Focus On: Quest-Walmart Deal Latest in Mass Retailing of Lab Tests

Laboratory test products have been appearing on the shelves of mass retail stores with growing frequency. But the newly announced partnership between Walmart and Quest Diagnostics raises eyebrows because of the sheer size and strength of the participants.

Terms of the Deal

The plan is for Quest to open co-branded lab service centers at 15 Walmart stores in Florida and Texas by the end of the year. Initially, the centers will furnish just testing services, but are expected to expand over time to include other basic health care services. “By providing lab testing and healthcare services where people also shop, we will make it easier for Walmart customers to get the quality diagnostic insights they need in convenient locations,” noted Quest CEO Steve Rusckowski.

Quest has been a leader in collaborating with mass retail with over 100 company-branded patient service centers (PSCs) at Albertsons companies’ grocery stores (Safeway, Vons, Randalls and Tom Thumb) across California, Colorado, Maryland, Oregon, Texas, Virginia, and Washington. By doing the Walmart deal, Quest has expanded the model beyond grocery.

For its part, Walmart hailed the deal as making its stores into a “one-stop shop” for customers’ everyday health and wellness needs. The Quest partnership enables the retail giant to extend its current health care offerings which include free health screenings like blood pressure readings at all U.S. stores and vaccines in select stores.

The Brick and Mortar Model

The Quest-Walmart deal follows the typical model for collaboration between labs and mass retailers in which co-branded PSCs are established at store locations. These arrangements have proven to be a positive for both sides. The stores benefit from the extra foot traffic and added customer convenience; labs get to leverage their retail partners’ real estate assets to generate incremental volumes and greater exposure.

The Cloud Model

Of course, the strategy is not confined to brick and mortar settings. Not surprisingly, Amazon has been among the most active in adapting the model for online retail. So far, most lab tests on Amazon have been sold through third parties. But last November, Good Start Genetics became the first genetic testing firm to establish a direct partnership with Amazon to provide physician-ordered tests online, namely Good Start’s VeriYou next generation sequencing test for couples planning to have kids. The dynamic: Customers must register online, furnish family history and provide consent. A licensed physician then reviews the data and decides whether to order the test. The customer can then buy the test on Amazon for $149.

DTC Applications

Both models have also been adapted for direct-to-consumer (DTC) applications allowing customers to order tests without a physician’s order in states where such arrangements are permitted by law. The ill-fated Walgreens-Theranos partnership was a notable example of the former to a brick and mortar setting. Online examples include Quest’s newly launched QuestDirect empowering consumers in Colorado and Missouri to order designated tests online without a physician’s order.