PAML, Cleveland Clinic Labs To Share High-End Tests

The Cleveland Clinic Laboratories and Spokane, Wash.-based PAML, which entered into a semiformal strategic alliance last year, have disclosed the first steps the partnership will take. PAML recently announced that the two laboratories would perform testing for one another for specific assays on their menus. PAML Chief Executive Officer Francisco Velázquez said the agreement covers “several dozen” tests. The terms of the agreement prohibit Velázquez from disclosing which tests will be shared, although he indicated they were mostly high-end assays that focus primarily on cardiovascular, genetics, and oncology diagnostics, among other specialties. “We identified areas where we had an opportunity to have better test menus together. What that basically means is the Cleveland Clinic will send testing to PAML, and PAML will send testing to the Cleveland Clinic,” he said, adding that the arrangement will fill some gaps in the menus of both labs for complex tests. Cleveland Clinic officials did not immediately respond to a request seeking comment. Both labs have sophisticated transportation networks—PAML has clients as far east as New Jersey—so the test-sharing collaboration is not expected to incur additional costs. Velázquez also noted that the turnaround times already in place for these assays would be unchanged. “Mainly, we had to work together, develop some logistics and infrastructure, but there was minimal incremental cost,” he said. Velázquez did not disclose what the annual shared test volume would be under the collaboration. Velázquez added that the next step in the collaboration—test development—would commence within the next six months. The two labs had announced last year they had entered into a strategic alliance, but few details had been released until now. Susan Steagall, a laboratory industry consultant in Salem, Ohio, suggested the collaboration is fairly unique. Most such partnerships, she observed, have come between academic laboratories or those with large stakes in managed care, such as Kaiser Permanente or the Geisinger Health system. Heather Creran, an Atlanta-based laboratory business consultant, believes that providers are compelled these days to seek unusual alliances. “It is not surprising that two leaders in the evolution of health care such as Cleveland Clinic and PAML are collaborating,” she said. “In order to survive, traditional health care companies will quickly need to figure out how best to deliver health care more efficiently, conveniently, and at a lower cost. It will be imperative for health care providers to partner, even with entities that they may have considered competitors in the past.” And given the current laboratory business environment, “I can see where [such alliances] could become a trend,” Steagall observed. Velázquez said the collaboration came as a result of PAML’s reaching out to a variety of large laboratories to seek an alliance. He noted that the Cleveland Clinic’s lab was the only one whose management was interested in working together without a focus specifically on the bottom line. “I was somewhat disappointed that our other colleagues in the industry did not do this for something greater than ourselves,” he said. “It’s not ‘What we are going to do for me, and how much should we charge you?’ but how can we develop a better model [for care].” Regarding test development, for example, working together would eliminate duplicative costs for research and allow both labs to offer the tests down the line. Velázquez said he did not believe that new facilities would need to be constructed for this stage of the collaboration. Takeaway: The collaboration between PAML and the Cleveland Clinic Laboratories has been positioned as less of a business arrangement and more as a path toward improving both laboratory operations and clinical care.