Inside the Lab Industry: Recent Moves by Labs Suggest Tilt Toward Workplace Wellness

Is the increasing popularity of employee wellness programs creating a potential new revenue source for laboratories? Quest Diagnostics, the nation’s largest laboratory, and Health Diagnostic Laboratory (HDL), one of the largest regional labs in the northeast, may soon find out. Quest just spent an undisclosed sum to acquire Summit Health, a Michigan-based provider of on-site employee wellness programs. At nearly the same time the Summit acquisition was announced, HDL released an elaborate smartphone app that allows users of its lab services to check their test results and track their eating habits, among other options. Whether or not Quest’s and HDL’s moves signal that labs will be piling into the wellness realm, there is little doubt that corner of health care delivery is growing fast. More than 90 percent of companies with 200 or more employees offered such programs in 2009, according to a report conducted in 2012 by the Rand Corp. for the U.S. Department of Labor. Basic lab assays such as lipids and blood glucose are staples of such programs. Meanwhile, vastly more money is being invested in these initiatives than even in the recent past. According to a survey released last month by the National Business Group on Health, corporations plan to spend $594 per worker on employee wellness programs in 2014, up nearly 15 percent from 2013 and more than double the $260 spent per employee in 2009. The primary impetus is the endemic levels of obesity in the United States and accompanying chronic conditions such as heart disease and diabetes, which cost firms hundreds of billions of a dollars a year in additional health care costs and lost productivity. Provisions in the Affordable Care Act are also prodding such programs forward by cutting employer premiums by as much as 30 percent if workers meet goals such as weight loss and reductions in cholesterol levels and blood pressure. No doubt, Quest sees the ubiquity of such programs and the dramatic increase in cash being put into them as an alluring option. And one of the biggest motivators for such programs—the need for employees to keep health care costs in check—can also help labs in defining their role as the sector continues to shift from a volume to a value model. “Disease prevention and wellness programs are critical to better outcomes and lower costs. Together, our two companies will give employers, health plans, and individuals greater access to a uniquely broad range of prevention and wellness services that use diagnostic insights to inform early intervention and preventive care and ultimately reduce health care costs,” said Quest Chief Executive Officer Steve Rusckowski. Summit provides on-site services to some of the largest corporations in the United States, including IBM, Merck, and Pepsi (ironically, its client roster also includes Quest rival LabCorp), and has substantial payer contracts with UnitedHealthcare, Aetna, and Cigna. Its trademark product is Single Station, a 15-minute health screening that includes tests for lipids and blood sugar. Another 1,000 lab tests are available through Summit’s wellness program. The company also provides follow-up services such as lifestyle coaching and smoking cessation programs. At the time Quest acquired Summit, it was growing dramatically. The firm projected revenue would top $103 million in 2013, more than double the $50 million it reported in 2012. It opened an office in Arizona last year to accommodate its expanding operations in the western United States and more than doubled the staff at its headquarters in Novi, Mich. Aside from its primary work site business, Summit also has a burgeoning side business in home-based wellness testing, which accounted for about 2 percent of its overall revenue last year. How the acquisition plays out remains to be seen. Roy Manning III, an analyst with Seeking Alpha, noted that Quest did not release any data about its impact on earnings. “It’s a different trend for [Quest] to go in this direction,” said Peter Francis, president of Clinical Laboratory Sales Training in Woodstock, Md., adding that it was beyond the kind of straightforward lab acquisition in which Quest typically engages. Regulatory Changes Helped Launch HDL App Meanwhile, the recent changes in federal regulations that allow labs to directly transmit results to patients was one of the reasons HDL introduced its new app, called myHDL, which is available on both the iPhone and Android platforms. It allows users access to their biometric data (height, weight, and body mass index), as well as 42 different lab test metrics, including metabolic, renal, lipids, lipoproteins, myocardial function, inflammation, and platelets. HDL spokesperson Jeff Kelley indicated the recent regulatory changes that allow labs to provide patients with results directly without prior physician approval will prove a boon to the employee wellness market. That opinion is shared by ARCpoint Labs, the South Carolina-based workplace testing firm. “The quicker your employees can get their lab results, the faster they can pursue treatment for any abnormalities the lab tests reveal, including chronic illness, high levels of cholesterol, high blood pressure, and more. Armed with their lab results, your employees can also help you shape your workplace wellness programs to best fit your company’s needs,” said a recent entry on the company’s blog. ARCpoint’s chief executive officer, Felix Mirando, could not be reached for comment. Kelley noted that patients who participate in HDL’s wellness program, known as My Health Counts, are able to access their test results within seven days of a draw. The HDL data provided via the smartphone app is color coded green, yellow, and red to indicate whether a patient is in the optimal, intermediate, or high testing range. Each test result is also explained to the patient, as well as the risks attached to being outside of the optimal range. Aside from accessing their lab results, users of the app can also communicate with HDL’s clinical consulting team, keep daily diaries of their diets and food consumption, and trade photos of food with other users. The app was developed in conjunction with MedHelp, a San Francisco-based firm that creates fitness and lifestyle apps and tracking software. It is compatible with wireless devices such as the Fitbit, which tracks calories consumed, and the smart scale manufactured by the French firm Withings, which can broadcast news of weight loss to Twitter and several weight loss support Web sites. “We have always said that HDL is a health management company with advanced lab services, and having a tool for our tech-savvy patients to engage in their own health was an important piece for us to offer as part of our mission,” said HDL Chief Executive Officer Tonya Mallory. Mallory indicated that while the myHDL is not expected to significantly boost test volumes—tests cannot be ordered via the app—it is expected to better engage employees in wellness programs and hopefully bring down overall health care costs. And there are new iterations of the app currently in the pipeline. Francis noted that the greater transparency around obtaining lab results may indeed prompt patients to communicate more proactively with their doctors and could even lead to more lab tests. However, he cautioned, it could also wind up leading to patients overwhelming doctors. “It will create a different paradigm [surrounding] test results,” he said. Takeaway: The ever-growing employee wellness business and recent regulatory changes regarding how test results are transmitted may have created a new opportunity for labs both to grow their core business and to better prove their value in health care delivery.