Sale of respected laboratory information system company may be an early sign that investors believe clinical laboratories and pathology groups are ready to upgrade their LISs and add needed capabilities
In the past 10 years there has been little disruption to the
laboratory
information systems (LIS) market that clinical
laboratories and anatomic
pathology groups use. Yet, over that same 10-year period, almost every
hospital and physician group practice adopted an electronic
health system (EHR), primarily because of federal financial incentives that
encouraged such adoption.
For medical
laboratories and pathology groups, this widespread—nearly
universal—adoption of EHRs by the nation’s hospitals and physicians was
disruptive. Labs were required to expend resources building digital interfaces
to the EHRs of their parent hospitals and client physicians to support
electronic test ordering and test reporting.
However, because that wave of EHR adoption is now over,
clinical labs and pathology groups have an opportunity to assess the current
state of the health
information technology (HIT) that they use daily, primarily in the form of
the classic laboratory information system that handles nearly all the primary
functions needed to support testing and other operational needs.
This opportunity to help medical laboratories enhance and/or
upgrade the capabilities of their laboratory information systems may be one
motivation behind the recent sale of a well-known LIS company.
Private Equity Firm Buys Orchard Software
On Oct. 7, 2019, Orchard Software Corporation of Carmel,
Ind., announced its acquisition by Franciscan Partners, a private equity firm
based in San Francisco.
Orchard Software, founded in 1993, has grown steadily over
the past 20 years, primarily by serving physician office laboratories,
community hospital labs, and independent clinical laboratory companies. With each
stage of growth, Orchard added functionality to its LIS and related software
offerings and moved up-market to serve larger hospitals and larger labs.
The purchase price and the terms of the sale were not
announced. Orchard’s Founder, President and CEO, Rob Bush, will retire. The new
CEO is Billie Whitehurst, who came to Orchard from Netsmart Technologies, where she was Senior
Vice President. The remainder of Orchard’s management team will be kept in
place.
“Francisco Partners will provide capital and expertise to enable Orchard to grow at a faster pace and continue to develop its newer web-based products in an industry that has lagged behind in adoption of cloud-based software,” says Rob Bush (above), Orchard Software’s Founder and exiting CEO, in a press release. (Photo copyright: Twitter.)
Is the LIS Market Heating Up?
What makes the purchase of Orchard by a multi-billion-dollar
private equity company noteworthy is the fact that it is the first significant
transaction in the LIS sector probably since the mid-2000s, which saw several
significant mergers and acquisitions.
Other acquisitions or investments involving LIS companies
need to happen before it would be appropriate to say that investor interest in
the LIS sector is heating up. However, it is accurate to say that many
professional investors will be watching to see whether Franciscan Partners
succeeds with its investment in Orchard Software. If Orchard’s revenue and
operating profits increase substantially in the next few years, that may
encourage other investors to look for LIS companies and products that they can
buy.
If this were to happen, that would be a positive development
for both clinical laboratories and anatomic pathology groups, because these
investors would have a motive to add new functions and capabilities to their
LIS products. It would also wake up a sector of lab information technology that
has been relatively quiet for several years.
Researchers believe new findings about genetic changes in C. difficile are a sign that it is becoming more difficult to eradicate
Hospital infection control teams, microbiologists, and clinical laboratory professionals soon may be battling a strain of Clostridium difficile (C. difficile) that is even more resistant to disinfectants and other forms of infection control.
A WSI news release states the researchers “identified genetic changes in the newly-emerging species that allow it to thrive on the Western sugar-rich diet, evade common hospital disinfectants, and spread easily.”
Microbiologists and infectious disease doctors know full well that this means the battle to control HAIs is far from won.
“C. difficile is currently forming a new species with one group specialized to spread in hospital environments. This emerging species has existed for thousands of years, but this is the first time anyone has studied C. difficile genomics in this way to identify it. This particular [bacterium] was primed to take advantage of modern healthcare practices and human diets,” said Nitin Kumar, PhD (above), in the news release. (Photo copyright: Wellcome Sanger Institute.)
Genomic Study Finds New Species of Bacteria Thrive in
Western Hospitals
In the published paper, Nitin Kumar, PhD, Senior Bioinformatician at the Wellcome Sanger Institute and Joint First Author of the study, described a need to better understand the formation of the new bacterial species. To do so, the researchers first collected and cultured 906 strains of C. difficile from humans, animals, and the environment. Next, they sequenced each DNA strain. Then, they compared and analyzed all genomes.
The researchers found that “about 70% of the strain collected specifically from hospital patients shared many notable characteristics,” the New York Post (NYPost) reported.
Hospital medical laboratory leaders will be intrigued by the
researchers’ conclusion that C. difficile is dividing into two separate
species. The new type—dubbed C. difficile clade A—seems to be targeting
sugar-laden foods common in Western diets and easily spreads in hospital
environments, the study notes.
“It’s not uncommon for bacteria to evolve, but this time we actually see what factors are responsible for the evolution,” Kumar told Live Science.
New C. Difficile Loves Sugar, Spreads
Researchers found changes in the DNA and ability of the C.
difficile clade A to metabolize
simple sugars. Common hospital fare, such as “the pudding cups and instant
mashed potatoes that define hospital dining are prime targets for these strains”,
the NYPost explained.
Indeed, C. difficile clade A does have a sweet tooth. It was associated with infection in mice that were put on a sugary “Western” diet, according to the Daily Mail, which reported the researchers found that “tougher” spores enabled the bacteria to fight disinfectants and were, therefore, likely to spread in healthcare environments and among patients.
“The new C. difficile produces spores that are more
resistant and have increased sporulation
and host colonization capacity when glucose or fructose is available for
metabolism. Thus, we report the formation of an emerging C. difficile
species, selected for metabolizing simple dietary sugars and producing high
levels or resistant spores, that is adapted for healthcare-mediated
transmission,” the researchers wrote in Nature Genetics.
Bacteria Pose Risk to Patients
The findings about the new strains of C. difficile bacteria
now taking hold in provider settings are important because hospitalized
patients are among those likely to develop life-threatening diarrhea due to
infection. In particular, people being treated with antibiotics are vulnerable
to hospital-acquired infections, because the drugs eliminate normal gut
bacteria that control the spread of C. difficile bacteria, the
researchers explained.
According to the Centers for Disease Control and Prevention (CDC), C. difficile causes about a half-million infections in patients annually and 15,000 of those infections lead to deaths in the US each year.
New Hospital Foods and Disinfectants Needed
The WSI/LSHTM study suggests hospital representatives should
serve low-sugar diets to patients and purchase stronger disinfectants.
“We show that strains of C. difficile bacteria have continued to evolve in response to modern diets and healthcare systems and reveal that focusing on diet and looking for new disinfectants could help in the fight against this bacteria,” said Trevor Lawley, PhD, Senior Author and Group Leader of the Lawley Lab at the Wellcome Sanger Institute, in the news release.
Microbiologists, infectious disease physicians, and their
associates in nutrition and environmental services can help by understanding
and watching development of the new C. difficile species and offering
possible therapies and approaches toward prevention.
Meanwhile, clinical laboratories and microbiology labs will
want to keep up with research into these new forms of C. difficile, so
that they can identify the strains of this bacteria that are more resistant to
disinfectants and other infection control methods.
Journalists, researchers, and a growing number of consumers now recognize the often huge variability in the prices different medical laboratories charge for the same lab tests
One step at a time, the Medicare program, private health insurers, and employers are putting policies in place that require providers—including clinical laboratories and pathology groups—to allow patients and consumers to see the prices they charge for their medical services. Recent studies into test price transparency in hospitals and health networks have garnered the attention of journalists, researchers, and patients. These groups are now aware of enormous variations in pricing among providers within the same regions and even within health networks.
Now that hospitals’ medical laboratory test prices are
required to be easily accessible to patients, researchers are beginning to compile
test prices across different hospitals and in different states to document and
publicize the wide variation in what different hospital labs charge for the
same medical laboratory tests.
Journalists are jumping on the price transparency bandwagon
too. That’s because readers show strong interest in stories that cover the
extreme range of low to high prices providers will charge for the same lab
test. This news coverage provides patients with a bit more clarity than
hospitals and other providers might prefer.
Shocking Variations in Price of Healthcare
Services, including Medical Laboratory Tests
The Health Care Cost Institute (HCCI) in conjunction with the Robert Wood Johnson Foundation (RWJF), examines price levels of various procedures and medical laboratory tests at healthcare institutions across the United States in the first release of a series called Healthy Marketplace Index. According to the HCCI website, “a common blood test in Beaumont, Texas ($443) costs nearly 25 times more than the same test in Toledo, Ohio ($18).”
In April, the New
York Times (NYT) made the wide variation
in how clinical laboratories price their tests the subject of an article titled,
“They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost
$1,000.” The article discusses the HCCI findings.
The coverage by these two well-known entities is increasing the
public’s awareness of the broad variations in pricing at clinical laboratories
around the country.
Aside from the large differences in medical laboratory test
prices in different regions, the HCCI found that there are sometimes huge price
variations within a single metro area for the same lab tests. “In just one
market—Tampa, Fla.—the most expensive blood test costs 40 times as much as the
least expensive one,” the NYT notes.
In other industries, those kinds of price discrepancies are
not common. The NYT made a comparatively outrageous example using
ketchup, saying, “A bottle of Heinz ketchup in the most expensive store in a
given market could cost six times as much as it would in the least expensive
store,” adding, however, that most bottles of ketchup tend to cost about the
same.
The graphic above is taken from the New York Times article on test price discrepancies in healthcare. The range of prices for the medical lab test known as a comprehensive metabolic panel are for metropolitan areas only. The data is sourced from the Health Care Cost Institute study. It’s easy to see why patients would be confused by clinical laboratory pricing that varies so widely. (Graphic copyright. The New York Times.)
The CMS mandate designed to make the prices of medical services accessible to healthcare consumers has, in many ways, made things more confusing. For example, most hospitals simply made their chargemaster available to consumers. Chargemasters can be confusing, even to industry professionals, and are filled with codes that make no sense to the average consumer and patient.
“This policy is a tiny step forward but falls far short of what’s needed. The posted prices are fanciful, inflated, difficult to decode and inconsistent, so it’s hard to see how an average person would find them useful,” Jeanne Pinder, Founder and Chief Executive of Clear Health Costs, a consumer health research organization, told the NYT in an article on how hospitals are complying with the mandate to publish prices.
In addition to the pricing information being difficult for
consumers to parse, it also may lead them to believe they would need to pay
much more for a given procedure than they would actually be billed, resulting
in patients opting to not get care they actually need.
Why Having a Strategy Is Critically
Important for Clinical Laboratories
Clinical laboratories are in a particularly precarious position in all of this pricing confusion. For one thing, most hospital-based medical laboratories don’t have a way to communicate directly with consumers, so they don’t have a way to explain their pricing. Additionally, articles and studies such as those in the NYT and from the HCCI, which describe drastic price variations for the same tests, tend to cast clinical laboratories in a somewhat sinister light.
To prepare for this, medical laboratory personnel should be
trained in how to address customer requests for pricing and how to explain
variations in test prices among labs, before such requests become problematic. Lab
staff should be able to explain how patients can find out the cost of a given
test, and what choices they have regarding specific tests.
In 2016, Dark Daily’s sister-publication, The Dark Report (TDR), dedicated an entire issue to the impact of reference pricing on the clinical laboratory industry. In that issue, TDR reported on how American supermarket chain Safeway helped guide their employees to lower-priced clinical laboratories for lab tests, resulting in $2.7 million savings for the company in just 24 months. Safeway simply implemented reference pricing; the company analyzed lab test prices of 285 tests for all of the labs in its network, and then set the maximum amount it would pay for any given test at the 60th percentile.
If a Safeway employee selected a medical laboratory with prices less than the 60th percentile, the normal benefits and co-pays applied. But if a Safeway employee went to clinical laboratories that charged more than the 60th percentile level, they were required to pay both their deductible and the amount above Safeway’s maximum.
Safeway’s strategy revealed wide variation in testing
prices, just as the HCCI report found. This means that employers can be added
to the list of those who are paying much closer attention to medical laboratory
test pricing than they have in the past. These are developments that should
motivate forward-looking pathologists and clinical laboratory executives to act
sooner rather than later to craft an effective strategy for responding to consumer
and patient requests for lab test price transparency.
Low prices to encourage consumers to order its WGS service is one way Veritas co-founder and genetics pioneer George Church hopes to sequence 150,000 genomes by 2021
By announcing an annotated whole-genome sequencing (WGS) service to consumers for just $599, Veritas Genetics is establishing a new price benchmark for medical laboratories and gene testing companies. Prior to this announcement in July, Veritas priced its standard myGenome service at $999.
“There is no more comprehensive genetic test than your whole genome,” Rodrigo Martinez, Veritas’ Chief Marketing and Design Officer, told CNBC. “So, this is a clear signal that the whole genome is basically going to replace all other genetic tests. And this [price drop] gets it closer and closer and closer.”
Pathologists and clinical laboratory managers will want to watch to see if Veritas’ low-priced, $599 whole-genome sequencing becomes a pricing standard for the genetic testing industry. Meanwhile, the new price includes not only the sequencing, but also an expert analysis of test results that includes information on more than 200 conditions, Veritas says.
“The focus in our industry is shifting from the cost of sequencing genomes to interpretation capabilities and that’s where our secret sauce is,” said Veritas CEO Mirza Cifric in a news release. “We’ve built and deployed a world class platform to deliver clinically-actionable insights at scale.” The company also says it “achieved this milestone primarily by deploying internally-developed machine learning and AI [artificial intelligence] tools as well as external tools—including Google’s DeepVariant—and by improving its in-house lab operations.”
The myGenome service offers 30x WGS, which Veritas touts in company documentation as the “gold standard” for sequencing, compared to the less-precise 0.4x WGS.
The myGenome service is available only in the United States.
Will Whole-Genome Sequencing Replace Other Genetic Tests?
Veritas was co-founded by George Church, PhD, a pioneer of personal genomics through his involvement with the Harvard Personal Genome Project at Harvard Medical School. In a press release announcing the launch of myGenome in 2016, Veritas described its system as “the world’s first whole genome for less than $1,000, including interpretation and genetic counseling.”
Church predicts that WGS will someday replace other genetic tests, such as the genotyping used by personal genomics and biotechnology company 23andMe.
“Companies like 23andMe that are based on genotyping technology basically opened the market over the last decade,” Martinez explained in an interview with WTF Health. “They’ve done an incredible job of getting awareness in the general population.”
However, he goes on to say, “In genotyping technology, you
are looking at very specific points of the genome, less than half of one
percent, a very small amount.”
Martinez says Veritas is sequencing all 6.4 billion letters
of the genome. And, with the new price point, “we’re closer to realizing that
seismic shift,” he said in the news release.
“This is the inflection point,” Martinez told CNBC.
“This is the point where the curve turns upward. You reach a critical mass when
you are able to provide a product that gives value at a specific price point.
This is the beginning of that. That’s why it’s seismic.”
Rodrigo Martinez (above), Veritas’ Chief Marketing and Design Officer, told CNBC, “The only way we’re going to be able to truly extract the value of the genome for a healthier society is going to be analyzing millions of genomes that have been sequenced. And the only way we can get there is by reducing the price so that more consumers can sequence their genome.” Photo copyright: Twitter.)
Payment Models Not Yet Established by Government, Private
Payers
However, tying WGS into personalized medicine that leads to actionable diagnoses may not be easy. Robin Bennett, PhD (hon.), a board certified senior genetic counselor and Professor of Medicine and Medical Genetics at UW School of Medicine, told CNBC, “[Healthcare] may be moving in that direction, but the payment for testing and for services, it hasn’t moved in the preventive direction. So, unless the healthcare system changes, these tests may not be as useful because … the healthcare system hasn’t caught up to say, ‘Yes, we support payment for this.’”
“Insurers are looking for things where, if you get the
information, there’s something you can do with it and that both the provider
and the patient are willing and able to use that information to do things that
improve their health,” Phillips told CNBC. “Insurers are very interested
in using genetic testing for prevention, but we need to . . . demonstrate that
the information will be used and that it’s a good trade-off between the
benefits and the costs.”
Sequencing for Free If You Share Your Data
Church may have an answer for that as well—get biopharmaceutical companies to foot the bill. Though Veritas’ new price for their myGenome service is significantly lower than before, it’s not free. That’s what Nebula Genomics, a start-up genetics company in Massachusetts co-founded by Church, offers people willing to share the data derived from their sequencing. To help biomedical researchers gather data for their studies, Nebula provides free or partially-paid-for whole-genome sequencing to qualified candidates.
“Nebula will enable individuals to get sequenced at much
lower cost through sequencing subsidies paid by the biopharma industry,” Church
told BioSpace.
“We need to bring the costs of personal genome sequencing close to zero to
achieve mass adoption.”
So, will lower-priced whole-genome sequencing catch on?
Perhaps. It’s certainly popular with everyday people who want to learn their
ancestry or predisposition to certain diseases. How it will ultimately affect
clinical laboratories and pathologists remains to be seen, but one thing is
certain—WGS is here to stay.
The 80 scientists and engineers that comprise the consortium believe synthetic biology can address key challenges in health and medicine, but technical hurdles remain
Synthetic biology now has a 20-year development roadmap. Many predict this fast-moving field of science will deliver valuable products that can be used in diagnostics—including clinical laboratory tests, therapeutics, and other healthcare products.
Eighty scientists from universities and companies around the world that comprise the Engineering Biology Research Consortium (EBRC) recently published the 20-year roadmap. They designed it to “provide researchers and other stakeholders (including government funders)” with what they hope will be “a go-to resource for engineering/synthetic biology research and related endeavors,” states the EBRC Roadmap website.
Medical laboratories and clinical pathologists may soon have new tools and therapies for targeting specific diseases. The EBRC defines synthetic biology as “the design and construction of new biological entities such as enzymes, genetic circuits, and cells or the redesign of existing biological systems. Synthetic biology builds on the advances in molecular, cell, and systems biology and seeks to transform biology in the same way that synthesis transformed chemistry and integrated circuit design transformed computing.”
Synthetic biology is an expanding field and there are predictions that it may produce research findings that can be adapted for use in clinical pathology diagnostics and treatment for chronic diseases, such as cancer.
Another goal of the roadmap is to encourage federal
government funding for synthetic biology.
“The question for government is: If all of these avenues are now open for biotechnology development, how does the US stay ahead in those developments as a country?” said Douglas Friedman, EBRC’s Executive Director, in a news release. “This field has the ability to be truly impactful for society and we need to identify engineering biology as a national priority, organize around that national priority, and take action based on it.”
Designing or Redesigning Life Forms for Specific
Applications
Synthetic biology is an interdisciplinary field that combines
elements of engineering, biology, chemistry, and computer science. It enables
the design and construction of new life forms—or redesign of existing ones—for
a multitude of applications in medicine and other fields.
Another recent example comes from the Wyss Institute at Harvard. Scientist there developed a direct-to-consumer molecular diagnostics platform called INSPECTR that, they say, uses programmable synthetic biosensors to detect infectious pathogens or host cells.
The Wyss Institute says on its website that the platform can
be packaged as a low-cost, direct-to-consumer test similar to a home pregnancy
test. “This novel approach combines the specificity, rapid development, and
broad applicability of a molecular diagnostic with the low-cost, stability, and
direct-to-consumer applicability of lateral flow immunoassays.”
In March, Harvard announced that it had licensed the technology to Sherlock Biosciences.
Howard Salis, PhD (above), Associate Professor of biological engineering and chemical engineering at Pennsylvania State University (Penn State), co-chaired the EBRC Roadmapping Working Group that produced the roadmap. In a Penn State news story, Salis explained synthetic biology’s potential. “There are both traditional and startup companies leveraging synthetic biology technologies to develop novel biotech products,” he said. “Organisms that produce biorenewable materials; diagnostics to detect the Zika virus, Ebola and tuberculosis; and soil bacteria that fix nitrogen into ammonia for improved plant growth.” (Photo copyright: Twitter.)
Fundamental Challenges with Synthetic Biology
The proponents of synthetic biology hope to make it easier
to design and build these systems, in much the same way computer engineers
design integrated circuits and processors. The EBRC Roadmap may help scientist
worldwide achieve this goal.
However, in “What is Synthetic/Engineering Biology?” the EBRC also identifies the fundamental challenges facing the field. Namely, the complexity and unpredictability inherent in biology, and a limited understanding of how biological components interact.
The EBRC roadmap report, “Engineering Biology: A Research
Roadmap for the Next-Generation Bioeconomy,” covers five categories of applications:
Health and medicine are of primary interest to pathologists.
Synthetic Biology in Health and Medicine
The Health and Medicine section of the report identifies
four broad societal challenges that the EBRC believes can be addressed by
synthetic biology. For each, the report specifies engineering biology
objectives, including efforts to develop new diagnostic technologies. They
include:
Existing and emerging infectious diseases: Objectives include development of tools for treating infections, improving immunity, reducing dependence on antibiotics, and diagnosing antimicrobial-resistant infections. The authors also foresee tools for rapid characterization and response to “known and unknown pathogens in real time at population scales.”
Non-communicable diseases and disorders, including cancer, heart disease, and diabetes: Objectives include development of biosensors that will measure metabolites and other biomolecules in vivo. Also: tools for identifying patient-specific drugs; tools for delivering gene therapies; and genetic circuits that will foster tissue formation and repair.
Environmental health threats, such as toxins, pollution, and injury: Objectives include systems that will integrate wearable tech with living cells, improve interaction with prosthetics, prevent rejection of transplanted organs, and detect and repair of biochemical damage.
Healthcare access and personalized medicine: The authors believe that synthetic biology can enable personalized treatments and make new therapies more affordable.
Technical Themes
In addition to these applications, the report identifies
four “technical themes,” broad categories of technology that will spur the
advancement of synthetic biology:
Gene editing, synthesis, and assembly: This refers to tools for producing chromosomal DNA and engineering whole genomes.
Biomolecule, pathway, and circuit engineering: This “focuses on the importance, challenges, and goals of engineering individual biomolecules themselves to have expanded or new functions,” the roadmap states. This theme also covers efforts to combine biological components, both natural and non-natural, into larger, more-complex systems.
Host and consortia engineering: This “spans the development of cell-free systems, synthetic cells, single-cell organisms, multicellular tissues and whole organisms, and microbial consortia and biomes,” the roadmap states.
Data Integration, modeling, and automation: This refers to the ability to apply engineering principles of Design, Build, Test and Learn to synthetic biology.
The roadmap also describes the current state of each
technology and projects likely milestones at two, five, 10, and 20 years into
the future. The 2- and 5-year milestones are based on “current or recently
implemented funding programs, as well as existing infrastructure and facilities
resources,” the report says.
The longer-term milestones are more ambitious and may
require “significant technical advancements and/or increased funding and
resources and new and improved infrastructure.”
Synthetic biology is a significant technology that could
bring about major changes in clinical pathology diagnostics and treatments.
It’s well worth watching.
