Why hasn’t lab testing caught up with the 21st century?

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By Gary Frazier

Commerce is growing and changing at a pace that our world perhaps hasn’t seen since the Industrial Revolution. But the healthcare industry (including the lab testing sector) has yet to get in step with the evolving times.

Generation Z is now the world’s largest generation, forcing businesses to learn to cater directly to digital natives. A quality product that’s reasonably priced and almost always in stock is no longer enough to keep consumers happy. The product must move from an online cart to the consumer’s front doorstep in record time.

Countless companies balance quality, volume, price and speed by localizing their business model. Consumers receive goods and services sooner when those products are sourced and provided nearby. So why hasn’t the diagnostic testing market taken similar steps to deliver quicker results without sacrificing quality or affordability?

Our industry’s long-established, centralized model worked well enough for long enough. But it’s time to adapt our trade to a rapidly evolving world.

A brief, recent history of diagnostic testing

The current lab testing paradigm essentially began in 1988, when the Clinical Laboratory Improvement Amendments (CLIA) were introduced.

Before then, diagnostic testing operations generally fell into two categories: in-house laboratories in hospitals; and small, mom-and-pop laboratories. Smaller labs were very scattered, delivered uneven quality and were sometimes even corrupt, paying kickbacks to doctors who sent them test samples.

CLIA, which amended the Public Health Services Act, aimed to enact federal standards and increase oversight in diagnostic testing. And, in that respect, it worked.

By requiring all U.S. testing labs to earn certification, CLIA ensured testing operations large and small wouldn’t yield slipshod results or engage in unethical behavior. But CLIA certification is a lengthy, expensive process requiring regular inspections and preparation – for which smaller labs often lack resources and human capital. In consequence, these labs often evolved into niche players offering cancer testing, molecular testing or other specialized service.

CLIA also pushed initial heavy consolidation within the lab testing sector. Within 30 years of CLIA, Labcorp and Quest Diagnostics collectively owned roughly 54% of the market share. And no other company has cracked the 5% mark. They thrived by offering quality testing while handling a high volume of samples sent to a few processing locations, all at a low cost to customers. (We like to call this the “warehouse model.”) This near-duopoly left healthcare providers – and their patients – with relatively few options, especially locally.

Until a few years ago, this market setup worked quite well for the industry (despite being a duopoly). But then consumers’ expectations for how and when they receive goods and services – including healthcare – changed irrevocably.

An outmoded status quo

The 21st century brought unprecedented technology developments, resulting in a world that’s more flexible and individualized than ever. But it’s also impatient.

Growing tech capabilities led to the emergence of the gig economy. With it came a wave of decentralized, digitized, democratized services that help people save money and time without sacrificing quality. A few taps on a smartphone screen give consumers access to meal and grocery deliveries, ridesharing services and household goods – all serviced by people within driving distance of the consumer’s doorstep. COVID-19 drastically spiked demand for these services since consumers were more isolated and individualized than ever.

Meanwhile, the lab industry hasn’t figured out how to truly meet consumers where they are. While the “warehouse model” of LabCorp and Quest doesn’t skimp on quality and keeps costs relatively low, it fails to meet another important criterion of modern commerce: speed.

Doctors, hospitals, clinics and other customers from around the country send their test samples to a high-traffic, non-localized processing site. There, they enter a queue of countless other samples. People wait days, weeks or longer for results needed to keep their lives moving – something a world of digital natives is loath to tolerate. (The pandemic only exacerbated this problem, which is why we formed Worksite Labs – more on that later.)

This inefficiency goes beyond individual consumer satisfaction: It has clinical and organizational impact as well. Speedy lab results affect your doctor’s ability to provide effective treatment. Likewise, if your employment at a new company is pending a drug test, your employer can’t onboard you until your results finally arrive.

The lab testing industry must catch up to the ways of the world. That’s where we’re taking it.

A new way to do an old thing

Many companies do diagnostic testing well. But what sets us apart is how we’ve made lab testing more agile, adaptable and modern than ever before.

We’ve engineered a decentralized lab model that eliminates potential risks including transit issues, contamination and supply chain holdups. This model works – we’ve used it at scale to deliver hundreds of thousands of quick-turnaround COVID-19 test results over the past two years. It’s kept things moving for consumers who need testing for travel, work and other functions. And it’s fueled our partnerships with various organizations to facilitate testing (and contact tracing) for the people they serve.

Worksite Labs serves these customers with what we like to call a “labbing local” model. We tailor a specific unit of team members and resources that delivers localized diagnostic testing services at full capacity. If our customer’s testing needs change, we can easily add more staff and resources to the existing operation or reallocate them to wherever else they’re needed.

The real magic, though, lies in our ability to minimize turnaround time. Our flexibility in location and size lets us set up testing operations either on-site or within easy driving distance of our customers and prevent bottlenecking. Rather than shipping test specimens off to a distant warehouse (which adds another layer of risk in losing samples), we simply take them to our own local lab and process them without further ado. Individuals get the fastest possible results, guaranteed.

Our speed and efficiency don’t just keep consumers happy at the back end. The employers, organizations and healthcare providers who procure tests on their behalf get peace of mind when they receive trustworthy results ASAP. Not to mention, they protect their bottom line by getting just the right amount of testing they need, making every dollar count.

By mixing speed, quality, capacity and affordability, ours is a lab testing model truly built for the modern age.

Gary Frazier is CEO of Worksite Labs. Chief Financial Officer Craig Beam and Chief Strategy Officer Adit Parasuram also contributed to this blog post.

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