CEO SUMMARY: At Northwell Health, the clinical laboratory team has been busy building and opening two new, large laboratory facilities. First to open was the lab in Little Neck, Queens, a shared lab with NYC Health and Hospitals. This lab will handle 36 million tests annually. The second lab to open is Northwell’s new core lab facility in Long Island, at Lake Success. This lab is designed to perform 55 million tests annually. Projects like these point to a building boom in the clinical lab industry.
TWO MORE LARGE CLINICAL LABORATORIES ARE SCHEDULED TO OPEN this month, bringing to five the number of new facilities that big lab organizations have opened or announced throughout the United States since September.
The new labs are in New York City and Long Island. Early this month, Northwell Health and the NYC Health and Hospitals corporation opened a new 36,000-square foot facility in the Little Neck section of Queens. Then, later in the month, Northwell Health opened a second, larger new lab facility in its hometown, Lake Success, N.Y.
Two Partners in NYC Lab
In Little Neck, the two partners are sharing the $47.7 million cost of the new lab, which is expected to save NYC Health and Hospitals more than $20 million annually. On the first day, the lab began operations with 176 employees, a number that is expected to rise to 210 as testing volume increases.
NYC Health and Hospitals runs 11 acute care hospitals, five post-acute and long-term care facilities, a federally qualified health center clinic, a home health agency, among other operations. As the nation’s largest public health system, the NYC Health and Hospitals corporation serves more than one million New Yorkers annually in more than 70 patient care facilities across the city’s five boroughs.
The new laboratory facility in Little Neck is an integral part of what Northwell and NYC Health and Hospitals call the Clinical Laboratory of New York Alliance (CLNY), which the partners formed in 2014. As the largest nonprofit hospital-operated lab in the nation, CLNY is designed to enhance quality and patient care and cut costs for both health systems and their hospitals. Also, CLNY aims to integrate laboratory services through a shared reference lab and to standardize information systems and equipment.
Later in February, Northwell Health opened a second CLNY lab when it moved its core lab operations from one location in Lake Success, N.Y., to Northwell’s Center for Advanced Medicine, also in Lake Success. Located across the street from the health system’s headquarters in the village of New Hyde Park, the Center for Advanced Medicine includes a cancer institute, the Smith Institute for Urology and the Monter Cancer Center, the Long Island Newsday newspaper reported.
Space for Clinical Lab, AP
The laboratory facility at the Center for Advanced Medicine will include space for clinical lab and anatomic pathology testing. Built at a cost of $59.6 million, the new Center for Advanced Medicine lab will measure 101,000 square feet—including 84,000 square feet for clinical lab work—and contain the largest chemistry and hematology automated line of its kind in North America, Northwell said.
Newsday reported that Northwell Health planned to move 520 employees to its new lab in Lake Success, and that the new facility will be able to run 55 million tests annually. Many of those tests will come from the health system’s 23 hospitals and its medical group, Northwell Health Physician Partners. Other tests will come from nonaffiliated hospitals and physicians, the newspaper added.
To manage the additional lab test volume from the new labs in Little Neck and nearby Lake Success, Northwell has hired about 90 new employees over the past year. In total, Northwell Health Labs has a workforce of more than 1,300, the partner said.
Prior Use of Lab Building
The renovated building in Lake Success has an interesting history from when Sperry Gyroscope Corp. manufactured weapons there during World War II. When the war ended, Sperry didn’t need as much space and the United Nations located its headquarters there from 1945 to 1951, when the UN opened its new facility in Manhattan.
The construction of these two sizeable new laboratory facilities comes in the midst of an interesting building boom in the clinical laboratory industry. In recent months, three major laboratory companies began building very large lab facilities. (See TDR, Feb. 4, 2019.)
In Salt Lake City, ARUP Laboratories has construction underway on a 200,000 square foot lab building. It will be the fifth building at the company’s headquarters.
In DeLand, Fla., DaVita Labs, a division of DeVita Kidney Care, opened a 150,000 square foot laboratory facility. This expands the capacity of the existing laboratory at that site.
In Clifton, N.J., Quest Diagnostics is in the design stage to build a new laboratory facility of 250,000 square feet. It expects the new lab to be operational by early 2021.
Collectively, the investments by major organizations to expand the capacity of their clinical lab facilities demonstrates that the healthcare system is using more lab tests. Two trends fuel this activity.
First, physicians need to order more clinical laboratory tests. One factor is the ongoing increase of population and the number of patients. Another factor is that physicians are participating in care models that require them to apply the same care algorithms to every patient, as appropriate. For example, every diabetes patient should get an annual hemoglobin A1c test. These algorithms include lab tests.
Second, there are more types of clinical laboratory tests that physicians can use to diagnose and treat different diseases and medical conditions. This increases the volume of lab tests ordered each year.
Of course, both trends described above work against the single most disruptive trend in the clinical lab industry today: the successive and deep cuts to lab test payments that Medicare and private health insurers are implementing.