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Private Labs in South Africa Voluntarily Agree to Lower Prices for COVID-19 PCR Tests following Investigation by Country’s Competition Commission

In an out-of-court settlement, two commercial clinical laboratory companies also agreed to reduce their prices for rapid antigen tests as well

How clinical laboratory companies were pricing their COVID-19 tests caught the attention of government authorities in South Africa. Government agencies in that country are establishing what they view as fair clinical laboratory pricing for private COVID-19 PCR (polymerase chain reaction) and rapid antigen tests without turning to litigation or fines.

The Competition Commission (Commission) is an organization charged with reviewing and acting on business practices in South Africa. In a December 11, 2021, news release, the Commission said it had reached a “ground-breaking agreement” with two private laboratories—Ampath and Lancet—to reduce their COVID-19 PCR test prices from 850 South African rand (R850) to R500 (from US$54.43 to US$31.97).

As of December 12, a third private laboratory company that also had been investigated, PathCare, had not agreed to the court settlement, Daily Maverick reported.

Also effective are lower prices for rapid antigen tests, the Commission said in a separate December 23 news release.

COVID Test Prices ‘Unfairly Inflated’

The changes in PCR test prices in South Africa followed a formal complaint by the Council for Medical Schemes which alleged the private pathology labs [the term for clinical laboratories in South Africa] were “supplying” COVID-19 PCR tests at “unfairly inflated, exorbitant, and/or unjustifiable” prices, Daily Maverick reported.

Tembinkosi Bonakele

The clinical laboratory companies “exploited consumers by earning excessive profits on essential products or services,” Tembinkosi Bonakele (above), Commissioner of the South Africa Competition Commission, told the Daily Maverick. “It is always encouraging for companies to voluntarily consider reducing prices, especially where the public is detrimentally affected by the prices, as to avoid protracted litigation,” he added. (Photo copyright: Sowetan Live.)

According to the Daily Maverick, as part of the investigation, which began in October 2021, the Commission asked the private clinical laboratory companies for financial statements and costs of COVID-19 testing.

“We did, then, further interrogation in order to strip out what we saw was potentially padding the costing and unrelated costs. And on the basis of that, we came to the figure of R500,” James Hodge, told the Daily Maverick. Hodge is Chief Economist, Economic Research Bureau, and Acting Deputy Commissioner at the Competition Commission South Africa.

 For its part, Lancet, Johannesburg, said in a statement that it “Appreciates the spirit of constructive engagement with the Commission which has resulted in an outcome that best serves the people of South Africa as they confront the fourth COVID wave. We are sensitive to the plight of the public and agree that reducing the COVID-19 PCR price is in best national interest.”

Clinical Laboratory Test Prices: Market Dynamics

So, were the prices too high? In the US, clinical laboratories are reimbursed considerably more by Medicare for COVID-19 testing (about $100), as compared to the South Africa private clinical lab prices.

Also, the Centers for Medicare and Medicaid Services (CMS) said in a statement that effective January 2021 it included in that rate an incentive of $25 to labs that provide results within 48 hours.

Medical laboratories are reimbursed $75 for a high throughput COVID-19 test when results are reported beyond 48 hours, CMS added.

Antigen Tests Prices Also Reduced

The Commission said that during its review of COVID-19 PCR test pricing it received a Department of Health Republic of South Africa complaint about prices for rapid antigen test pricing as well.

After another Commission review, PathCare, Lancet, and Ampath agreed to reduce prices for rapid antigen tests to a maximum of R150 or $9.74 (from a range of R250 to R350 or $16.28 to $22.79), a news release noted.

By comparison, Abbott’s BinaxNOW COVID-19 Antigen Self Test is priced at $23.99, on Abbott’s website as well as online at Walgreens.

“The reduction of COVID-19 rapid antigen test prices will help alleviate the plight of consumers and widen accessibility and affordability of COVID-19 rapid antigen testing, which is a critical part of the initiatives to avoid escalation of the pandemic,” said Bonakele in the news release, which also stated that the Commission would receive financial statements from the three labs every few months.

The Commission also is reviewing a “large retail pharmacy chain’s” rapid antigen prices, which “follows a complaint lodged by the Department of Health (DOH), on December 14 2021, against service providers delivering COVID-19 Rapid Antigen tests in South Africa to consumers,” Cape Town Etc reported. The specific pharmacy chain was not identified.

Data Show COVID Plight in South Africa

More than 21.6 million COVID-19 tests have been offered by healthcare providers in South Africa, and 3.5 million cases were detected, according to the Department of Health, Republic of South Africa.

In January, The New York Times reported:

  • 28% of South Africans are fully vaccinated.
  • 33% of residents have had one vaccine dose.
  • One in 17 people was diagnosed with COVID-19.
  • One in 632 had died from the infection.
  • COVID-19 deaths total 92,830.

Considering those data, one wonders if the South African government acted fast enough on test pricing.

For medical laboratory leaders, it’s important to recognize that not only are lab services in the spotlight during the COVID-19 pandemic, business practices and prices also are being monitored by officials in this country.

Donna Marie Pocius

Related Information:

Urgent Media Briefing on the Announcement of a Ground-Breaking Agreement on PCR Test Prices

PathCare Also Agrees to an Immediate Price Reduction of COVID-19 PCR Tests

Big Three Private Pathology Groups Agree to Another Price Reduction

Major Pathology Labs Agree to Lower Price of COVID-19 PCR Tests to R500

Lancet Laboratories Agreement with Competition Commission of South Africa

CMS Changes Medicare Payment to Support Faster COVID-19 Diagnostic Testing

Private Pathology Groups to Reduce COVID-19 Rapid Antigen Test Price to No More than R150

Tracking Coronavirus in South Africa: Latest Case Count

Ex-Theranos CEO Elizabeth Holmes Testifies She Made Mistakes, Shifts Blame for Some of the Now Defunct Clinical Laboratory Testing Startup’s Failures

Jurors are expected to hear closing arguments beginning on December 16 and then will decide Holmes’ fate in criminal fraud trial

It was seven days of testimony from former Theranos CEO Elizabeth Holmes, reported in detail by most major news outlets. The jury in her criminal fraud trial heard the once-high-flying Silicon Valley executive attempt to explain away charges of deception. She acknowledged that she made mistakes while leading the clinical laboratory blood-testing company but claimed that others were ultimately responsible for the company’s failures.

In “Former Theranos Lab Director and Staff Testify in Ongoing Elizabeth Holmes Fraud Trial That They Voiced Concerns about Reliability and Accuracy of Edison Blood-Testing Device,” Dark Daily covered testimony by San Jose, Calif., pathologist Adam Rosendorff, MD, who told jurors that in the days leading up to the 2013 launch of the Edison blood-testing device he warned Holmes in emails and in person that the product wasn’t ready to be deployed commercially.

Rosendorff left Theranos in November 2014. He was followed by three more Theranos laboratory directors, all of whom have testified in the fraud case against Holmes.

Presumably, in her testimony, Holmes was laying the blame for key failures in the accuracy of the lab tests performed for patients, along with major deficiencies in how her medical lab company complied with CLIA regulations, on these former Theranos laboratory directors (as the clinical laboratory company’s CLIA lab directors of record during those years).

Former federal prosecutor Keri Curtis Axel, JD, an attorney with Waymaker LLP in Los Angeles, told Yahoo Finance Live that Holmes is mounting “a state of mind defense.”

“Whether you have an intent to defraud is really a state of mind,” she said.

Elizabeth Holmes trial illustration

The illustration above depicts ex-Theranos CEO and founder Elizabeth Holmes concluding seven days of testimony in her criminal fraud trial in San Jose, California. Closing arguments are scheduled to begin December 16. Clinical laboratory directors and pathologists following the fraud trail may soon learn whether the four clinical laboratory directors who worked for Theranos may in some way be held accountable for some of the company’s activities. (Graphic copyright: Vicki Behringer/The Wall Street Journal.)

‘We Wanted to Help People’

Holmes’ testimony may have both helped and hurt her case. According to The Wall Street Journal (WSJ), Holmes “hasn’t flinched during questioning by her lawyer or the government.

“The persona of the confident yet traumatized chief executive could create reasonable doubt in the minds of jurors, legal observers following the trial say, and muddy the evidence prosecutors put forward over 11 weeks to prove she intended to defraud investors and patients about the reach of Theranos’ technology,” the WSJ wrote.

During testimony, Holmes maintained that her goal in founding Theranos was to increase access to healthcare. “We wanted to help people who were scared of needles,” she told jurors, the WSJ reported.

In building its case, prosecutors presented witness testimony and other evidence strongly suggesting Holmes lied to investors about Theranos’ laboratory testing capabilities and deployment, concealed its use of commercial blood testing machines, and hid ongoing issues with its Edison device.

One of the most damaging moments of Holmes’ own testimony may have been when she admitted to affixing the logos of pharmaceutical giants Pfizer and Schering-Plough to reports sent to Walgreens and potential investors.

Holmes told jurors that her intent was to give credit to others, not to deceive and her defense attorneys attempted to show that many of Holmes’ more questionable decisions were aimed at protecting Theranos trade secrets.

Dark Daily covered this in “Corporate Executives and Mega-Rich Investors Testify in Elizabeth Holmes’ Federal Fraud Trial That They Were Misled by Theranos’ Claims about the Edison Blood-Testing Device.”

“We had a huge amount of invention that was happening in our laboratories,” Holmes testified, according to CNN’s trial coverage. “We had teams of scientists and engineers that were working really hard on coming up with new ideas for patents and trade secrets, and we needed to figure out how to protect them.”

Holmes Claims No Responsibility for Theranos’ Lab Operations and Product Development

On the witness stand, Holmes acknowledged she was the final decisionmaker at Theranos. However, she worked to distance herself from the company’s medical laboratory troubles. She pointed out that others within the company had control over laboratory operations and scientific decision-making.

The WSJ reported that defense lawyer Kevin Downey asked Holmes, “Who was responsible for operational management of the lab?”

Holmes replied, “Sunny Balwani.” She explained that her former No. 2 executive oversaw all the “business parts” of the lab. Meanwhile, the clinical/scientific decision-making, Holmes stated, was the job of the laboratory director and laboratory leadership.

When given the opportunity to cross-examine Holmes, prosecutors focused on Holmes’ response to the 2015 WSJ investigation into Theranos and her retaliatory actions against whistleblower Erika Cheung, a former lab employee who became a source for the WSJ’s expose and a prosecution witness.

According to WSJ live coverage, Holmes testified that Theranos hired a law firm and threatened Cheung with litigation after she left the company, but only did so to protect Theranos’ trade secrets. Holmes acknowledged that Cheung’s concerns about Theranos’ blood-testing technology ultimately were proven correct.

“I think I mishandled the entire process of the Wall Street Journal reporting,” Holmes said.

Closing Arguments

In her closing day of testimony, Holmes was asked if she ever intentionally misrepresented Theranos’ technology to patients and investors, the WSJ reported.

“Never,” Holmes responded.

Asked if investors lost money because of her attempting to mislead them, she answered, “Of course not.”

Clinical laboratory directors and pathologists who have taken a keen interest in the Holmes fraud trial will soon learn if the jury buys her arguments. Closing arguments are set for December 16, after which the jury must decide whether Holmes intended to defraud patients and investors or is guilty only of falling short in her goal of revolutionizing clinical laboratory medicine. 

—Andrea Downing Peck

Related Information:

Elizabeth Holmes Cross Examination: ‘The Devil Will Be in the Details’

Elizabeth Holmes’ Testimony: Moments That Might Influence Jurors

Elizabeth Holmes Trial: Former Theranos CEO Recounts Abuse by her Former Lover

Holmes Testifies Balwani Told Her What to Eat, How to Lead Theranos

Elizabeth Holmes Nears End of Her Time on the Stand in Her Criminal Trial

Others Led Laboratory Operations, Holmes Says

‘I Worship You’: Jury Sees Texts Between Holmes and the Ex She Accused of Abuse

Cross Examination of Holmes Begins with WSJ Investigation That Exposed Theranos Problems

Holmes Says She Never Tried to Mislead Investors, Patients

Former Theranos Lab Director and Staff Testify in Ongoing Elizabeth Holmes Fraud Trial That They Voiced Concerns about Reliability and Accuracy of Edison Blood-Testing Device

Corporate Executives and Mega-Rich Investors Testify in Elizabeth Holmes’ Federal Fraud Trial That They Were Misled by Theranos’ Claims about the Edison Blood-Testing Device

Prosecutors in Elizabeth Holmes’ Federal Fraud Trial Question Witnesses about Theranos’ Edison Technology and the Inaccurate Medical Laboratory Test Results It Produced

Jury also heard testimony about Holmes’ claims that the Edison device was doing clinical laboratory testing for the military in overseas theaters

During the seventh week of ex-Theranos CEO Elizabeth Holmes’ criminal fraud trial, headline-making testimony continued nearly non-stop. A former Theranos product manager took the stand offering damning testimony that tied Holmes to questionable product demonstrations and exaggerated claims about the military’s use of the Edison blood-testing device. And a Pfizer scientist testified to alleged improper use of the Pfizer logo by Theranos in a report that went to Walgreen executives.

In “Tales of Theranos Devices Saving Soldiers Haunts Holmes at Trial,” Bloomberg reported that prosecutors alleged Holmes misled investors and others when she falsely claimed the Department of Defense (DOD) had deployed Theranos’ Edison device to the battlefield and used it in Afghanistan on medical evacuation helicopters.

Those claims contributed to the federal Securities and Exchange Commission (SEC) charging Holmes in 2018 with fraud and stripping her of control of Theranos, the SEC stated in a news release.

CNN reported that former Senior Product Manager Daniel Edlin, who worked at Theranos from 2011-2016, acknowledged in court that the Edison device had never been used in a war zone or installed on a medivac helicopter. He also noted that Holmes had final say over his communications with the DOD.

According to CNN, “Edlin said he worked directly with Holmes to support the relationships with the military and Defense Department. He said, ‘the end goal’ for these discussions ‘was to start a research program that would compare Theranos’ testing to the testing available to the military at that time.”

Edlin testified that Holmes was ‘highly involved’ with these communications, CNN reported.

“I’d say any substantive communication I had with the military, I either discussed with her ahead of time … or email drafts were reviewed and approved before I sent them back out,” he testified.

Elizabeth Holmes, ex-CEO of Theranos

Elizabeth Holmes, ex-CEO of now-defunct blood-testing company Theranos, is seen above leaving a San Jose, Calif., courthouse following a hearing. Holmes faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud for allegedly misleading investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing Edison technology. Holmes has pleaded not guilty. (Photo copyright: Reuters.)

During cross examination, Edlin walked back some of his damaging testimony. When asked by defense attorney Kevin Downey, JD, of Williams and Connelly, LLP, if he or anyone else at Theranos was intentionally trying to deceive investors or other visitors during the demonstrations, Edlin responded, “Of course not,” according to Palo Alto Online.

To counter the prosecution’s claims that Theranos’ Edison machines were unsuitable for military use because they could not operate in high temperatures, Downey introduced an email from an Army doctor at the US Command in Africa praising the Edison after examining it in high temperatures. The doctor also, according to court documents, proposed the Army provide more funding to test the Edison’s capabilities, Palo Alto Online reported.

Nevertheless, according to The Wall Street Journal (WSJ), the Edison was never sent to a US military laboratory in Afghanistan for study, nor was it used in Africa to run blood tests.

Former Pfizer Scientist Testifies to Misuse of Intellectual Property

In another broadside to the Holmes defense, former Pfizer scientist Shane Weber, PhD,  testified Holmes used the Pfizer logo in investor materials without the company’s permission in order to pass off as credible a study aimed at validating the Edison device.

The WSJ reported Weber told jurors that in 2008 he had reviewed a 15-page Theranos study involving cancer patients, but that he had stated in his own internal report to Pfizer at that time that nine conclusions in the study—including a statement that the “Theranos system performed with superior performance”—were “not believable.” Pfizer eventually heeded Weber’s advice to not enter into a partnership with Theranos.

Prosecutors stated that as part of Theranos’ negotiations with Walgreens, which ultimately invested $140 million in the blood-testing company, Holmes had placed a Pfizer logo on the top of each page of the cancer study report before sending it to Walgreens executives, claiming it was an independent due-diligence report on Theranos technology.

Weber told jurors that he had not known about the altered report until he was shown the document by prosecutors. He stated the logo was added without Pfizer’s permission, the WSJ reported.

Unfortunately for Walgreens, the retail pharmacy chain entered into a business agreement with Theranos without extensively examining or testing the Edison device, which Theranos had claimed could quickly and accurately run 200 diagnostic tests using a finger-stick of blood. Instead, the company relied on the opinions of its own staff healthcare experts and outside experts, none of whom fully tested the technology either, the WSJ stated.

Testimony in the Elizabeth Holmes fraud trial is expected to continue through December. Therefore, clinical laboratory managers and pathologists should expect headline-making news to continue as well. Dark Daily will continue its coverage as the trial moves forward.   

Andrea Downing Peck

Related Information:

Tale of Theranos Devices Saving Soldiers Haunts Holmes at Trial

Elizabeth Holmes Trail: Former Theranos Project Manager Testifies No Intent to Deceive

Military Didn’t Study Theranos Devices in Afghanistan, Witness Says

Theranos, CEO Holmes, and Former President Balwani Charged with Massive Fraud

Elizabeth Holmes Trial: Theranos Claims to Rupert Murdoch Were Disputed within Company

Former Theranos Lab Director and Staff Testify in Ongoing Elizabeth Holmes Fraud Trial That They Voiced Concerns about Reliability and Accuracy of Edison Blood-Testing Device

Four-star general Jim Mattis testified that he eventually “didn’t know what to believe about Theranos anymore,” The Wall Street Journal reported

Former-Theranos CEO Elizabeth Holmes was known for her obsession with Steve Jobs, imitating not only the late Apple CEO’s well-known management style, but also his wardrobe choices. However, clinical laboratory managers and pathologists will not be surprised to learn that—in testimony during Holmes’ federal fraud trial—Theranos’ former laboratory director told jurors Holmes’ “confident demeanor” disappeared when she was told her revolutionary blood-testing technology “didn’t work,” KPIX5 TV reported.

During two days of testimony in San Jose, Calif., pathologist Adam Rosendorff, MD, told jurors that in the days leading up to the 2013 launch of the Edison blood-testing device he warned Holmes in emails and in person that the product wasn’t ready to be deployed commercially.

“I told her that the potassium was unreliable, the sodium was unreliable, the glucose was unreliable, [and] explained why,” testified the clinical pathologist. “She was very nervous. She was not her usual composed self. She was trembling a bit, her knee was tapping, her voice was breaking up. She was clearly upset,” he added.

KPIX5 TV reported that Holmes had told Rosendorff the laboratory could substitute conventional federal Food and Drug Administration (FDA)-approved devices as needed.

Rosendorff left his position with Theranos in November 2014. According to KPIX5, he told jurors, “I felt pressured to vouch for [medical laboratory] tests that I did not have confidence in. I came to believe that the company believed more about PR and fundraising than about patient care. The platform was not allowing me to function effectively as a lab director.”

Adam Rosendorff, MD

Former Theranos Laboratory Director Adam Rosendorff, MD (above), testified in the federal fraud trial of Theranos founder and ex-CEO Elizabeth Holmes that he considered filing a whistleblower lawsuit against his employer because of his concerns about the Edison blood-testing device’s lack of reliability and accuracy of test results. “I wanted to get the word out about what was happening at Theranos,” the clinical pathologist told jurors, the Wall Street Journal reported. (Photo copyright: LinkedIn.)

In continuing testimony, Rosendorff acknowledged that tension increased between himself and Holmes and Theranos’ Chief Operating Officer Ramesh “Sunny” Balwani over Rosendorff’s concerns about the reliability and accuracy of the lab’s test results. At one point, he asked Balwani in an email if his name could be removed from the Theranos CLIA lab license so he would not be legally responsible for the lab’s problems.

Balwani’s own fraud trial begins in January 2022.

Former Theranos Lab Director Considered Filing a Qui Tam Lawsuit

According to the Wall Street Journal (WSJ), Rosendorff testified he forwarded work emails to his personal email account to protect himself in case the federal government investigated Theranos. He also considered filing a whistleblower lawsuit against the company.

“I wanted to get the word out about what was happening at Theranos,” he testified, the Wall Street Journal reported.

The government’s first witnesses were former Theranos employees:

Gangakehedkar testified that Holmes knew about reliability issues with the Edison blood-testing device, yet pressured staff to move forward with the Walgreens roll out.

Theranos’ partnership with Walgreens ended in 2016, after Theranos voided years of test results performed on its machines.

In “Former Theranos Chemist Says Elizabeth Holmes Was Aware of Testing Failures,” the WSJ reported that Gangakhedkar resigned from Theranos in September 2013, taking with her Theranos documents and copies of emails in which she expressed her concerns to Holmes and others about continuing problems with Theranos’ lab tests.

“I was scared that things would not go well,” Gangakhedkar testified, her voice breaking at one point. “I was afraid I would be blamed.”

As foreshadowed during the trial’s opening statements, Holmes’ defense team plans to argue that their client did not intend to defraud investors but believed her blood-testing technology—portrayed as capable of running more than 200 tests using a finger-stick sample of blood—would revolutionize the healthcare industry.

In his opening remarks to the jury, Lance Wade, JD, a member of the Holmes defense team from Williams and Connolly LLP, told jurors that evidence will show Theranos investors were “incredibly sophisticated and knew the risks” and were actually pushing to invest in Theranos. The reality of the case, he said, is “far more human and real, and oftentimes, I hate to say it, technical and complicated and boring” than what the federal government has suggested, Forbes reported.

Four-star General Jim Mattis (ret.) Testifies

According to the Wall Street Journal, former Defense Secretary Jim Mattis testified he joined the Theranos board in the summer of 2013, at which time he invested $85,000 in the company. He said he had first met Holmes in San Francisco in 2011. At the time, Mattis, a Marine Corps four-star general, was leading the US military’s Central Command (CENTCOM) and that, according to testimony, he recognized the Edison device’s potential for use on the battlefield.

Mattis testified he and other Theranos board members were surprised to learn in 2015 that Theranos was using blooding testing equipment from competing companies.

“There came a time when I didn’t know what to believe about Theranos anymore,” he told jurors, according to the WSJ. Mattis resigned from the board in 2016, after learning he would be nominated as Secretary of Defense in the Trump administration.

Courtroom sketch

The courtroom sketch above shows former Defense Secretary four-star general Jim Mattis testifying Wednesday at the criminal trial of Theranos founder Elizabeth Holmes in San Jose, Calif. (Graphic copyright: Vicki Behringer.)

Theranos Investors

Theranos, which reached a peak valuation of $9 billion, received nearly $1 billion in funding from private investors, including from some well-known people. In “Theranos Trial Jurors to Weigh Whether Investors Were Dupes or Savvy Speculators,” according to the WSJ, the startup’s top investors included:

  • The Walton family—$150 million—heirs to the Walmart fortune;
  • Fox News Corp Executive Chairman Rupert Murdoch—$125 million—who sold his shares back to the company in 2017 for $1;
  • Former Education Secretary Betsy DeVos and her family—$100 million;
  • The Cox family, owner of Atlanta-based media and automotive company Cox Enterprises—$100 million;
  • Media investor Carlos Slim—$30 million;
  • Greek shipping magnate Andreas Dracopoulos—$25 million;
  • The Oppenheimer family—$20 million;
  • Riley Bechtel, former Chairman of Bechtel Corp.—$6 million;
  • Estate attorney Daniel L. Mosley—$6 million; and
  • New England Patriots owner Robert Kraft—$1 million.

As Holmes’ fraud trial heats up, Dark Daily will continue its coverage. In “Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial,” we reported that Holmes’ defense team revealed plans to claim “intimate partner abuse” by Holmes’ then boyfriend, Theranos Chief Operating Officer Ramesh “Sunny” Balwani.

And in “On-demand Video Service Hulu Gets Underway on TV Miniseries Documenting Rise and Fall of Former Theranos CEO Elizabeth Holmes,” we covered Hulu’s plan to produce the “The Dropout,” a limited series chronicling Holmes’ rise and fall from Founder and CEO of $9 billion tech company Theranos to criminal defendant.

The trial is expected to last until mid-December, with jurors hearing testimony on Tuesdays, Wednesdays, and Fridays. For clinical laboratory scientists, each day of testimony should bring a new round of surprises so stay tuned.

Andrea Downing Peck

Related Information

Elizabeth Holmes Trial: Live Updates

Theranos Trial Jurors to Weigh If Investors Were Dupes or Savvy Speculators

Elizabeth Holmes’ Lawyer Says She Made ‘Mistakes,’ But ‘Failure Is Not a Crime’

Former Theranos Chemist Says Holmes Was Aware of Testing Failures

Elizabeth Holmes Confident Demeanor Vanished When Told Tests Didn’t Work, Former Lab Director Tells Jury

Elizabeth Holmes Trial: Jim Mattis Tells Jury He Came to Doubt Theranos Technology

Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial

On-demand Video Service Hulu Gets Underway on TV Miniseries Documenting Rise and Fall of Former Theranos CEO Elizabeth Holmes

Walmart to Open 4,000 Healthcare ‘Supercenters’ by 2029 That Include ‘Comprehensive’ Clinical Laboratory Services

With the majority of Americans living just a few miles from a Walmart, how might independent clinical laboratories compete?

Retail giant Walmart (NYSE:WMT) plans to install 4,000 primary care “supercenters” in stores by 2029 that will include clinical laboratory testing services. This is on top of the dozens of Walmart Health locations already in operation in Georgia, Florida, Arkansas, Illinois, and Texas.

Clinical laboratories already have growing competition in the healthcare marketplace from pharmacy chains CVS (NYSE:CVS), Walgreens (NASDAQ:WBA), and Rite Aid (NYSE:RAD) which have installed in-store healthcare clinics in their retail locations—many of which offer limited, but common, medical laboratory services—as well as from existing Walmart Health locations.

Now, Walmart is poised to become a much bigger healthcare player. According to MedCity News, Walmart is “looking beyond traditional retail clinics as it seeks to create ‘supercenters’ with comprehensive healthcare services.”

Presumably, this includes an expanded menu of clinical laboratory testing services—along with the EKGs, vision care, dental care, and more—that Walmart Health locations currently provide for children and adults.

And though Becker’s Hospital Review reported in March that Walmart’s “plan is in flux,” the major national retailer continues to disrupt healthcare in significant ways.

Not the Average Retail Health Clinic

In “Walmart Health Opens Two Primary Care Clinics at Retail Supercenters in Chicago with Plans to Open Seven Florida Locations in 2021,” Dark Daily covered CNBC’s question, “Is Walmart the future of healthcare?” from its article, “How Walmart Plans to Take Over Health Care.”

We reported that Walmart Health’s list of services included:

  • Primary care,
  • Dental,
  • Counseling,
  • Clinical laboratory testing,
  • X-rays,
  • Health screening,
  • Optometry,
  • Hearing,
  • Fitness and nutrition, and
  • Health insurance education and enrollment.

However, the new Walmart Healthcare supercenters differ from Walmart Health clinics and the clinics operated by Walmart’s retail competitors Target, CVS, Walgreens, and Rite Aid.

Those clinics are designed to draw customers into existing retail setting. Walmart has a different goal with its healthcare supercenter concept.

“There’s a big difference between offering healthcare services to drive more people to your store and offering healthcare services because you’re in the healthcare business,” said former President of Health and Wellness for Walmart, Sean Slovenski, during a panel hosted by the American Telemedicine Association. “We’re in healthcare,” he continued, “We’re not in retail healthcare. We’re recruiting physicians in all of these areas and bringing them in.”

Providing Transparency with Clear, Consistent Pricing

In response to consumer demand for transparency, Walmart is taking a different approach to charging patients for healthcare services. The cost of an appointment for primary care is $40 for an adult and $20 for a child. The patient can choose to bill insurance or not, and people without insurance can pay out-of-pocket.

Prices for individual services are equally transparent. Explaining why Walmart is becoming a player in the healthcare industry, Marcus Osborne, Senior Vice President Walmart Health, told Fierce Healthcare, “It’s issues of affordability. That people can’t afford the care they need for themselves and their families. It’s issues of access … That really is the business that we’ve been in. Walmart’s business has been about helping people afford the things they need, getting them in a more accessible, convenient way, and doing it in ways that are simple. Healthcare’s no different in that regard.”

According to STAT, some 35 million Americans were uninsured in 2020. Thus, the idea of transparent pricing and walk-in affordable care should appeal to a sizable market. Walmart is banking on that. Considering that 90% of Americans live within 10 miles of a Walmart, the potential success of the healthcare supercenters becomes clear, Becker’s Hospital Review noted.

Walmart’s Other Healthcare Moves

In addition to opening 20 Walmart Health Centers, and its plans for 4,000 healthcare supercenters, Walmart has made other moves that indicate its intention to disrupt the healthcare industry.

Walmart Insurance Services, for example, partnered with eight payers during the open enrollment period in 2020 to sell its Medicare products. Through a partnership with Clover Health, a Preferred Provider Organization (PPO), and a Health Maintenance Organization (HMO) with a Medicare contract, Walmart made its insurance plans available to 500,000 people in Georgia, Becker’s Hospital Review reported.

“We’re going to have a consumer revolution in retail for point of care,” John Sculley, former Apple CEO and current chairman at RxAdvance (now called nirvanaHealth), told CNBC. “Why? Because if the Walmart tests are successful, and I suspect they will be, people will be able to go in and get these kinds of health services at a lower cost than if they had health insurance.”

“A lot of the opportunity is just about bringing what we’re doing to more people. I think about Walmart Health and what we launched a little over a year ago in Georgia and the impact we’ve seen in the communities where it launched. I think one of the biggest things to do is how do we continue to find ways to make that model work so we can reach more people with it in more communities,” Marcus Osborne (above), Senior Vice President Walmart Health, told Fierce Healthcare. Walmart certainly has experience in disruption. The retailer upended the grocery industry from the moment it entered the market, and it was the first to offer $4 prescriptions, which disrupted long-standing retail relationships consumers had with their pharmacies. Clinical laboratories should realize that Walmart
will likely make similar waves in the healthcare sector. (Photo copyright: Consumer Goods Forum.)

How Will Clinical Laboratories Compete?

Change is constant. Clinical laboratories that cannot adapt to changing market forces are ill-equipped to withstand the coming “consumer revolution.” However, labs that have already begun to plan for more direct-to-consumer interactions will be better positioned to adjust as changes come.

“My goal is that we have done the work on Walmart Health as a model, to really get it to work from a consumer perspective and get it to work in a way that it scales effectively, that we are able to reach more people,” Osborne told Fierce Healthcare.

Clinical laboratory leaders should understand that this trend is being driven by consumer demand for convenience, lower costs, and price transparency. Labs that don’t prepare to address those forces will be left behind as Walmart provides what consumers want.

Dava Stewart

Related Information:

Walmart Opens Second Health Center Offering Clinical Laboratory Tests and Primary Care Services

9 Numbers That Show How Big Walmart’s Role in Healthcare Is

Walmart Divulges Plans for ‘Healthcare Supercenters’

Why Does Walmart Think It Has a Right to Play in Healthcare? Top Health Exec Osborne Explains

The Number of Americans Without Health Insurance Has Been Trending Up. Let’s Turn It Down Again

Former Apple CEO: Walmart’s Healthcare Services Will Cause ‘a Consumer Revolution’