The newly approved legislation will “eliminate regulations preventing patients from learning about diagnostic testing and services provided by local clinical laboratories,” according to a press release issued by the Pennsylvania Senate Republicans.
Republican state Senator Rosemary Brown was the bill’s primary sponsor. She was joined as co-sponsors by a bipartisan group of colleagues.
“The regulations prevent patients from learning about clinical laboratories and the services they provide,” Brown said in the press release. “Patients deserve to know about their options when they are selecting a clinical laboratory to perform these important tests and procedures.”
The press release noted that Pennsylvania is the only state that prohibits clinical laboratories from advertising to residents.
“It’s time for Pennsylvania to catch up with the rest of the nation and enable patients to have access to this information,” said co-sponsor of the bill Republican Senator Tracy Pennycuick (above) in a press release. “Our bill would enable advertising while maintaining the important consumer protection provisions that ensure tests and procedures can only be performed based on a doctor’s order.” Once enacted into law, clinical laboratories in Pennsylvania will be able to advertise their services just like labs in other US states. (Photo copyright: Montgomery County Republican Committee.)
Details of Senate Bill 712
The bill applies to clinical laboratory tests ordered by licensed healthcare practitioners and performed by the medical laboratories themselves. Labs are prohibited from making claims “about the reliability and validity of the testing that is inconsistent with the testing proficiency standards” in federal law, the bill states, and labs must disclose that the test “may or may not be covered by health insurance.”
Brown, Pennycuick, and co-sponsor Republican Senator Lynda Schlegel Culver, discussed the need for the new legislation in a March 2023 memo, observing that 70% of healthcare decisions are influenced by clinical laboratory tests.
“As our state and the nation’s healthcare system continues to grow and evolve, consumers are demanding greater transparency and to be more engaged in how healthcare is delivered to them,” they wrote, adding that the state’s current restrictions are “outdated.”
“We believe permitting outreach to Pennsylvania consumers with accurate, scientifically based diagnostic information can be a source of personalized, highly relevant insight to help foster better, more informed dialogue with licensed healthcare providers, which enables Pennsylvania consumers to take action to improve their health,” they wrote.
“Patients should have access to information about the services and procedures available at their local clinical laboratories,” said Senator Culver in the press release. “I want to make sure patients can make informed decisions about where and how to obtain these important health services. Our bill would remove the gag order on this specific set of healthcare services.”
Similar legislation, HB1558, sponsored by Republican Representative Paul Schemel, is currently pending in Pennsylvania’s House of Representatives.
Larger Push for Healthcare Consumerism
Dark Daily and our sister publication The Dark Report have reported extensively about the rise of consumerism in healthcare—including factors such as price transparency—as it applies to medical laboratories.
And in “Millennials Set to Reorder Healthcare and Lab Testing,” The Dark Report advised clinical laboratories on the need to reconfigure key aspects of their services to accommodate the rising numbers of Millennials in the workforce. For example, these consumers are accustomed to using mobile devices to interact with retailers and want the same convenience when obtaining healthcare services from doctors and labs.
Global management consulting firm McKinsey and Company addressed many of these issues in report titled, “Driving Growth through Consumer Centricity in Healthcare.” The authors suggested that healthcare providers need to “redefine the consumer experience” by emulating “consumer-focused companies in other sectors” with “personalized offerings and services, value-based pricing, and an elevated experience—all from distinctive, high-quality brands.”
The report also noted that providers still have a lot of work to do. “Many consumers believe that the health system does not support their care needs, and they perceive that the quality of their healthcare is negatively affected by their personal attributes, including income, insurance coverage, weight, and age, among other factors,” the authors wrote.
Huron, a healthcare consulting company, identified five current trends in healthcare consumerism based on a survey of US consumers, Healthcare Dive reported. They are:
Greater digital functionality, including telehealth, wearable devices to report health data, and mobile apps for scheduling, communication, and payment.
Affordability, shorter wait times, and online ratings as factors driving consumers to choose providers.
Accurate diagnoses and effective treatment plans as drivers of consumer satisfaction.
Increasing demand for technology-enabled conveniences such as virtual care.
More price transparency in response to concerns about affordability.
Pennsylvania’s decision to join the rest of the nation and allow clinical laboratories to advertise their services may be evidence that the growing number of consumers who want direct access to medical care and the ability to choose their provider—be it hospital, physician, or clinical laboratory—are encouraging the pathology and medical laboratory professions to lobby their state lawmakers to make it easier to advertise their services to the public.
Expect there to be more clinical laboratory testing at pharmacies as retail pharmacy chains expand their primary care offerings
Walgreens Boots Alliance (NASDAQ:WBA) of Deerfield, Illinois, continues to expand its primary care footprint with VillageMD’s latest acquisition of Starling Physicians, a multi-specialty physicians group with 30 locations in Connecticut, according to a VillageMD news release. Walgreens is the majority owner of VillageMD, which now has more than 700 medical centers, Healthcare Dive noted.
This deal continues the trend of corporations acquiring physician practices. Already, the majority of physicians are employees, not partners in a private practice physician group. Under corporate ownership, these physician groups often decide to change their clinical laboratory providers. For that reason, managers and pathologists at local medical laboratories will want to explore how they might provide daily lab testing services to the corporate owners of these primary care clinics.
The Hartford Business Journal called VillageMD’s acquisition of Starling Physicians—which is subject to a state investigation for possible certificate-of-need requirement—one of Connecticut’s “more high-profile healthcare merger and acquisition deals in Connecticut in recent years.”
The Starling Physicians group acquisition comes just a few months after
VillageMD paid $8.9 billion for Summit Health-CityMD of Berkeley Heights, New Jersey, with primary care services in the Northeast and Oregon. Walgreens invested $3.5 billion in that transaction, a Summit Health news release noted.
These acquisitions by Walgreens/VillageMD provide opportunities for local clinical laboratories to serve the physicians in these practices, though the operations may have a different patient flow and work process than traditional family practice clinics located in medical offices around community hospitals.
“Starling shares our vision of being a physician-led model and they provide care in a compassionate and exceptional way to all the patients they serve. By integrating primary care with specialty care, we are able to optimize access to high-quality care for our patients,” said Tim Barry (above), CEO and Chair of VillageMD in the news release. “This is a natural extension of our growth in the Northeast, including our recent acquisition of Summit Health-CityMD. Together, we are transforming the way healthcare is delivered in the United States.” Clinical laboratories in these areas will want to develop a strategy for serving the physicians practicing at these non-traditional locations. (Photo copyright: The Business Journals.)
Primary Care at Retail Locations a Growing Trend
Dark Daily and its sister publication The Dark Report have reported extensively on the growing trend by pharmacy chains and other retail superstores to add primary care services to their footprint.
In “By 2027, Walgreens Wants 1,000 Primary Care Clinics,” The Dark Report covered how Walgreens had disclosed that it would spend $5.2 billion to acquire a 63% interest to become the majority owner of VillageMD. Fierce Healthcare reported that “[Walgreens] planned to open at least 600 Village Medical at Walgreens primary-care practices across the country by 2025 and 1,000 by 2027.”
VillageMD is a primary care provider with same-day appointments, telehealth virtual visits, in-home care, and clinical laboratory diagnostic testing such as blood tests and urinalysis. Many VillageMD practices are located in buildings next door to Walgreens sites throughout the United States. (Photo copyright: Walgreens.)
Other Retailers Investing in Primary Care
Other retailers have recently taken deeper dives into healthcare as well.
According to Forbes, “The acquisition comes amid a flurry of acquisitions across the US for doctor practices, which are being purchased at an unprecedented pace by large retailers like Walgreens Boots Alliance, CVS Health, Amazon, and Walmart. Meanwhile, medical care providers owned by health insurers like UnitedHealth Group’s Optum and Cigna’s Evernorth are also in the doctor practice bidding war.”
And in February, CVS announced plans to acquire for $10.6 billion Oak Street Health, a Chicago-based primary care company with 169 medical centers across 21 states that plans to have more than 300 centers by 2026.
Do Clinical Laboratories Want Retail Customers?
The question of whether clinical laboratories should pursue retail customers is at this point academic. Consumer demand is driving the change and labs that don’t keep up may be left behind.
“The trend of putting full-service primary care clinics in retail pharmacies is a significant development for the clinical laboratory industry,” wrote Robert Michel, Editor-in-Chief of Dark Daily and The Dark Report. “These clinics will need clinical lab tests and can be expected to shift patients away from traditional medical clinic sites for two reasons—lower price and convenience—since this new generation of primary care clinics will be located around the corner from where people live and work.”
Thus, healthcare system laboratories or large reference labs may want to reach out to Walgreens, CVS, Amazon, and Walmart for test referrals. These and other large retailers are investing heavily in the belief that consumers will continue to seek convenience in their healthcare.
New federal funds likely to spark additional growth in hospital-at-home programs across the US while creating need for clinical laboratories to serve these homebound patients
In one of the latest examples of health systems’ providing acute care to patients outside of traditional hospital settings, Orlando Health announced its launch of the Orlando Health Hospital Care at Home program serving central Florida.
According to an Orlando Health press release, “The Orlando Health program is the first in Central Florida to be approved for Medicare and Medicaid patients, with future plans to expand the service for patients with private insurance and at other Orlando Health locations. It is an extension of a federal initiative created during the height of the COVID-19 pandemic to increase hospital capacity and maximize resources.”
Orlando Health is a not-for-profit healthcare system with 3,200 beds at 23 hospitals and emergency departments. It is the fourth largest employer in Central Florida with 4,500 physicians and 23,000 employees. Its Hospital Care at Home program serves patients who meet clinical criteria with 24/7 telehealth remote monitoring and virtual care from the Orlando Health Patient Care Hub. In-person nursing visits are also offered daily, according to Orlando Health.
“Orlando Health wanted to be able to provide a different level of care for its patients and give them a different opportunity to be cared for other than the brick-and-mortar of the hospital,” Linda Fitzpatrick (above), Assistant Vice President for Advanced Care at Orlando Health told Health News Florida. “We’ll have decreased infectious rates in their homes, decreased exposures. It is a healthier and happier place to be in order to heal.” Clinical laboratories in the Orlando area will have the opportunity to serve healthcare providers diagnosing patients in non-traditional healthcare settings. (Photo copyright: Orlando Sentinel.)
Lowering Costs and Avoiding In-hospital Infections, Medical Errors
Treating patients at home, even after inpatient visits, can save them money. At the same time, patients are more comfortable in their own homes and that contributes to faster recoveries.
“[We’ll be able to measure] heart rate, respiration, temperature, and blood pressure. We’ll also do video conferencing from that location with the patient. We’ll have nurses going to the patient’s home at least twice a day,” interventional cardiologist Rajesh Arvind Shah, MD, Senior Medical Director of Hospital Care at Home, Orlando Health, told Health News Florida.
Orlando Health patients can be safely treated in their homes for many conditions including:
According to the American Hospital Association (AHA), “many are seeing the hospital-at-home model as a promising approach to improve value. … This care delivery model has been shown to reduce costs, improve outcomes, and enhance the patient experience. In November 2020, the Centers for Medicare and Medicaid Services launched the Acute Hospital Care at Home program to provide hospitals expanded flexibility to care for patients in their homes.”
Hospital-in-the-Home (HITH) is considered by many experts to be safer for patients, as they are not exposed to nosocomial (hospital-acquired) infections, falls, and medical errors. In its landmark “To Err is Human” report of 1999, the Institute of Medicine (IOM) estimated that medical errors killed as many as 98,000 patients in hospitals annually.
And in “Australia’s Hospital-in-the-Home Care Model Demonstrates Major Cost Savings and Comparable Patient Outcomes,” we predicted that wider adoption of that country’s HITH model of patient care would directly affect pathologists and clinical laboratory managers who worked in Australia’s hospital laboratories. Having more HITH patients would increase the need to collect specimens in patient’s homes and transport them to a local clinical laboratory for testing, and, because they are central to the communities they serve, hospital-based medical laboratories would be well-positioned to provide this diagnostic testing.
New Federal Funds for HITH Programs
One recent impetus to create new HITH programs was the passing of the Consolidated Appropriations Act, 2023 (HR 2617). The federal bill includes two-year extensions of the telehealth waivers and Acute Hospital Care at Home (AHCaH) individual waiver that got started during the COVID-19 pandemic.
As of March 20, the federal Centers for Medicare and Medicaid Services (CMS) listed 123 healthcare systems and 277 hospitals in 37 states that had been approved to use the AHCaH wavier.
Now that federal funding for AHCaH waivers has been extended, more healthcare providers will likely start or expand existing HITH programs.
“I think [the renewed funding] is going to allow for additional programs to come online,” Stephen Parodi, MD, Executive Vice President External Affairs, Communications, and Brand, Permanente Federation; and Associate Executive Director, Permanente Medical Group, told Home Health Care News.
“For the next two years, there’s going to be a regulatory framework and approval for being able to move forward. It allows for the collection of more data, more information on quality, safety, and efficiency of these existing programs,” he added. Parodi also oversees Kaiser Permanente’s Care at Home program.
Labs without Walls
Clinical laboratories can play a major role in supporting HITH patients who require timely medical test results to manage health conditions and hospital recovery. Lab leaders may want to reach out to colleagues who are planning or expanding HITH programs now that federal funding has been renewed.
Loss could indicate an industrywide slowdown in digital health adoption and suggests medical laboratories will want to continue developing a virtual care strategy
Only two years after Teladoc Health (NYSE:TDOC) completed acquisition of Livongo, a data-based health coaching company, the virtual healthcare provider reported a 2022 net loss of $13.7 billion, a company press release announced.
The loss, which has been described as “historic,” is “mostly from a write-off related to the plummeting value of its Livongo acquisition. … By comparison, in 2021 [just a year earlier], Teladoc posted a net loss of $429 million,” Fierce Healthcare reported.
However, during Teladoc’s fourth quarter earnings call, CEO Jason Gorevic said, “We are pleased with the strong fourth quarter and full-year operating results. Despite a challenging macro environment, we were able to expand our product offerings and enhance the level of care delivered across our integrated whole-person platform.” Teladoc Health’s 2022 revenue was $2,406,840 compared to $2,032,707 in 2021. That’s an 18% increase over last year’s revenue, according to the earnings report. Nevertheless, a month before the earnings call Teladoc laid off 300 non-clinician employees, Fierce Healthcare noted.
“Teladoc Health has been at the forefront of the adoption curve, and we believe that our scale, breadth of product offering, and proven outcomes will enable us to maintain and expand our position in the market,” said Teladoc Health CEO Jason Gorevic during February’s earnings call. Clinical laboratory leaders may view the company’s $13B loss as indication that adoption in telehealth by physicians, healthcare providers, and patients of digital-based health services is not happening as swiftly has been predicted. (Photo copyright: The Business Journals.)
Predictions in Telehealth Adoption Fall Short
Teladoc Health, based in Purchase, New York, acquired Livongo of Mountain View, California, in October 2020 for $18.5 billion.
A news release at that time declared that the merger was “a transformational opportunity to improve the delivery, access, and experience of healthcare for consumers around the world.
“The highly complementary organizations,” the release stated, “will combine to create substantial value across the healthcare ecosystem, enabling clients everywhere to offer high quality, personalized, technology-enabled longitudinal care that improves outcomes and lowers costs across the full spectrum of health.”
The deal was hailed as advancing telemedicine and digital health services. As it turned out, though, the demand for those types of services fell far short of the Teladoc’s expectations. One way to interpret the cause of the multi-billion dollar write-down is that adoption of digital health services by physicians, healthcare providers, and consumers is not happening as fast as Teladoc projected.
It may also be that companies allocated too much money to deals during the COVID-19 pandemic, an unstable period of time for making major business decisions.
Teladoc to Reduce Costs while Pursuing Increased Adoption of Virtual Care
Gorevic told analysts during the earnings call that the company needs to reduce costs and reach a market that is “in the early innings.” Year-over-year growth of 6% to 11% is expected in 2023, he said.
“You should expect us to balance growth and margin with an increased focus on efficiency going forward. Part of that approach is rightsizing the cost structure to reflect the current growth rates of the business,” Gorevic said. “The more balanced approach does not mean that we will stop relentlessly pursing growth and increased adoption of virtual care across the industry. Virtual care’s role within the healthcare industry remains underpenetrated, and we will continue to invest to expand our leadership position,” he added.
Digital Health Investing Falls Off
However, citing digital health market data in the new CB Insights report, Becker’s Hospital Review(Becker’s) suggested the digital health bubble may have “popped,” and that funding by investors is falling fast from the “Golden Age” of 2021.
The digital health category grew by 79% in 2021 to $57.2 billion, a record high, according to data cited by Becker’s. In the fourth quarter of 2021, there were 13 new digital health companies with valuations of at least $1 billion each. But by the end of 2022, digital health funding dropped to $3.4 billion. That’s “a five-year low,” Becker’s reported.
“The drop in funding in digital health companies I feel is a response to the volatility in healthcare where over 50% of hospitals and healthcare providers have posted losses for 2022 and a bleak outlook for 2023,” Darrell Bodnar, Chief Information Officer at North Country Healthcare in Lancaster, New Hampshire, told Becker’s.
And, in a statement about hospitals’ financial health, Fitch Ratings said providers in 2022 reported “weaker profitability and liquidity” as compared to 2021. For most providers, a “rapid financial recovery” is not expected, Fitch noted.
Labs Need Telehealth Strategies
All of this uncertainty in the telehealth/virtual care markets may ultimately benefit clinical laboratories and lab investors who delayed investing in technology that enables supporting physicians and patients using telemedicine visits. Still, it would be smart for medical laboratory leaders to develop a digital health strategy to meet consumer demand for lab testing services in tandem with virtual care visits with healthcare providers.
Company also launches Amazon Clinic virtual healthcare services and announces it will terminate Amazon Care by end of year
Clinical laboratory leaders and pathologists may understandably struggle to keep abreast of Amazon’s moves in the healthcare space. For years, Amazon has tried to develop medical services that disrupt the US healthcare industry in the same way its digital book business upended traditional book publishing. It is clear that Amazon is heavily investing in healthcare ventures that deliver what it believes are better alternatives to existing primary care, clinical laboratory, and retail pharmacy options.
Now, the Seattle-based global e-commerce company has announced plans to acquire One Medical, a membership-based primary care organization, for $3.9 billion according to a news release.
Headquartered in San Francisco, One Medical has primary care offices in 12 major US markets and offers its members 24/7 virtual care, according to the company’s website.
“We think healthcare is high on the list of experiences that need reinvention,” said Neil Lindsay (above), SVP of Amazon Health Services, in a news release announcing the planned acquisition of One Medical. “We love inventing to make what should be easy easier, and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” he added. However, clinical laboratory leaders have watched Amazon’s efforts to disrupt healthcare come and go. (Photo copyright: Advertising Age/Daniel Berman.)
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As One Medical Grows, Amazon Launches Virtual Care Clinic
“One Medical’s philosophy is rooted in quality care, patient-centered design, and a smart application of technology,” Greg Hayes, MD, District Medical Director for One Medical, Preston Center, Dallas, told Texas News.
For its part, One Medical, which currently has more than 125 clinic locations, sees opportunity to grow its services as part of Amazon (NASDAQ:AMZN). “Joining Amazon is a tremendous next step in innovating and expanding access to high-quality, high-value healthcare,” said Amir Dan Rubin, One Medical Chief Executive Officer, in a blog post.
One Medical (NASDAQ:ONEM) is the operating name for 1Life Healthcare, Inc., a chain of primary care clinics that has 815,000 members, a 14% increase over last year. According to a news release on the company’s third quarter 2022 financial results, its revenue was $261.4 million, up 73% over the same period last year. More than 8,000 companies and organizations work with One Medical, the company’s website notes.
Meanwhile, Amazon is also launching Amazon Clinic, a virtual health service “that delivers convenient, affordable care for common conditions” to people in 32 states, an Amazon news release states.
Amazon Clinic offers virtual care services for 20 common conditions including allergies, acne, migraines, and urinary tract infections. Patients complete a questionnaire through a message-based portal prior to meeting with clinicians.
Clinical laboratory managers and pathologists will want to note that Amazon Clinic will need medical laboratory testing performed to properly diagnose patients and determine the best treatments. Since Amazon Clinic will be a virtual care service, Amazon can be expected to explore such options as sending collection kits directly to individuals using the virtual care service, allowing them to collect needed samples that can be returned to traditional clinical laboratories for testing. Amazon’s existing courier and delivery service would make it easy for the internet giant to deliver either specimen collection kits or home-test kits to obtain the necessary diagnostic data.
“Amazon Pharmacy and One Medical (once the deal closes) are two key ways we’re working to make care more convenient and accessible. But we also know that sometimes you just need a quick interaction with a clinician for a common health concern. … That’s why today were also introducing Amazon Clinic, a message-based virtual care service,” Amazon said in its news release.
What’s Next for Amazon?
Separately, Amazon announced it will terminate Amazon Care at the end of 2022. Amazon Care is a virtual and in-home care service it launched in 2019.
However, in a 2022 internal email, senior vice president of Amazon Health Services Neil Lindsay said Amazon Care wasn’t a sustainable, long-term solution for its enterprise customers, according to Fierce Healthcare.
“This decision wasn’t made lightly and only became clear after many months of careful consideration,” he said. “Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting and wasn’t going to work long-term.”
Will Amazon Provide Clinical Laboratory Services?
Now that Amazon is set with primary care, pharmacy, and virtual health services, might it next explore medical laboratory testing or other diagnostics relationships?
But this apparently has not slowed Amazon’s drive to gain a foothold in the primary care and virtual health services market. Therefore, clinical laboratory leaders should advance their outreach to healthcare providers who are caring for Amazon employees, customers, and soon patients, in new ways and offer their lab services.
