Lab Soft News

Are Hospitals Becoming Obsolete; Consequences for Pathology and the Labs

I have blogged in the past about how the mission and nature of hospitals in the U.S. is changing rapidly (see, for example: The Design of Bedless Hospitals Continue to Evolve Based on Cost and Technology; Some Additional Ideas About the Bedless Hospitals of the Future; The Case of the "Disappearing Hospital Beds"; Implications for Pathologists). This same idea was covered in a somewhat controversial recent article by Ezekiel Emanuel with the provocative headline that asked whether hospitals were becoming obsolete (see: Are Hospitals Becoming Obsolete?). Below is an excerpt from it:

What year saw the maximum number of hospitalizations in the United States? The answer is 1981....That year, there were over 39 million hospitalizations — 171 admissions per 1,000 Americans. Thirty-five years later, the population has increased by 40 percent, but hospitalizations have decreased by more than 10 percent. There is now a lower rate of hospitalizations than in 1946. As a result, the number of hospitals has declined to 5,534 this year from 6,933 in 1981.....The number of hospitals is also declining because more complex care can safely and effectively be provided elsewhere, and that’s good news.....Studies have shown that patients with heart failure, pneumonia and some serious infections can be given intravenous antibiotics and other hospital-level treatments at home by visiting nurses. These “hospital at home” programs usually lead to more rapid recoveries, at a lower cost. As these trends accelerate, many of today’s hospitals will downsize, merge or close. Others will convert to doctors’ offices or outpatient clinics. Those that remain will be devoted to emergency rooms, high-tech services for premature babies, patients requiring brain surgery and organ transplants, and the like.

Meanwhile, the nearly one billion annual visits to physicians’ offices, imaging facilities, surgical centers, urgent-care centers and “doc in the box” clinics will grow....Hospitals will also continue consolidating into huge, multihospital systems. They say that this will generate cost savings that can be passed along to patients, but in fact, the opposite happens. The mergers create local monopolies that raise prices to counter the decreased revenue from fewer occupied beds. Federal antitrust regulators must be more vigorous in opposing such mergers. Instead of trying to forestall the inevitable, we should welcome the advances that are making hospitals less important. Any change in the health care system that saves money and makes patients healthier deserves to be celebrated. 

Dr. Emmanuel does not touch on this point but hospitals are also experiencing competition for high-margin surgical procedures like knee replacements from specialized surgicenters. Such centers can perform knee replacements as ambulatory procedures and at lower prices (see: Tug of War between Hospitals and Surgicenters for Knee Replacements; Some Surgicenters Listing Prices, Reject Insurance, and Require Cash Payment). Their price competitiveness can be attributed to their high degree of specialization and also perhaps to their cherry-picking the most healthy patients who can tolerate the lack of an inpatient stay. Hospitals subsidize their money-losing units like critical care units with their profits from labs and radiology, for example. This constrains them from lowering their prices to compete with surgicenters that don't have such expenses. Also, you need to pay attention to Emmanuel's remark about the fact that merged hospitals are becoming monopolies with fewer incentives to lower their prices.

The future of pathology, a hospital-based speciality, is inextricably bound up with the future of hospitals. To a certain extent, the same logic applies to the field of radiology but many radiologists work in stand-alone imaging centers that are competing with hospital-based radiology groups (see: Need an MRI? It pays to shop around. Big time.; Anthem Won't Pay for Outpatient MRIs and CT Scans in Hospitals). This trend away from hospital-based care may be good news for the surgical pathology reference labs and the large national reference labs like LabCorp and Quest. I have suggested in the past that these two giants may be pursuing different strategies (see: Quest and LabCorp Pursue Divergent Strategies; Which Will Succeed More?). 

Sunquest Signs Contract to Provide LIS Support for 124 Hospitals in Australia

Sunquest Information Systems is embarking on a project that has the potential to change the face of lab computing. It has signed a contract to provide lab computing support for all of the hospitals in the state of Queensland, Australia, which has a population of about 4.5 million people (see: Queensland Health partners with Sunquest for Laboratory Information System). Below is an excerpt from the press release:

The contemporary enterprise laboratory information system (LIS) and services will support improved care responsiveness, safety and healthcare outcomes for the millions of Queenslanders served by the state's 124 hospitals, 70 primary health centers and clinics, 17 aged care facilities and 33 extreme remote multi-purpose health services. Queensland Health performs more than 20,000 tests per day in 36 public pathology, forensic and scientific laboratories....The contract includes Sunquest's full end-to-end enterprise laboratory information system for all pathology disciplines including chemistry, hematology, microbiology, histopathology, cytology, blood transfusion and molecular....Sunquest demonstrates support for patient safety and communication with existing systems After being named Vendor of Choice from a field of seven vendors, ahead of the main contract Sunquest was required to create a working prototype to demonstrate key processes and achieve sign-off from a variety of stakeholders. The prototype, delivered in a prompt six weeks, successfully demonstrated interoperability with Queensland Health's existing systems showing Sunquest can meet Queensland's needs.

For the purposes of this note, I will refer to the Sunquest LIS that will provide lab computing in 124 hospitals and other facilities in Queensland as a "health system LIS" or HS-LIS. The press release refers to an "enterprise LIS" which I think is subject to misinterpretation because of the ambiguity of the term enterprise. This new contract strikes me as a potentially important step in the evolution of the classic LIS which has most often deployed in a single hospital or across several hospitals. We are now in the midst of an era with the emergence of huge health systems in the U.S., the leading one with 76 hospitals (see: Healthcare Fast Facts – Top 30 Largest Hospital Systems in America). It might make sense to me for some of these very large health systems to install a single LIS to support the labs functioning in all of the hospitals comprising the large health system.

I believe that many of these large health systems will be seeking in the future to establish multiple "laboratories of excellence" within the system as a means to insource sophisticated testing like genomic and molecular (see: Intermountain Precision Genomics to develop hereditary cancer gene panels). To my mind, this is a far superior policy to the dependence on external reference labs to provide esoteric testing. As these "laboratories of excellence" proliferate in the mega-health systems, it would also seem to make sense for the future to install a "health system LIS" or HS-LIS. This single LIS could then effeciently manage laboratory test ordering, specimen transport, and results reporting, such as will occur in the Queensland project, across all of the labs in the single health system. This will be particularly important with the adoption of digital pathology technology where slide preparation and scanning could take place in one processing lab but with the images transferred to the various surgical pathology specialists scattered in all of the hospitals in the system.

Intermountain Precision Genomics to Develop Hereditary Cancer Gene Panels

The emerging healthcare model which is dominated by a small number of very large health systems will be characterized, in part, by in-house, sophisticated genomic and molecular lab testing by these systems. This is because these large health systems will have the capital to invest in their own "laboratories of excellence" within their system. Such is the case with Intermountain Healthcare which has its own in-house genomics laboratory called Intermountain Precision Genomics. Intermountain Health is one of the giant health systems with 37,000 employees, 22 hospitals, and more than 185 clinics. Here is the mission statement for this laboratory copied from its web site:

At Intermountain Precision Genomics in-house laboratory, experts analyze the DNA and genetic makeup of a cancer patient's tumor, enabling detection of the individual genes with errors in a person's cancer to determine treatment options. The testing is proprietary to Intermountain Healthcare, but access to it is available to oncologists anywhere. The testing serves patients with late-stage cancer who have failed in a traditional treatment method.

Intermountain Precision Genomics has just announced a plan to develop hereditary cancer gene panels (see: Intermountain Precision Genomics to develop hereditary cancer gene panels). Below is an excerpt from the article describing this new test offering:

Intermountain Precision Genomics announced...it will develop hereditary cancer gene panels. IPG...is poised to validate and launch several tests to identify disease-causing genetic variants associated with hereditary cancer syndromes.....The move follows a recent article in the Journal of Clinical Oncology that reveals an unmet need for genetic testing in women with a history of breast and ovarian cancer. The JOC article, "National Estimates of Genetic Testing in Women with a History of Breast or Ovarian Cancer," shows that fewer than one in five women with a history of breast cancer or ovarian cancer who meet specific National Comprehensive Cancer Network criteria have undergone genetic testing. Moreover, the journal notes, most have never discussed testing with a healthcare provider...."Genetic testing may be used to identify individuals previously diagnosed with cancer as well as healthy individuals who have hereditary cancer gene mutations," added Brent Hafen, who directs cancer genetic counseling for Intermountain. He added that genetic counseling in association with genetic testing allows individuals with an increased cancer risk to obtain more frequent screenings at younger ages, which leads to earlier detection and treatment.

The field of predictive genetic testing is blossoming with 23andMe as one of the pioneers in the field. The FDA is now allowing 23andMe to market tests that assess genetic risks for the following ten diseases or conditions (see: FDA Approves Marketing Of Consumer Genetic Tests For Some Conditions):

• Parkinson's disease, a nervous system disorder impacting movement
• Late-onset Alzheimer's disease, a progressive brain disorder that destroys memory and thinking skills
• Celiac disease, a disorder resulting in the inability to digest gluten
• Alpha-1 antitrypsin deficiency, a disorder that raises the risk of lung and liver disease
• Early-onset primary dystonia, a movement disorder involving involuntary muscle contractions and other uncontrolled movements
• Factor XI deficiency, a blood clotting disorder
• Gaucher disease type 1, an organ and tissue disorder
• Glucose-6-phosphate dehydrogenase deficiency, also known as G6PD, a red blood cell condition
• Hereditary hemochromatosis, an iron overload disorder
• Hereditary thrombophilia, a blood clot disorder

So, to summarize, parallel to the testing and surveillance of patient with suspected current malignant neoplasms, we now have labs providing genomic testing to identify disease-causing genetic variants associated with hereditary cancer syndromes. Not only will such testing be financially remunerative for the performing labs, it will also serve patients by allowing those with the genetic predisposition to cancer to monitor their health more closely.

ELLKAY Acquires CareEvolve and Thus a Larger Footprint in Lab Computing

I was a little behind on this news but I only recently learned that ELLKAY acquired CareEvolve in February of this year from OPKO Health. CareEvolve was previously a unit of BioReference Laboratories which had been purchased by OPKO (see: ELLKAY Completes Acquisition of CareEvolve Laboratory Portal and Connectivity Platform). Apparently OPKO did not find CareEvolve's software business a good fit for them. Here's an excerpt from this article about CareEvolve's business model:

The CareEvolve portal and interfaces power routine clinical, anatomic pathology, genomics, toxicology, and other types of laboratories, providing the electronic clinical workflow support between the point of care and laboratory. CareEvolve provides its laboratory customers with a broad range of features supporting the needs of physician offices, hospital clients, long-term-care facilities, prisons, and patient-service-center workflows.

CareEvolve provides services similar to those of Atlas Medical. One major business line for CareEvolve is thus the support of hospital lab outsourcing to physician offices. The company is certainly a good fit for ELLKAY. Copied from its web page describing the services it provides to clinical labs (see: Diagnostics Laboratories), it summarizes its mission in the following way:

We understand how the increase in EMRs and electronic orders and results is reshaping the healthcare industry. Our comprehensive suite of products and services offer all the solutions laboratories need, including providing software to practices for electronic orders and results, connecting to practice EMRs for electronic results delivery, and cross-reference insurance mapping, as well as connectivity to patient demographic and insurance information.

ELLKAY has a far broader mission than labs, however. Here is a brief summary of its services for hospital and health systems:

As these hospitals and healthcare institutions grow, they inherit new priorities and challenges. One of the major challenges is decommissioning the old EMR and keeping legacy data accessible when moving to a new EMR/EHR....Additionally, healthcare organizations are now finding it a necessity to aggregate various patient data from disparate source systems.....[I]t is a challenge for healthcare organizations to connect to the hundreds of disparate systems in the thousands of individual practices for the patient data they need. 

Merged CVS and Aetna Will Move Toward a Community-Based Healthcare Model

Following the purchase of Aetna, the third largest U.S. health insurance company, CVS has lost no time in describing the healthcare goal for this large new entity: a community based care model (see: CVS and Aetna seek community-based care model in giant healthcare deal). I have previously blogged about this same topic (see: Possible Purchase of Aetna by CVS; Strategic Healthcare Implications). Below is an excerpt from this current article:

Through their $69 billion deal, CVS Health and Aetna are swinging an axe at the traditional ways in which patients access healthcare in hopes of building a new kind of model that's lower cost and more convenient for the consumer. At the center of this strategy is what's commonly called the new front door to healthcare [see: Designing health care's new front door]: the walk-in clinic, and CVS has nearly 10,000 of them....The companies agreed that CVS will take over Aetna, with the No. 3 U.S. health insurer becoming a standalone unit inside the pharmacy giant....Because the storefront pharmacies and Minute Clinics are embedded in local communities and have become places that Americans frequent,...the combined company will be better able to manage patients with chronic diseases, who may see their primary care doctor only three or four times a year. Patients with chronic diseases represent the lion's share of healthcare spending. According to the Centers for Disease Control and Prevention, 86% of the nation's $2.7 trillion annual healthcare costs go to patients with chronic and mental health conditions....Already, insurers and self-insured employers have been steering patients toward lower cost care settings. Even hospitals have been opening retail clinics to capture patients and pull them into their systems. The cost of care at a retail clinic is much lower than in a doctor's office, and evidence has shown that the care quality is equal.

In abbreviated form, here are a series of bulleted points about how I think this community model of care will evolve:

• Executed through CVS's MinuteClinics, services will be offered for minor ailments as before but now with chronic disease care grafted on the mission. Offering care in a neighborhood setting rather than more centrally reinforces what I have called in the past the centrifugal direction of healthcare (see: Could Apple Be Trying to Develop a "Patient Portal" for the iPhone?).
• Although CVS may augment their MinuteClinic workforce with physicians, it's also possible that they may offer telemedicine visits. This would allow them to perhaps partner with hospital system(s) and provide specialty care. I think that a number of hospitals would compete to provide such telemedicine partnerships in order to obtain the CVS acute care and surgery referrals.
• I predict that at least three types of lab testing will be soon be offered: (1) low complexity tests that are currently offered  on-site (see: Details about CVS' MinuteClinic POCT Strategy; Lab Testing Now Being Offered in Walgreens California Stores); (2) a broad array of tests provided by national reference labs with the CVS stores serving as patient service centers (PSCs) (see: Walgreens Partners with LabCorp for Patient Service Centers in Drug Stores); (3) it would also be feasible for CVS to launch point-of-care testing (POCT) services to generate rapid test results in the MinuteClinics.
• An interesting question is how the new entity will provide medical imaging. If they do anything at all, it will probably be to develop relationships with standalone imaging centers which are already low-cost providers (see: Anthem Won't Pay for Outpatient MRIs and CT Scans in Hospitals).

In August, 2006, I discussed the  minor efforts of health systems to compete with retail drug walk-in clinics (see: Health Systems Launch Walk-In Clinics). This then prompts the question about how our large U.S. healthcare systems will react to this merger news. This answer for me is easy -- they will do little or nothing (see: The CVS-Aetna Merger Is A Mortal Threat To U.S. Hospitals). Most will just wring their hands, having thus far been unable to develop a low-cost ambulatory solution to compete with the walk-in clinics.

The Case of the "Disappearing Hospital Beds"; Implications for Pathologists

I have posted a number of previous notes about the greater emphasis being placed on ambulatory care and bedless hospitals (see, for example: Hospitals Investing Capital in Variety of Outpatient Facilities: IT Serves as the Glue; Some Additional Ideas About the Bedless Hospitals of the Future). I had not come across hard numbers about this phenomenon until now. A recent article discussed the case of the "disappearing hospital beds" (see: The case of the disappearing hospital beds). Below is an excerpt from it:

Healthcare is leaving the traditional four walls of hospitals. As patients, payers, and providers seek to reduce costs and improve quality, they are relying less on inpatient stays and more on outpatient services. A growing reliance on outpatient services could drive healthcare costs down as costly inpatient services are increasingly reserved for patients who truly need them. Hospital beds have been on their way out for a while. Over the past 20 years, the general trend to provide more value and less volume has driven down the number hospital beds available to patients nationwide. There were a total of 901,056 hospital beds across the country in 1994....That number fell to 786,874 by 2014. Inpatient admissions ticked upwards slightly during that time, but admission rates per 1,000 visits dropped from 118 to 103.7. Around 2.3 million more patients were treated at hospitals in 2014 than in 1994, but they spent 26.7 million fewer days in the hospital.

Meanwhile, utilization of outpatient services has increased. There were a little less than 383 million outpatient visits in 1994 and more than 693 million in 2014. The number of outpatient surgeries performed each year increased from 13.2 million in 1994 to 17.4 million in 2014. The number of outpatient surgery centers serving patients has increased by 407 from 2009 to 2014, from 5,039 to 5,446. As a smaller percentage of patients require shorter inpatient stays, hospitals are removing their beds.....The University of Pittsburgh reduced its beds in service across its network of hospitals by 8.4% from 2013 to 2014....While some providers remove beds, others aren’t offering inpatient services at all. In 2014, Montefiore Health System opened a massive 12-story ambulatory surgical hospital without any inpatient beds.....[The] MetroHealth System [recently] opened the Brecksville Health and Surgery Center in Ohio. The facility will feature an always-open emergency department, laboratory and imaging services, and primary care services, but it will not offer inpatient services....In one review of relevant studies,...researchers determined outpatient surgeries were associated with cost savings averaging 16.6% to 57.6%, with most of the savings in nursing and room costs.

The professional services rendered by pathologists in hospitals consist of the interpretation of tissue biopsies and surgically resected tissues and the management of clinical laboratories. Let's call this set of services pathology diagnostics for the sake of this discussion. I believe that the following set of changes will have a major effect on the volume of pathology diagnostics: (1) the shift to outpatient services including outpatient surgery; (2) increased adoption of telemedicine and home monitoring (see: Telemedicine and Home Monitoring Will Promote Healthcare Transformation); (3) value-based care driving more surveillance and a reduction of lab testing driven, in part through the deployment of "laboratory expert systems" (see: Reduction in Unnecessary Clinical Laboratory Testing Through Utilization Management at a US Government Veterans Affairs Hospital); (4) increased home lab testing and "wearables"; (5) adoption of predictive analytics and big data that will squeeze more useful information from generic lab tests; (5) increased competition from national reference labs as more retail drug stores install walk-in clinics and patient service centers for national reference labs.

In terms of the most significant and impending effect on the volume of pathology diagnostics, I would suggest we look at the increase in outpatient services and outpatient surgeries as noted above. Historically, far fewer tests are ordered for outpatients than inpatients. This is due, in part, to the fact that outpatients are less sick and that inpatients undergo more complex surgeries. However, part of the growth in the number of outpatient surgeries has been based on the fact that new techniques and technologies allow more complex cases to be performed on this basis (see: Tug of War between Hospitals and Surgicenters for Knee Replacements). As outpatient services expand, I predict that the number of tests per patient visit may increase but not to the former inpatient levels. In short, I think that the total volumed of pathology diagnostics will decline in upcoming years. 

Helix Makes DNA Sequencing Available to Consumers; Where Do We Go From Here?

For a number of years, I have speculated about one of the dilemmas of routine lab testing as compared to whole genome sequencing (WGS). This latter is the process of determining the complete DNA sequence of one's genome at a single time. The value of, say, a serum sodium is transient and dependent on the patho-physiological status of the patient. The value is reported by labs normally only accompanied by the reference range. Further interpretation is left to the test-ordering physician.

In the case of WGS, the result is theoretically relevant for the life of the patient but the analysis and interpretadtion of the DNA changes frequently as new research is reported about DNA patterns and the consequences of DNA "mistakes". How then should a lab report WGS results initially and how should it be reimbursed for subsequent reports? A recent article addressed this question in relationship to Helix (see: HELIX’S BOLD PLAN TO BE YOUR ONE STOP PERSONAL GENOMICS SHOP). Below is an excerpt from the article:

In 2015, Helix spun out of San Diego-based Illumina, the $20 billion genomics giant whose supercomputers sequence about 90 percent of the world’s DNA data. Its goal? To take the sequencing tech used by researchers and doctors and open it up to consumers in a digital marketplace built on DNA....[The company recently launched a new] platform—a smorgasbord of 18 products designed to turn a one-time genetic donation into a lifetime of insights....Every product on Helix’s marketplace will draw from the same DNA sample, which the company will sequence, store securely, and offer up through an API....For consumers, that means they can sequence once with the potential to purchase a lifetime of dynamic discoveries. The key word there is dynamic: The marketplace’s offerings will expand as genetic insights improve. Its initial products, like other consumer tests, are constrained by the current state of research....

Here’s how the Helix platform works: Eighty bucks and a spit sample gets you a spot on one of Helix’s sequencing machines, and a chunk of cloud storage for the protein-coding region of your genome—about 22,000 genes, otherwise known as the exome. Normally that would cost somewhere between $500 and $1,000. More commonly, consumer genetic tests use a technology called genotyping to report on certain genetic sites, but even those cost $100 to $250. So comparatively, Helix’s base sequencing fee is a real bargain. But once you’ve gained access to the marketplace, it’s a pay-as-you-go buffet of personal genomics lifestyle products....Eric Topol, a geneticist at Scripps Research Institute and a leader in the US’s most ambitious public sequencing project—the Precision Medicine Initiative—says Helix’s low cost of whole exome sequencing is indeed an impressive achievement. But because you can’t download all your raw data, the price is essentially an illusion, meant to hook people more than return meaningful results.

Helix's business model makes a certain amount of sense, at least for the present. The consumer is providing an incredibly valuable asset to the company so the initial DNA analysis is cheap and probably subsidized to some extent. Presumably, Helix will sell access to this DNA data to various healthcare companies like pharma's, presumably anonymized. In addition, Helix will also sell specialized, "lifestyle" reports to the consumers whose DNA data they are holding. Where we probably need to end up regarding WGS data is for it to be generated and stored by a non-profit or governmental agency that would provide services to a broad swath of the population at little of no cost. However, it's not clear that the government would be able to mount such a broad effort compared to Helix. Perhaps the Precision Medicine Initiative referred to above can expand to offer such services. New "DNA analysis" companies then might emerge, offering low-cost interpretation of data held by the non-profit in the cloud. Unfortunately and with the growing problem of computer hacking, all such enterprises would offer a tempting target. In short, I am not sure whether any non-profit competitors to Helix will arise, at least in the short-term.

Cigna Continues to Expand into the Provider Side of Healthcare

It has become clear to me that some health insurance companies have decided to try to control some aspects of healthcare delivery as a cost-saving measure. Evidence of this trend was the recent decision by Cigna to partner with CVS' MinuteClinics. This new program applies only to Cigna's employer-sponsored health plans. (see: Cigna teams with CVS Health in collaboration to rival urgent care clinics). Below is an excerpt from the article:

In June,...[Cigna] and CVS Health announced the initiative [to partner with CVS] for Cigna's self-funded employer-sponsored health plans. Retail pharmacies are competing against traditional providers by offering convenient walk-in clinics....Roughy 45 percent of urgent care facility visits by its members could be conducted at retail clinics, potentially reducing healthcare costs by 81 percent per visit, Cigna said. The collaboration aligns Cigna-administered health benefits with CVS Pharmacy and CVS MinuteClinic retail healthcare services....Cigna Health Works can help patients who do not have a primary care doctor to find one by providing a list of Cigna-contract physicians from the health plan's provider network....Cigna Health Works beneficiaries get personalized pharmacy support through Health Tag Messages on the prescription bag to advise patients of needed health actions by the pharmacist or clinician, and provide information on available Cigna health and wellness coaching services included in their Cigna plan at no additional cost. They get contracted discounts at CVS MinuteClinic for select preventive and acute care, including biometric screenings for blood pressure, cholesterol and blood sugar as well as diagnosis and treatment for minor illnesses such as bronchitis, ear infections and strep throat.

I think that the most important idea in this quote is the following: roughy 45 percent of urgent care facility visits by its members could be conducted at retail clinics, potentially reducing healthcare costs by 81 percent per visit. This initiative is one attempt by Cigna to "bend the healthcare cost curve" by encouraging insured members to seek some of their primary care at MinuteClinics. It will be a much longer and harder road to greatly reduce costs in hospitals with them trying to secure their own financial stability and also their orientation toward fee-for-service rather than value based-care. I suspect that Cigna will have much more control over costs working with walk-in retail clinics with their relatively simple business plan and care administered by nurse practitioners (NPs). 

The article cited above lists some of benefits for consumers with Cigna's employer-sponsored health plans such as a discount for preventive and acute-care services. It's obviously a financial benefit for Cigna to cover the lower cost of the CVS clinic visits as well as spend more time on preventive measures and the performance of some simple lab tests. As I have said before, look for an expansion of the lab test menu performed in MinuteClinics (see: Details about CVS' MinuteClinic POCT Strategy). One initiative not yet attempted will be to enable the CVS nurse practitioners to perform blood draws with send-out tests sent to reference labs such as Quest or LabCorp. This could be accomplished today in those states where a physician order is not required for a lab test. As MinuteClinics prepare to address more serious conditions, such lab testing could be built into the diagnostic protocols used by their NPs.

Ancestry.com Uses Quest as Its Reference Lab for DNA Testing

I have wondered on occasion which reference lab was performing the DNA testing for consumer genealogy/genomic web sites like AncestryDNA.com and 23andMe. Part of the answer was recently revealed by the Dark Daily (see: AncestryDNA Collaborates with Quest Diagnostics to Provide Home DNA Testing to Healthcare Consumers). Below is an excerpt from the article:

Did you ever wonder which lab does all the genetic testing for Ancestry as it offers to help consumers learn more about their family histories?....[I]t is Quest Diagnostics...,one of the world’s largest clinical laboratory companies—that does the genetic sequencing on the consumer samples provided to it by Ancestry....[T]he number of individual samples in the Ancestry repository and database is now four million, according to information on its website. AncestryDNA (Ancestry) and Quest Diagnostics (Quest) now collaborate to help consumers learn about their family histories and unlock secrets in their DNA. Since August of 2016, Quest has performed the genomic testing for home DNA kits ordered through Ancestrydna.com....To utilize the AncestryDNA service, consumers must first order a DNA kit online through the Ancestry website. The cost of the kit is $[79]....The DNA test uses microarray-based autosomal DNA testing, analyzing as many as 700,000 changes in an individual’s genome....

[Ancestry.com] maintains...[that the company does] not claim ownership rights to DNA submitted to them for testing, and that they do not share DNA testing results with other entities and organizations without customer permission....Regardless of the debate over ownership of a person’s DNA, this collaboration between Ancestry and Quest Diagnostics is an example of a company relying on diagnostic industry vendors and clinical laboratories to perform services for its customers. It illustrates the need for clinicians and laboratory professionals to remain current on industry trends in ways that might help their labs to increase profits and provide value-added services to consumers. Ancestry’s growing volume of consumer testing demonstrates that there is a potential market for medical laboratories that make themselves available to consumers to answer questions and concerns about DNA testing.

AncestryDNA.com had announced its business relationship with Quest in August 2016 as a second diagnostic partner (see: Quest Diagnostics and AncestryDNA Collaborate to Expand Consumer DNA Testing). The article did not discuss the identify of the first partner. More details were revealed at that time about its new relationship with Quest:

Ancestry selected Quest Diagnostics after considering several laboratory organizations through a formal request for proposal process. Quest Diagnostics will perform genetic testing on Ancestry customer samples at its state-of-the-art laboratory in Marlborough, Mass. ....Opened in 2014, the 200,000 square foot laboratory can accommodate expected growing demand for AncestryDNA. Quest expects to begin performing testing for Ancestry in the first quarter of 2017. Over time, the two companies intend to explore additional opportunities such as developing tools and applications to guide people on building and understanding their "family medical tree."

Ancestry.com started as a genealogy company, enabling its customers to build a family tree on-line and providing access to historical records like U.S census reports as an on-line resource. 23andMe was launched as a consumer-oriented genomic testing lab but encountered resistance from the FDA (see: 23andMe Customers: Suckers or Empowered Consumers?). The company has moved in recent years in the direction of being a legitimate DNA medical reference lab (see: 23andMe Requests FDA Clearance for DNA Saliva Testing; FDA allows marketing of first direct-to-consumer tests that provide genetic risk information for certain conditions). It looks like AncestryDNA has decided to avoid any entanglements with the FDA by turfing its lab testing to Quest and restricting its interpretations for customers to genealogy issues, thus avoiding any legal and regulatory issues raised by genomic testing. At any rate, Quest's experience with large-scale DNA testing for AncestryDNA certainly prepares it to scale-up for genomic testing in Marlborough for all of its healthcare clients as demand for such testing increases. 

Pharmaceutical Companies Seek to Develop Relationships with Partner Labs

In a recent post, I discussed how Alexion, a pharmaceutical company, was obtaining test results from reference labs in an anonymized format as a means for tracking patient with PNH and aHUS (see: Reference Labs Provide Patient Test Information to Pharmaceutical Company). Such efforts were deemed necessary by the company because patients with these diseases are uncommon while the cost of drug treatment is astronomical. The company was thus highly interested in identifying patients who would potentially require drug treatment. Here's a quote from that previous note:

Seeking a way to fatten thinning profit margins and under the rationale of helping drug companies with research, labs began to sell blinded test results to data aggregators and drug companies. For Alexion, this arrangement started with a lab in Bangor, Maine, called Dahl-Chase, which helped develop the test to detect PNH. It expanded to other regional labs, including Machaon Diagnostics Inc. in Oakland, Calif., as well as national labs such as Laboratory Corp. of America Holdings, known as LabCorp, and Quest Diagnostics.

I have posted a number of notes in the past about companion diagnostics whereby positive tests for specified biomarkers are required by the FDA in order to justify treatment with some expensive drugs (see: Consideration of a Broader Definition for "Companion Diagnostics"; Companion Diagnostics Gains Wider Acceptance in FDA Despite Challenges; An Expanding Definition for Companion Diagnostics; A Closer Look at Companion Diagnostics Strategies; Cancer Immunotherapy Meets Companion Diagnostics). This is to ensure that the use of these drugs is appropriate with the companion test indicating that the drug treatment will be efficacious. Because of the growing relationship between drugs and lab test results, particularly with reference to drugs with high profit margins, pharma companies will certainly continue to create various "relationships" with reference labs.

What is the nature of these relationships to reference labs? First, the pharmaceutical company may develop special expertise in a technology like flow cytometry and will then seek to license its technology to reference labs. Pharma companies may also buy test results from lab directly or through an intermediary like Management Science Associates. Some drug companies might even try to purchase reference labs but this would probably not sit well with the FDA because of COI issues pertaining to companion testing. Therefore, I suspect that the pharma companies would like to keep their access to test results on a more arms-length basis.

An article from 2003 about "Rd-Dx" relationships suggested to me another and compelling reason for a deepening of the relationships between pharmaceutical companies and the diagnostic industry: the identification of new patients at an earlier point in the natural history of a disease (see: How to Make Rx-Dx Alliances Work). This would serve to increase the market for, say, an immunotherapy agent used to treat cancer (see: Screening and Early Detection). Here is the relevant quote from this article:

Rx Dx alliances, by definition, seek to identify new patients for a drug through the use of new diagnostic technologies. Thus, it is important that the partners come up with diagnostic guidelines and standards that will support the new technology. Although pharma companies can and should expect diagnostic partners to lead those efforts, it is important for both companies to work out shared costs in advance of product development.