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
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).
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
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.