In a previous post, I discussed the well-established reference lab business model used by both Quest and LabCorp (see: Quest Diagnostics and Lab Corp Business Models Becoming Obsolete). In this note, I listed five different perspectives from which this model was in danger of becoming obsolete. For example, their key customers are private physician offices and such medical practices are disappearing in the face of expansion of integrated delivery networks as well as other factors (see: Health-care law driving doctors away from small practices, toward hospital employment). Moreover, younger physicians are predisposed to work in IDNs for a salary rather than enter private practice. In response, Quest is making a valiant effort to catch the wave of current trends with a program called Blueprint for Wellness. Here's a description of the program from the Quest home page:
Through Blueprint for Wellness, Quest Diagnostics, the world’s leader in diagnostic testing, information and services, comes to you and your company with a program that all your employees can access across the country. We provide biometric wellness screenings and unique services to empower measurable health improvement, improved productivity and lower healthcare costs for employees. Blueprint for Wellness concentrates on three distinct areas along the wellness continuum: Measure, Map, Modify.
As I understand it, the company is repurposing some of its patient service centers (PSCs) to "wellness centers" to perform "biometric screenings." This change will be in partnership with employers who offer, with strong financial incentives, wellness programs to their employees and will send them to such wellness centers for counseling and monitoring.
While I applaud this new effort that reinforces my previous conclusion that the current Quest business model may be losing relevance, reshaping itself partly as a wellness company is going to be a long and hard pull. Here are some of the challenges that come to mind about this new program:
- Most patients will continue to view their physician office as the logical location for the delivery of wellness services, although this is often wishful thinking on their part. In second place as logical wellness centers will be the walk-in clinics in retail drug chains like CVS and Walgreens that have a very significant lead on Quest for these services. The will also enjoy better brand awareness.
- Quest currently is a one-trick-pony, performing lab tests on specimens drawn at PSCs and then transported to centralized, highly automated clinical labs. Part of its expertise is the logistics involved in these operations. Walgreens seem to be a step ahead of Quest regarding lab testing with its partnership with Theranos using micro-samples and multiplex testing at announced lower prices (see: Finally, Some Important New Details about the Theranos Business Model). This Theranos model could be converted, in time, to point-of-care (POC) testing in the retail drug store settings.
- Lab testing does not sit at the epicenter of wellness practices for conditions like diabetes, obesity, lung/cardiovascular disease, and fitness. Correcting these problems is frequently all about patient motivation, dietary changes, and avoidance of cigarettes and alcohol. By and large, PCPs themselves are receiving poor marks for weight reduction in favor of established programs like Weight Watchers. Entry into the "wellness arena" is not going to be easy for a national reference lab company.
In summary, I consider this effort by Quest too little to late. However, it's a huge company (market cap $10B), much admired by investors because of predictable earnings, and embedded in the growing healthcare industry. They may be able to make "Blueprint for Wellness" work but I believe that the program won't be successful given the company's core business and expertise.