As the COVID-19 pandemic continues to stress healthcare systems across world, clinical labs and diagnostic firms have raced to ramp up testing of the virus.
But while that demand has soared, other tests have plummeted.
This week, Quest Diagnostics reported that during the last two weeks of March, the company's test volumes, inclusive of COVID-19 tests, fell by more than 40%.
"Federal, state and local governmental policies and initiatives designed to reduce the transmission of COVID-19 have resulted in, among other things, a significant reduction in physician office visits, the cancelation of elective medical procedures, customers closing or severely curtailing their operations ... all of which have had, and we believe will continue to have, an impact on the Company's operating results, cash flows and financial condition," the company said in the federal filing.
In an investor note, Barclay's analyst Jack Meehan wrote that the Quest numbers track with a model the bank developed that predicted a roughly 35% drop in lab test volumes due to the pandemic. The model was based on a survey of 50 OB/GYNs that found these doctors expected to see a 40% to 60% decline in office visits during the outbreak.
Smaller regional and community laboratories are facing similar challenges, with the National Independent Laboratory Association (NILA) noting last week that "the volume of routine laboratory testing has declined dramatically due to the closure of many physicians' offices, medical clinics, surgicare centers, and other healthcare facilities."
The association added that the drop in test volumes "is forcing many regional [and] community laboratories to reduce their workforce."
Empty doctors' offices are becoming more common as patients forego routine care during the pandemic.
"You can't do elective surgeries, so pathology work is down like 50%," said Mick Raich, CEO of consulting firm Vachette Pathology. Lab testing has held up somewhat better, but here, too, volumes are suffering, he said, adding that he thought the 40% drop in test volumes cited by Quest seemed realistic.
NILA Administrator Mark Birenbaum said that his members report drops ranging from 40% to 90%. Certain specialty labs, like those serving the in vitro fertilization space have shut down completely, he said.
Layoffs and furloughs of lab employees have also begun, Birenbaum said. He said the he did not have hard numbers for layoffs in the lab space, but gave the example of one large member lab that laid off or furloughed 15% of their workforce last week.
Kyle Fetter, executive vice president and general manager of diagnostic services at revenue cycle management and lab informatics firm Xifin,, said that thus far, most industry layoffs and furloughs were occurring on the administrative side of the business as labs tried to maintain their clinical staff.
Fetter said his firm has seen volumes drop substantially not only for routine lab testing but also for tests that might not typically be considered elective, such as genetic tumor testing to determine patient cancer therapy, which he said had dropped around 30% to 35% since the start of the outbreak in the U.S.
"We would not expect those [testing] behaviors to change drastically, but they are a little bit in the short term," he said.
Fetter said Xifin has also seen a large drop in hereditary cancer testing, though he noted this was less surprising given that this testing is generally less urgent than testing for somatic mutations to guide cancer treatment.
Another area that has seen a major decline is toxicology and pain medication testing, where test volumes have dropped more than 50%, Fetter said.
"Patients are still on these [pain] medications, so it is probably not a great thing that they are not monitoring it as much through pain and toxicology testing," he said. "But it's a very clear trend that that testing is way down. What people are calling elective procedures right now is a much broader spectrum than what it might have been in the past."
Non-invasive prenatal testing has seen only a 20% drop, Fetter said.
Raich said that some labs are trying to move into COVID-19 testing to help address the broader shortfall but noted that "you can't make up that [lost] volume with just COVID-19 testing."
Additionally, it can be difficult for labs to get ahold of the instrumentation and supplies they need to start COVID-19 testing, he said.
"It's hard to get the kits," he said. "And rightfully so. They are keeping the kits for in-patients who have COVID-type symptoms. You shouldn't just be testing anybody who wants to be tested."
Birenbaum similarly said that many NILA member labs who wanted to test for COVID-19 were facing hurdles.
"We have different size laboratories with different capabilities," he said. "If they are decent sized and have some of the equipment in-house already, the challenge has been, do they have equipment that is compatible with the Centers for Disease Control and Prevention assay."
More recently, he noted, several vendors have received federal approval for tests on their platforms. But those labs had trouble getting test kits, with some labs being told by vendors that they won't be able to get shipments of kits for two months. Obtaining swabs for collecting patient samples has also been a challenge for some labs, Birenbaum said.
Labs without the proper instrumentation already in place must weigh the capital investment with the return, given the supply chain issues.
"Labs are saying, well, we would [start SARS-CoV-2 testing], but we don't have the necessary capital and we're not willing to take loans out if we don't know whether we can get kits," Birenbaum said. "If we have the equipment but we can't do the testing because we can't get the supplies, then we're just losing money."
Low reimbursement is another factor.
Initial pricing for the CDC test is around $36 and reimbursement for non-CDC versions are around $51.
According to some NILA member labs, "if you factor in all the capital investment and everything, the [Medicare rates] don't cover their costs," Birenbaum said.
Fetter agreed. "At the price [CMS] is going to pay for COVID-19 testing, if a lab is super efficient, they will potentially break even," he said.
This story first appeared in our sister publication 360Dx, which provides in-depth coverage of in vitro diagnostics and the clinical lab market.
