As coronavirus pandemic emerged, the Minnesota reference laboratory surged its testing capacity from 2,600 to 20,000 samples per day in an effort to meet ever-increasing demand
Over the past several years, medical laboratory workforce shortages worldwide have challenged clinical laboratory managers to process increasing numbers of clinical laboratory tests with fewer staff. But that did not prepare them for the Herculean task of processing millions of tests each week! According to the CDC’s COVID Data Tracker, as of January 11, 2021, labs nationwide have processed 264,642,631 PCR tests since the start of the SARS-CoV-2 pandemic.
How were medical laboratories able to ramp up their processing capability so quickly? Here’s one example.
A Massive Undertaking at Mayo Clinic Laboratories
On March 12, 2020, Mayo Clinic Laboratories (Mayo) of Rochester, Minn., became one of the first hospital-affiliated reference labs in the country to develop a test for the SARS-CoV-2 coronavirus. At that time, the Minneapolis Star Tribune reported, Mayo was processing 200 to 300 COVID-19 tests/day. By late March through early April, 5,000 to 6,000 COVID-testing samples were arriving daily, but the lab’s capacity topped out at 2,600 samples/day. Today, however, Mayo Clinic Laboratories processes 20,000 samples each day.
How did the Mayo increase its capacity to meet unprecedented demand for COVID-19 testing? According to the Rochester Post Bulletin (Post Bulletin) the laboratory’s tenfold increase in testing capacity “required a massive undertaking of planning, hiring, construction, acquisition of equipment, and a lot of imagination and adaptation.”
The Post Bulletin reported that Mayo Clinic Laboratories started with one advantage—it already owned two automated Roche cobas SARS-CoV-2 systems that had received emergency-use authorization (EUA) from the FDA in March to test for the novel coronavirus.
But as demand for processing kits rose worldwide, the clinical laboratory could obtain only enough kits to process 4,500 tests per day, effectively limiting testing capacity to half, the Post Bulletin reported.
Mayo responded to the supply-chain disruptions by adding less-automated platforms to their testing arsenal. But using systems that required more manpower and took longer to process tests meant lab managers needed to hire even more staff.
During a two-week span in November, the laboratory added 180 new staff, four times the number of new hires in a typical year. To get new hires on the lab floor faster, a two-week orientation course was transformed into a condensed one-day training session. Other spots were filled by employees transferring in from other departments.
The photo above shows “Racks of COVID-19 test samples [being] unpacked and carted to available testing stations at the Rochester lab.” According to the Rochester Post Bulletin, “Mayo Clinic staff and volunteers handle tens of thousands of COVID-19 test samples daily from around the country at the Mayo Clinic Laboratories in Northwest Rochester.” (Photo and caption copyright: Rochester Post Bulletin/Ken Klotzbach.)
“It was kind of crazy. The size of the lab area just kept growing and growing,” said Ben Larson—who volunteered to move from his job as a lab processing assistant to a crew that processed COVID-19 samples in the Hepatitis/HIV Molecular Laboratory—in a Mayo Clinic Laboratories Insights blog post. “I thought it was cool, seeing all the COVID news and being able to say, ‘I’m actually working in the lab that’s doing the testing.’ It’s something I’ll tell my kids and grandkids. When there was the huge pandemic, I was working at Mayo Clinic as one of the people on the frontlines.”
Linda Spiten, Operations Administrator, Mayo Clinic Department of Laboratory Medicine and Pathology (DLMP), credits much of the lab’s success to the 400 DLMP staffers who shifted to different roles for the COVID transformation.
“We were definitely building the car as it was rolling down the street, because so much was hitting us so fast. But our staff is resilient and gracious. Knowing we didn’t have all the answers, but trusting, they took a leap of faith that we could work it out,” she said in the Insights blog post. “Many people made many sacrifices to work nights and weekends. We had people in labs working for weeks on end training in new folks, so we could make sure we had people ready to go. It was incredible.”
“A team of [clinical] technicians verify COVID-19 samples before passing it on for testing,” at Mayo Clinic Laboratories, Rochester Post Bulletin reported. (Photo and caption copyright: Rochester Post Bulletin/Ken Klotzbach.)
Clinical Laboratory Staff Shortages a Widespread Problem
Mayo Clinic Laboratories is not alone in facing supply-chain interruptions and staffing shortages during the pandemic. An Association for Molecular Pathology (AMP) survey in August of 2020 revealed the extent of the problem. More than 85% of respondents reported supply chain interruptions had delayed and/or decreased testing. The shortages most often cited were:
swabs (60%),
transport media (53%),
testing kits (34%),
reagents (33%),
testing platforms (32%).
Eighty-five percent of those surveyed said they have staffing shortages as well:
more than half (53%) reported not having enough medical technicians.
To manage these shortages, Mayo Clinic Laboratories found innovative ways to transform its operations. The Post Bulletin noted the lab implemented an employee’s suggestion to mark lab coats with color-coded duct tape, so that new hires could more easily identify supervisors’ roles and departments.
The need for added refrigeration was solved by parking 53-foot refrigerated trucks at the lab for storage of up to 15,000 pounds of dry ice each week, a changed that necessitated installing new doors on the building.
And according to the American Association of Clinical Chemistry (AACC), Mayo Clinic Laboratories also added a third shift to the workday to increase capacity and enable lab technologists to work spaced six feet apart.
“This management team has taught us to think on our feet,” lab worker Jane Masching told the Post Bulletin.
Infectious Disease Specialist Joseph Yao, MD, was tasked with coordinating the surge in Mayo Clinic’s testing capacity to 20,000 samples a day, an amount that still falls short of demand.
“I said we had better be prepared for the worst,” Yao told the Post Bulletin, noting the lab has received up to as many as 50,000 COVID test samples in a single day. “We’re still 15, 20 thousand behind. We’re always behind by about 24 hours.”
But some say there is reason to remain positive. Though the COVID-19 pandemic has clearly stretched clinical laboratories’ ingenuity, staffing, and workflow, Christopher Doern, PhD (above), Director of Clinical Microbiology at Virginia Commonwealth University School of Medicine in Richmond, Va., believes there is a silver lining for the clinical laboratory profession. He says the general public now has firsthand knowledge of the value of clinical laboratory medicine and its important role in patient care.
Nevertheless, while Mayo Clinic Laboratories is a prime example of how an organization can bring together the resources needed to meet the demand for COVID-19 tests, many clinical laboratories in the United States still struggle to hire more staff for the lab, as well as to obtain the needed volume of SARS-CoV-2 test kits and supplies.
Also called a ‘bundled payment’ model, under this plan, hospitals and clinical laboratories will receive ‘lump sums’ for certain healthcare procedures
Employers and insurers continue to move healthcare providers away from fee-for-service (FFS) payment models and toward value-based reimbursement arrangements, also called Pay for Performance or bundled-payment models. While intended to save money, such payment models can have adverse financial consequences for clinical laboratories that are dependent on billing for each individual procedure.
Medical laboratories and anatomic pathology groups should closely monitor these moves. Labs are increasingly being asked to participate in contracts where they are not paid for specific services, but instead required to participate in per-member-per-month-fee arrangements with the lab assuming at least some utilization risk. This is coming.
The latest example involves Connecticut and Maine. Both states recently announced plans to use bundled payments for certain health services as part of their state employee health plans.
Incentivizing Quality in Connecticut
With an FFS model, healthcare providers bill insurance companies, government agencies, and consumers for all individual healthcare services rendered. Under the fee-for-service payment model, every visit to a medical provider, every procedure, every test and every drug administered for a particular health issue are itemized and billed separately.
However, in an interview with Connecticut Public Radio (WNPR), Josh Wojcik, Policy Director, Connecticut Office of the State Comptroller, said, “The incentives in that [FFS] model are problematic. It incentivizes volume. It does not incentivize quality.”
By contrast, with a bundled or episode-of-care payment model, providers and healthcare facilities are paid a lump sum for all services performed to treat a patient for a particular health issue or episode within a certain time frame. Some believe this type of payment model could help curtail skyrocketing medical costs, while delivering a high level of care for patients. But it is not an easy change.
“It’s heavy lifting, and it’s important because we are talking about realigning the incentives in the healthcare system,” Kevin Lembo, Connecticut State Comptroller, told WNPR.
Connecticut Centers of Excellence for Healthcare Services
Connecticut also introduced a plan to identify certain hospitals and medical facilities as “Centers of Excellence” and encourage their state employees to utilize those facilities for medical procedures. In addition, the state has negotiated a 5% to 10% discount on procedures performed at these facilities.
“We’re not just telling them what we are going to pay them. We’re negotiating. We expect savings,” Wojcik told WNPR.
The state of Connecticut has approximately 250,000 employees and retirees who are currently covered under the state’s health insurance plan. The Comptroller’s office estimates that these changes will result in a savings of about $95 million annually.
“What makes me even more excited is, if we can get this right with a quarter million people, pretty soon quality of care increases and cost increases slow not just for our folks, but for everyone,” Lembo said.
Maine Implements Bundled-Payment Model for Surgical Care
The state of Maine also introduced a healthcare plan where state employees, their dependents, and early retirees are encouraged to use designated facilities for some surgical procedures under the state’s Center-of-Excellence (COE) program.
Through a partnership with the Healthcare Purchaser Alliance of Maine, a non-profit collaborative of private employers and public trusts, Carrum Health, a cloud-based platform that connects employers and employees with COEs for surgical procedures, pairs the state’s patients with selected providers and bundled-payment options for more than 100 musculoskeletal, bariatric, and cardiovascular procedures.
In a news release, Sachin Jain (above), Founder and CEO of Carrum Health, said, “Carrum Health is excited to partner with the state of Maine to improve employee benefits while reducing the cost of care. This partnership further demonstrates our continuing ability to meet the needs of large public sector employers.” While Maine’s bundled-payment model for surgical care may indeed save the state money, might clinical laboratories soon be required to give up billing for all individual services? (Photo copyright: Carrum Health.)
Patients who utilize the health plan in Maine will not have to pay a deductible or any cost sharing and may receive medical services at any healthcare facility in the Carrum network nationwide. Self-insured employers who use the Carrum network typically pay up to 35% less for services, Modern Healthcare reported.
Under Carrum’s bundled-payment plan, the company pays a fixed price for medical procedures and clinical care associated with each episode of care. This fee covers consultation, the cost of any procedures, facility costs, and all professional expenses. Any readmissions or complications related to the treatment will also be covered for a period of 30 days after the initial date of the procedure.
Jain hopes the new agreements—such as the one with the state of Maine—will serve as a catalyst for more companies and organizations to change to bundled-payment methods for episodes of care.
“Before, hardly any providers in Maine were interested in bundles,” Jain told Modern Healthcare. “But now that a large, sophisticated employer like the state of Maine is seeing the potential, providers there are very interested in working with us. It greases the wheels for more providers to adopt bundled payments.”
Bundled-payment plans continue to gain in popularity as employers, health insurers, and Medicare officials seek ways to lower costs while simultaneously providing high-quality care and improving patient outcomes. However, clinical laboratories and anatomic pathology groups have long depended on fee-for-service billing and may find it difficult to receive payments as part of an episode-of-care or bundled-payment arrangement.
Coronavirus pandemic expected to spur wider acceptance of drone delivery services for clinical laboratory specimens and medical supplies
Routine delivery of clinical laboratory specimens and medical supplies by drone moved one step closer to reality with news that Walmart (NYSE:WMT), Quest Diagnostics (NYSE:DGX), and DroneUp of Virginia Beach, Va., are partnering to bring at-home self-collection COVID-19 test kits to residents of several areas hard hit by the COVID-19 pandemic.
In its race to keep pace with online retailer Amazon (NASDAQ:AMZN), Walmart last September implemented two drone-delivery trials. One, according to Progressive Grocer, is with Tel Aviv, Israel-based drone company Flytrex, to deliver select grocery and household essentials in and around Fayetteville, N.C. The other trial program is with drone company Zipline of San Francisco, to test delivery of certain health and wellness products to areas around Walmart’s headquarters in Bentonville, Ark., Progressive Grocer also reported.
Then, Walmart announced a third pilot project for home delivery—one that could potentially affect clinical laboratories. This time, in collaboration with Quest and DroneUp, Walmart is piloting delivery of at-home COVID-19 collection kits in North Las Vegas, and Cheektowaga, New York, a Walmart news release stated.
Is this yet another example of how the COVID-19 pandemic will continue to drive shifts in delivery of key healthcare services? Probably.
According to Walmart’s news release, “Patients who qualify for drone delivery of the COVID-19 self-collection kits must live in a single-family residence within a 1-mile radius of the designated [Walmart] Supercenters in North Las Vegas and Cheektowaga. The kits will land on the driveway, front sidewalk, or backyard of the customer’s home, depending on where there are cars and trees. There is no delivery or kit cost for customers electing to receive an at-home [COVID-19] kit delivered via drone. Once the kits are delivered, the person will perform a self-administered nasal swab in the privacy of their home and send their sample back to Quest Diagnostics for testing using the included prepaid shipping label.”
Click the image to watch the short video that demonstrates Walmart’s home delivery service of at-home COVID-19 test kits. Clinical laboratories in these areas may wonder how Walmart’s new drone-delivery service will impact their own specimen delivery programs. (Photo/video copyright: Walmart.)
The giant retailer’s expanding use of drone delivery systems will likely lead to greater acceptance among consumers of unmanned aerial vehicles for delivering all sorts of personal items, as well as various types of clinical laboratory specimens. If consumers embrace drone delivery systems, clinical laboratories with existing courier and logistics networks may experience another disruption in how they do business.
In a news release following the announcement of a yet another drone-delivery service of COVID-19 at-home test kits—this time in El Paso, Texas,—Amanda Jenkins, Vice President of Operation Support and Implementation, Walmart US Health and Wellness, said, “Walmart has been serving the El Paso community throughout the pandemic with drive-thru testing sites and extended testing hours, and we wanted to provide another way to access testing that provides convenience and leverages technology, while learning how drones could impact the delivery of healthcare in the future,” KTSM-9 TV reported.
Drone Delivery Systems Worldwide for Healthcare
The United States is not the only country turning to drone technology to speed deliveries and reduce person-to-person contact during the pandemic. A World Economic Forum blog post outlined the critical role drones are playing in China, the world’s most populated country, as it responds to the health crisis.
“At the moment of life and death, the air transport network can significantly confine the flow of people, avoid unnecessary physical contact, and prevent secondary transmission,” Lv Yinxiang, Secretary of the Party Committee of the County People’s Hospital, said in the blog post. “Medical samples delivered through air can shrink the delivery time … while saving precious field resources.”
Amazon also is predicting a bright future for drone delivery of all types of goods. In August, Amazon’s Prime Air drone delivery service received approval from the Federal Aviation Administration (FAA) to operate its fleet of drones, CNBC reported. Amazon launched its drone project in 2013 and began the process of seeking FAA approval in 2019.
And in “WakeMed Uses Drone to Deliver Patient Specimens,” Dark Daily’s sister publication, The Dark Report (TDR), reported on UPS’ launch of a drone delivery service on the WakeMed Health and Hospitals medical campus in Raleigh, N.C. The implementation followed a two-year test period during which UPS used drones manufactured by Matternet of Menlo Park, Calif., to fly clinical laboratory specimens from a medical complex of physicians’ offices to the health system’s clinical laboratory.
COVID-19 Pandemic Drives Drone Delivery System Development
Tom Ward, Walmart’s Senior Vice President for Customer Product, predicts the drone delivery systems being rolled out during the COVID-19 pandemic will increase the use of contactless delivery for all types of deliveries, not just healthcare.
“There’s a lot we can learn from our drone delivery pilots to help determine what roles drones can play in pandemic response, healthcare delivery, and retail,” he said in the Walmart news release. “We hope drone delivery of self-collection kits will shape contactless testing capabilities on a larger scale and continue to bolster the innovative ways Walmart plans to use drone delivery in the future.”
The widespread use of drone technology appears to be soaring to new heights as the COVID-19 pandemic moves forward into the new year. Clinical laboratory managers will want to keep their eyes on the skies as this new delivery system becomes more commonplace and potentially disrupts the way laboratory specimens traditionally have traveled to and from medical laboratories.
The key to success with pooled testing, says the lab’s director, is having the right personnel and equipment, and an LIS that supports the added steps
Experts believe pooled testing for COVID-19 could reduce the number of standard tests for SARS-CoV-2 by conserving testing resources and cutting lab spending on tests and testing supplies. However, some clinical laboratories have found pooled testing causes inefficiencies due to the lab’s lack of staff, limitations of existing equipment, and biosafety hood space, as well as not having a laboratory information system (LIS) that can manage the large volume of specimens and retesting involved in pooled testing.
One such example is the microbiology lab at 562-bed University of Vermont Medical Center (UVMC) in Burlington, Vt. After evaluating the pooled-testing method, Christina M. Wojewoda, MD, pathologist, Director of Clinical Microbiology at UVMC and an Associate Professor at the Larner College of Medicine at University of Vermont, decided last summer not to do pooled testing, due to the manual steps that the process requires.
The manual steps include having clinical laboratory scientists work under protective hoods to limit the virus’ spread, and both hood space and med techs are in short supply at UVMC, she explained during an exclusive interview with The Dark Report, Dark Daily’s sister publication.
“Our evaluation then is the same as it is now,” she commented. “The barriers to pooling still hold true. Instead of pooling, we keep up with the volume of COVID-19 samples by balancing in-house SARS-CoV-2 testing and send-out testing.”
Low Viral Load a Problem in Pooled Testing for SARS-CoV-2
Another problem, Wojewoda added, is when one patient’s sample in a pool of specimens has a low viral load of SARS-CoV-2. Clinical labs in some states have found that when the prevalence of the novel coronavirus in the population is below 5%, then pooled testing could be an effective testing strategy. However, although Vermont has a relatively low presence of the COVID-19 virus in the population, Wojewoda remains concerned about the viral load in a pooled sample.
“For us, it is less of an issue with prevalence in the population than an issue with low viral load in one patient sample, and that can happen with any prevalence level,” she said. “If there is a low level of virus in one sample, and that sample is combined with samples from four other patients to create the pool, you could dilute the virus below the assay’s level of detection. That means you could miss low-level positive patients.
“When we first considered pooling, we worried about missing those patients, but since then we’ve learned more about the SARS-CoV-2 virus,” she continued. “Now, we now know that patients start producing high levels of virus quickly and that low virus levels often occur toward the end of their infection, after they’ve probably been tested or identified.
“That means we’re less concerned with low levels of virus now than we were initially, at least when pooling five specimens in one tube. But it’s still something to watch for,” she noted.
What About Too Much Virus?
The opposite of this problem also is a concern. If the incidence of infection is too high in a population, then pooled testing could produce too many positive results. The required retesting then makes the process inefficient.
Wojewoda has heard similar concerns from her colleagues at other medical laboratories. They said they were not doing pooled SARS-CoV-2 testing for some of the same reasons.
“When we looked into pooled testing, a number of complications made it impractical,” she said. “Instead, we have been testing each patient individually.”
When patient COVID-19 samples exceed 500 in a day, UVMC sends those specimens to the Broad Institute in Cambridge, Mass., for testing.
During the summer, the rate of COVID-19 infections in Vermont was at about 1%, Wojewoda noted. In the last week of December, the Vermont Department of Health reported the seven-day average percentage of positive tests was 2.2%.
Laboratory Information System Challenges When Doing Pooled Testing
In addition to her concerns about the level of detection, UVMC’s laboratory information system (LIS) was another worry. “Clinical laboratories are designed to test one sample and get one result, and that one result goes into one patient’s chart,” she explained. “But when the lab makes a pool of, say, five patients’ samples, those five results need to go into five patients’ charts.
Wojewoda estimates that manual data entry for each of those results takes a solid minute per sample. “That’s not a lot, but it adds up over time, and it’s not something we do normally.”
Normally, lab test results get filed automatically into the patient’s chart, and then those results are available to patients online, she noted.
“There may be multiple fixes for this problem of accurately and efficiently getting pooled test results into the LIS, then reported to each individual patient, but for us the current state of our computer system requires that we enter each result into each patient’s chart manually. We try not to do that as much as possible because of the potential for errors from manual entry,” she said.
When Automation Falls Short
In addition, Wojewoda said that pooled testing cannot be automated the way most standard clinical laboratory tests are run.
“With routine testing, we put a sample on the instrument and let the test run,” she explained. “When we get the result, it goes into the patient’s chart. But, for pooled testing, we have to collect five samples and then pause to manually put a little bit of each of those five samples into one tube. Then, we put that tube on the instrument.
“After we get the results, we manually report the negative results into each patient’s chart,” she continued. “But if they’re positive, then lab staff must find the five tubes and test each one individually. Therefore, we’re doubling the time it normally takes to produce and report a positive result for SARS-CoV-2.”
Any positive results in a pooled sample, she explained, are held up at the instrument so that the lab staff can pull those five samples from the pool and test each one individually. “Then those individual results go into each patient’s chart, because potentially only one of the five might be positive. We don’t want all five of those patients to be labeled as positive if only one is positive,” she added.
Pooled testing for COVID-19 adds a layer of complexity that the UVMC lab does not normally do, noted the lab’s Director Christina M. Wojewoda, MD (above), a pathologist and Director of Clinical Microbiology at the University of Vermont Medical Center (UVMC) in Burlington, in an interview with The Dark Report. She added that the lab’s staff is already stretched thin and doing as much as possible. “In all these ways, pooled testing is different from how we usually run clinical lab tests. It’s clear that the idea behind pooled testing is to improve efficiency, and yet the need for manual data entry and pulling pooled samples apart create inefficiencies,” she commented. (Photo copyright: University of Vermont.)
Shortage of Lab Techs and Hood Space Compound Inefficiencies of Pooled Testing
Another problem is the requirement to pipette each specimen, she noted. “All infectious samples require hood space and a lab technician to do the work under the hood. But both hood space and lab techs are in short supply.”
Wojewoda explained that some tests being run at the UVMC lab are not being tested from the primary tube.
“There’s often a step where we take some of the primary sample and put it into a tube or cartridge for the test. Then, we put multiple samples together, and we have to pipette each one into the tube without cross contaminating the other samples,” she explained.
“At the same time, we have to track the five patient samples so that we can find the original specimen for testing if we need to do so later. All those steps take more staff time.
“So, while pooled testing saves reagents, it also takes more staff time for pipetting and data entry and the need to record which samples are in which tubes,” she noted. “That might require a spreadsheet or other electronic means to track which samples come from which patients.
“An automated way to do the pipetting would be helpful and would increase staff safety,” she added. “I worry when we’re working with something as infectious as SARS-CoV-2, because the lab techs must dig swabs out of liquid media before discarding them, while being careful not to contaminate anything around them.”
Pooled testing for COVID-19 clearly has potential. But, as Wojewoda explained, it brings complications that can cause inefficiencies. Clinical laboratory managers will want to evaluate existing instrumentation, automation, staffing, and laboratory informatics capabilities to determine if and how their labs would experience similar inefficiencies before a final decision to begin a program of pooled testing for COVID-19.
Consolidation of hospitals and health systems means consolidated medical laboratory services as well, and that impacts laboratory revenue and staff
Though COVID-19 shifted many healthcare systems’ priorities in 2020—including quite dramatically altering the priorities of the nation’s clinical laboratories—the SARS-CoV-2 pandemic does not appear to have slowed the pace of healthcare mergers and acquisitions. Many such deals are kept secret until closed by Dec. 31. They are then then announced after Jan. 1, so we may see additional big and surprising healthcare acquisitions announced in coming weeks.
Leaving aside the shock waves brought about by COVID-19, transformational changes to the healthcare community have been underway for a while.
In his article on HealthManagement.org, healthcare consultant Paul D. Vitale, MPA, FACHE, noted that for the past several years, health systems have set records in the mergers and acquisitions space. In 2017, he noted, there were more than 115 deals, and by 2019, there was a series of “mega” mergers, each worth more than $10 billion. The pattern continued in 2020, even with economic concerns brought about by the pandemic.
“According to many health systems, acquiring another organization, or merging with it, holds the key to future success. Faced with intense pressure to cut back on costs, mergers and acquisitions can leverage the economies of scale,” he wrote.
Below are several “deals” that closed in 2020 or are expected to close in 2021.
Pre-merger, Atrium Health’s network included 41 hospitals and 900 care locations, while the Wake Forest Baptist Health system was comprised of 42 hospitals and 1,500 care locations. Plans are underway to build a second campus for the school of medicine, where 3,500 students will be trained in more than 100 specialized programs.
“The impact of the strategic combination will be far-reaching, elevating North Carolina as a clear destination of choice to receive medical care for people all across the nation,” Julie Ann Freischlag, MD (above), CEO of Wake Forest Baptist Health and Dean of Wake Forest School of Medicine, told Healthcare Finance News. “Through our combined, nationally recognized clinical centers of excellence in multiple specialties, we will be able to expand our research in signature areas, such as cancer, cardiovascular, regenerative medicine and aging, and target bringing research breakthroughs to the community in less than half the time of the national average.” Freischlag will serve as Atrium Health’s Chief Academic Officer as well. (Photo copyright: Triad Business Journal.)
Doctors Acquire a Controlling Stake of Steward Health Care
In June, physicians in Dallas purchased a controlling stake of Steward Health Care through a structured recapitalization transaction. Though not strictly a merger and acquisition, the deal represents a similar transformational change of a health system. The change makes Steward the largest physician-owned-and-operated health system in the country, noted a news release.
Ralph de la Torre, MD (above), CEO and founder of Steward, says the industry is in the midst of a transformational moment. “The COVID-19 global pandemic has exposed serious deficiencies in the world’s healthcare systems, with a disproportionate impact on underserved communities and populations,” he stated in the news release. “We believe that future healthcare management must completely integrate long-term clinical needs with investments. As physicians first, we will focus on creating structures and timelines that meet the long-term clinical needs of our communities and the short-term needs of our patients.” (Photo copyright: The Boston Globe.)
Harrington Healthcare System and UMass Memorial Health Care
In January 2020, Harrington Healthcare of Massachusetts announced it was pursuing a corporate affiliation with UMass Memorial Health Care. The transaction was expected to be finalized by 2021.
“When we entered into our initial agreement with UMass Memorial in January, we had no idea what the next several months would bring,” said Ed Moore (above), President and CEO of Harrington Healthcare, in a news release. “Our team performed exceptionally well, and the community supported us every step of the way, but we could not have provided the outstanding care we did without the partnership and support of the clinical team at UMass Memorial. This experience redoubled our confidence that becoming part of the system would offer maximum benefit to our community at a time that requires flexibility, scale, and resources.” (Photo copyright: Worcester Telegram.)
Will More Announcements Come in 2021? Probably
For clinical laboratory managers and pathologists, the healthcare mergers and acquisitions of greatest interest are those that involve hospitals and health systems. When two big health systems merge—such as the transaction involving Atrium Health and Wake Forest Baptist Health—one of the first clinical services to undergo rationalization and consolidation is the clinical laboratory. One reason for this is because it is much easier to move more lab test specimens around the system than it is to move patients. So, many healthcare merger and acquisition deals directly affect the medical laboratory professionals employed by the institutions involved in the transaction.
Despite the pandemic—or because of the financial stresses created by it—there continue to be strong buyers and financially-weak sellers. For this reason alone, pathologists and clinical laboratory administrators should expect to see a regular flow of merger or acquisition announcements involving major healthcare organizations during 2021.
