Marketing and Branding as the Key Drivers for Direct Access Testing

Direct access testing (DAT) seems to have been languishing, or even faltering, almost since its emergence on the web. The largest commercial reference lab in the country, Quest Diagnostics, recently shut down its DAT operating unit, QuesTest (link here). I have discussed some specialized DAT niches such as paternity testing (links here and here) that appear to be thriving. However, such testing is not generally obtainable and reimbursable from a physician so that the web sites are the only game in town.

In my judgment, this lackluster performance by the DAT segment of the lab industry for "standard" lab tests can be attributed to the lack of effective marketing and branding. Let's face it. The clinical lab business is generally a high-volume, low-margin business. Third party payors tend to set the reimbursement level per test. Much of a lab manager and pathologist's time is spent trying to discourage orders for emerging new lab tests by physician clients, particularly the expensive ones. Little attention is paid to marketing and branding.

For me, however, one web-based DAT site is now emerging from the pack and seems to be creating a new business model --  Direct Laboratory Services. Here is the link to the company web site. Scanning this web site, you will see a new and very interesting emphasis on lab test branding and marketing.

The web site hits all of the important hot buttons on the home page with the following statements:

• Disease prevention saves lives. And it is now made even simpler: a Doctor's appointment is not necessary. Confidential results mailed directly to you within a few days. All blood tests offered at a savings of up to 70% off typical laboratory costs.
• The tests available are the same lab tests ordered by physicians, and are analyzed by the same CLIA-certified, accredited clinical laboratories.
• The earlier a problem is detected, the easier and more likely it is to be treatable.

Note the emphasis on branded testing with the following lab product references on the home page:

• DLS/CellMate Wellness test (link here)
• The "SmokerTest®" (this seems to be original with them)
• NMR LipoProfile (link here)
• PLAC Lp-PLA (link here)

The company is also right on top of an article that just appeared in the Wall Street Journal about DAT that makes reference to their site (link here).

In a previous post, I commented on the BioPhysical250, a mega-panel of 250 biomarkers available for high-end consumers for $3,400 inclusive of all services. Here is the link to that previous note and here is the link to the web site. This branded and comprehensive wellness-oriented set of biomarkers is simply not available at any other lab in the country. By way of disclosure, I am a member of the Medical Advisory Board of BioPhysical.

So how does all of this add up? In my opinion, the successful web providers of DAT services will move away from the generic warmed-over test panels such as "women's test panel" and "prostate panel" to web site that highlight branded tests about which consumers will develop a better understanding of the value proposition. Because DAT is paid for out-of-pocket, the cost of this testing will be discounted. Such discounts are possible, in part, because of the efficiency of web-enabled transactions. I believe that some segments of the DAT industry have now hit on a winning formula.