves to Open PSCs Across America

Quest has PSCs in the following states:

  • California (12 stores);
  • Colorado (27);
  • Delaware (1);
  • Maryland (9);
  • Montana (4);
  • Oregon (10);
  • Texas (26);
  • Virginia (7); and
  • Washington State (10).

This Quest patient service center operates within a Safeway store location. (Photo copyright: Quest Diagnostics.)

In June 2017, Quest announced it would open 10 additional PSCs in Tom Thumb retail stores in North Texas by the end of the month. Thom Thumb is a division of Albertsons, a food and drug retailer with stores nationwide. In the same announcement, Quest said it plans to open PSCs in 200 Albertson’s-owned stores nationwide by the end of the year.

Give Blood Then Shop

Also in June, Quest and Walmart (NYSE:WMT) announced a deal in which the two companies would open co-branded PSCs in 15 Walmart stores in Florida and Texas by the end of 2017.

In these locations, Quest encourages patients to have their blood drawn and then shop. Such locations can accommodate collecting specimens for routine blood work, such as total cholesterol and white blood cell count, as well as complex gene-based and molecular testing. Even patients with such chronic conditions as cancer, diabetes, and hepatitis, are encouraged to use these PSCs, the lab-testing company stated in the announcement.

Not to be outdone, LabCorp also announced a deal with Walgreens in June. In Forbes, Bruce Japsen reported that Walgreens (NASDAQ:WBA) announced it would collaborate with LabCorp (NYSE:LH) to develop and operate PSCs in Walgreens drugstores in Colorado, Illinois, and North Carolina.

The deal is the first for Walgreens since its troubled relationship with Theranos ended last year. Walgreens’ collaboration with LabCorp will initially begin this summer with five patient service centers in Denver and one in Morrisville, N.C. A seventh location in Deerfield, Ill., will open by the end of the year. Financial terms of the partnership were not disclosed.

Lessons Clinical Laboratories Learned with PSCs in Retail Stores

For Quest, the speed with which it is opening new PSCs is significant, because it seems to have taken lessons that Theranos and Sonora Quest learned earlier in Ariz. and applied them to markets nationwide. It’s worth noting that Safeway and Albertsons were already two of the largest retail grocery chains in the nation before they merged in 2015.

So, while Sonora Quest was working with Safeway, its parent company, Quest, was working with Albertsons.

One other point that is significant about Quest’s efforts is that not many other clinical laboratories have a presence in retail stores. It’s unknown just how much specimen volume these retail operations generate for Quest, one of the largest clinical lab companies in America. And, it is unknown if these PSCs in retail settings are breaking even or making a profit.

One result, however, is clear. That Quest is being so aggressive in opening PSCs testifies to the company’s level of interest in serving consumers directly. In other words, these PSCs are not primarily a direct-to-consumer play, but are aimed at building market share by adding regular lab testing done for patients. In this way, the direct-to-consumer business that Quest generates is a bonus.

The deals by Quest and LabCorp also imply that both clinical laboratory companies are willing to bet on the fact that consumers may prefer the convenience of using PSCs located in retail stores they currently frequent, rather than going to patient service centers in hospitals and sitting in a waiting rooms.

—Joseph Burns

Related Information:

Quest Diagnostics and Walmart Team Up to Expand Access to Healthcare Services

Walgreens Partners with LabCorp in New Diagnostic Testing Deal

Walgreens to Roll Out Urine, Blood Testing at Some Stores

Walgreens Partners with LabCorp on In-Store Lab Testing Services

Walmart and Quest Team Up for Lab Services

Quest’s Lab Services in New, Convenient Locations

You Can Now Get Lab Tests Done at Safeway Stores – from Theranos’ Rival

Nation’s Smaller Community Medical Laboratories Have Major Concerns about Financial Survival Once Medicare Officials Implement Deep Price Cuts to Lab Test Fees in 2018

Feb 8, 2017 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Pathology, Laboratory Testing

In vitro diagnostic manufacturers and medical distributors share concerns, along with other types of medical labs in nation’s small cities and hinterlands that include rural hospital labs and physician office labs (POLs) because, along with financial erosion, there is the potential of reduced access by Medicare beneficiaries to clinical lab tests where they live

SAN ANTONIO, TEXAS—Owners and managers of community and regional independent lab companies and community laboratories gathered here last week at a lab conference to assess what many believe is a bleak future. That’s because, in less than 11 months, medical laboratories across the United States will be dealing with unprecedented price cuts to the Medicare Part B clinical laboratory fee schedule (CLFS) and how those price cuts erode the financial stability of these essential labs, often the only local medical laboratory serving smaller communities and rural areas throughout the nation.

The number one financial threat of concern to these community and regional lab owners is how the Protecting Access to Medicare Act (PAMA) rule for private-payer market-price reporting will be used by the Centers for Medicare and Medicaid Services (CMS) to make fee cuts—effective on January 1, 2018—that will be financially devastating to the nation’s small and mid-sized community and regional labs, rural hospitals, some individual and group physician practices, and community hospitals—while causing increased market concentration that benefits the nation’s two dominant publicly-traded lab companies. (more…)

Why Healthcare Experts Critical of Direct Access Testing Advise Clinical Laboratories to Take Precautions

Sep 30, 2016 | Laboratory Instruments & Laboratory Equipment, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations

Test ordering and results interpretation can confuse the public says Dartmouth Institute, which is why some clinical laboratories limit the types of lab tests that people can request

Giving consumers direct access to medical laboratory testing continues to be a subject of some controversy. One factor in this debate is Theranos, which brought much attention to direct access testing, followed by extensive news coverage in recent months of its problems with reporting accurate clinical laboratory test results.

Concerns about allowing consumers to have direct access to lab testing were the subject of a recent National Public Radio (NPR) Shots Health News story. Several medical experts were interviewed and described why they had concerns about direct access testing (DAT).

One such expert is H. Gilbert Welch, MD, MPH, Professor of Medicine, Community and Family Medicine at The Dartmouth Institute (Dartmouth). According to Welch, DAT could contribute to over-diagnosis and give people an inaccurate impression of what good health actually means. (more…)

More Clinical Laboratories and Genetic Testing Companies Are Sharing Gene Sequencing Data That Involve Variations

Jul 11, 2016 | Coding, Billing, and Collections, Compliance, Legal, and Malpractice, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory Pathology, Laboratory Testing

The National Institute of Health’s ClinVar public database of genetic variation is demonstrating good accuracy, and a handful of clinical labs are learning to share and review this relatively small genetic database

In the analysis of genomic variants, data sharing is proving to be an important tool for researchers, scientists, pathologists, and clinical laboratory scientists.

Accessible databases like ClinVar, which was launched by the National Institute of Health (NIH) in 2013, have emerged to aggregate genetic sequencing with acceptable results. ClinVar exists to meet the needs of the medical genetics community. It collaborates with organizations to make pertinent genetic information available.

ClinVar is an archive of compiled data relating to genotype and phenotype variations among humans. Through this database, individuals can present and peruse submissions regarding variants found in patient samples.

ClinVar is averaging about 6,000 submissions per month by both commercial laboratory companies and reference labs. Major contributors to the database include: (more…)

Sustained Growth in Medicare Advantage Plans Threatens Financial Health of Smaller Pathology Groups and Local Medical Laboratories

May 27, 2015 | Coding, Billing, and Collections, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology

Surging enrollment in Medicare Advantage moves patients out of Medicare Part B and thus reduces the ability of regional clinical labs to have access to these Medicare beneficiaries

Smaller clinical laboratories and pathology group practices are facing an inauspicious trend. It is the fast growth of enrollment in Medicare Advantage plans that has reached record high numbers each year since 2010.

This is not a positive development because it moves Medicare Part B patients out of the fee-for-service program and shifts them into Medicare Advantage plans. These plans tend to sign contracts with the national laboratory companies, such as Quest Diagnostics Incorporated (NYSE: DGX) and Laboratory Corporation of America (NYSE: LH) because of their lower lab test prices while excluding most local medical laboratories and pathology groups from their provider networks. The net effect of this trend is that local labs lose access to those patients who were formerly in the Medicare Part B program, but are now enrolled in Medicare Advantage. (more…)

;