Comparison of "Traditional" Lab Testing with Direct Access Testing

In the course of researching yesterday's note about a direct-access-testing (DAT) franchise (see: DAT Franchise in Fort Lauderdale Focuses on "Sex and Drugs"), I came across an article on the topic from Washington G-2 Reports that provided an estimate of the total U. S. lab testing market versus the direct-to-consumer (DTC) laboratory testing market (see: Direct-to-Consumer Testing and Its Impact on the Lab Market). Such estimates are hard to find from reputable sources. My problem with the article is that the definitions used for traditional lab-based testing, direct-to-consumer (DTC) testing, and direct-access-testing (DAT) are confusing. Below is a excerpt from the article:

The direct-to-consumer (DTC) laboratory testing market, including at-home genetic testing, is estimated at less than $100 million in annual revenue out of the overall $51.7 billion U.S. laboratory testing market, according to several industry experts and Washington G-2 Reports. It is defined here as being comprised of "traditional laboratory-based" DTC testing and at-home genetic testing. In the traditional laboratory DTC testing area (excluding at-home genetic testing), there are half a dozen companies operating with a combined annual revenue of $15 million to $20 million. Though a small segment, it appears to be growing at 15% to 20% annually, driven in part by the approximately 45 million uninsured Americans and the aging of the baby boomers as they begin to retire. This part of the DTC (sometimes also referred to as direct-access-testing or DAT) testing market consists of several overlapping components-including routine laboratory testing that does not require physician referral; point of care (POC) testing; and over the counter (OTC) testing such as CLIA-waived laboratory tests, pregnancy tests, and insulin test strips. POC and OTC testing, however, are very different markets with different revenue and business models than DTC testing.

In a previous note (see: Four Categories of Direct Access Testing), I took a stab at establishing a clear definition for direct-access-testing (DAT). Here's a quote from the note (boldface emphasis mine):

The process by which a healthcare consumer tests, or submits for analysis in a clinical laboratory, a biological specimen (e.g., blood, serum, cells, urine, stool) without using a trained healthcare practitioner (e.g., physician, nurse) as a known intermediary in the process.

Continuing in this same spirit and spurred by the Washington G2 article above,  I would like to attempt to establish definitions for the two major categories of lab testing. Let's start by that stating that the lion's share of clinical lab testing in the U.S. can be classified as traditional lab testing (TLT) and for which we have not previously had a good label. This category includes work performed in commercial reference labs, hospital labs, and physician office labs (POLs). All of these tests share the following characteristics. They are both ordered by physicians and are performed by someone other than the patient/consumer, usually a lab professional. The use of the term "traditional" is particularly apt with reference to this category.

Let's further state that the second category of clinical lab testing can be referred to as direct-access-testing (DAT) or direct-to-consumer (DTC). I personally view these two terms as being synonymous since they essentially mean the same thing and prefer the former term because it is in more common usage. As the name implies, the critical feature of tests in this category is that they are NOT ordered by physicians but rather by patients/consumers themselves. They may be performed by either a patient/consumer himself or by laboratory personnel. This category includes the following types of testing: home kits, home-based instruments such as glucometers, and routine lab testing or DNA testing ordered via the web or occasionally in DAT storefront operations and performed in reference labs such as LabCorp.

The key difference between traditional lab testing (TLT) and direct-access-testing (DAT) is that physicians order the former and they are always performed by someone other than the patient/consumer. Patients/consumers order and frequently pay out-of-pocket for the latter and they may or may not perform the tests themselves.

Comments

[Mark Terry]

I'm the author of the article in question, a freelance writer as well as market researcher and analyst in the areas of clinical diagnostics, biotechnology and healthcare.

Although I don't disagree with your definitions in general, they are very, very broad, which poses a lot of difficulties in terms of market research and analysis.

DTC, Direct-To-Consumer, would include pregnancy tests, ovulation tests, even blood sugar urine strips and test kits, which is a very different market (and market size) than DAT, Direct Access Testing, which is typically referring to Minute Clinics and Doc-in-The-Box or online services that provide laboratory testing without a physician's order, but generally send the samples to an independent laboratory (most often LabCorp and/or Quest Diagnostics). The exception would be certain types of waived test kits like those for Strep throat. One of the problems with some of these kits, however, is a very high false negative rate, but that's a different topic entirely.

Cheers,
Mark Terry, writer