This Coronavirus Outbreak Will Change Lab Industry

Nation’s labs were hamstrung by inflexible test regulations, slow decisions by healthcare officials

CEO SUMMARY: COVID-19 is causing a level of global disruption not seen since the influenza outbreak of 1918. This new infectious disease exposes flaws in the strategies and planning of public health officials and governments in the United States and abroad. In this country, news media quickly recognized that the unavailability of clinical lab tests for COVID-19 was primarily because healthcare regulators required labs to comply with requirements that were burdensome during a time of crisis.

IT’S BEEN MORE THAN 100 YEARS since¬†the outbreak of a new infectious disease¬†interrupted daily life globally on the¬†scale of the current pandemic of the novel¬†coronavirus SARS-CoV-2, which causes¬†the disease now called COVID-19.

It was always anticipated that clinical laboratories in the United States would be on the front lines of efforts to help physicians diagnose a new infectious disease like COVID-19. But this new disease emerged and hopscotched around the world in ways that were not anticipated.

That also proved true for advanced planning. The COVID-19 pandemic demonstrated how the U.S. health system’s long-established strategies and plans for responding to a new infectious disease proved inadequate when confronted by the problems created by the global COVID-19 pandemic.

One consequence of these planning failures is that the nation’s infrastructure of clinical laboratories were regularly mentioned by the national news media in their criticisms of how government officials responded to the outbreak of this new infectious agent.

In particular, news outlets criticized the time it took for the U.S. healthcare system to develop accurate, reliable tests for COVID-19. Another major criticism continues to be about the limited access that physicians, patients, and consumers have to COVID-19 tests.

It would be an understatement to say the pathologists, clinical chemists, and medical laboratory scientists are equally frustrated about these same two issues. In particular, medical laboratory professionals know that those labs best-positioned to quickly develop, validate, and provide significant numbers of COVID-19 tests in support of patient care were unable to respond quickly because of government regulations and decisions by public health officials in how COVID-19 testing would be handled in the earliest days of the outbreak.

COVID-19 Cases on the Rise

As of this date, the reported daily increase in the number of new COVID-19 cases indicates that the pandemic in the United States continues to intensify. But one positive development in the effort to contain this pandemic in the U.S. is that the availability of COVID-19 lab tests is ramping up at rates that are almost exponential.

This happened quickly once officials at the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) loosened the regulatory handcuffs on the nation’s clinical laboratory organizations.

The ability of a growing number of lab¬†organizations to perform substantial volumes¬†of COVID-19 testing could not come¬†at a better time. Most clinical labs in the¬†United States are experiencing a dramatic¬†decline in revenue, for a simple reason‚ÄĒfewer people are visiting their doctors and¬†hospitals are admitting fewer inpatients¬†for conditions other than COVID-19. That¬†is why labs are experiencing considerable¬†declines in the number of specimens referred¬†daily for testing, along with the lost revenue¬†that would come from those same claims.

Making Up for Lost Revenue

Thus, the ability to replace that lost test¬†volume with a significant number of¬†COVID-19 tests‚ÄĒfor which health insurers¬†must reimburse‚ÄĒis a godsend for¬†labs that can perform COVID-19 tests.¬†However, because many community laboratories¬†and community hospital laboratory¬†outreach programs are way down¬†on the list for distribution of COVID-19¬†kits from IVD companies, these labs may¬†not get enough of these kits to help offset¬†the revenue loss from the decline in their¬†daily test referrals.

This decline in daily specimen volume, and the revenue loss associated with those tests hitting labs large and small across the United States, has gone unreported. Therefore, one outcome from this COVID-19 outbreak may be the closure, bankruptcy, or sale of community lab companies and hospital lab outreach businesses. This will happen because the novel coronavirus outbreak is causing a substantial loss of daily revenue.

When that¬†revenue loss is added to the significant¬†erosion of revenue over the past years due¬†to the PAMA price cuts to the Medicare¬†Part B Clinical Laboratory Fee Schedule‚ÄĒcompounded by similar price cuts enacted¬†by private health insurers‚ÄĒthe cumulative¬†revenue loss from these factors will tip a significant¬†number of lab organizations into¬†operational losses too great to overcome.

Dysfunctional Response

If, in coming months, the United States experiences a wave of clinical laboratory closures or sales, that won’t be the only disruptive consequence of the 2020 COVID-19 outbreak. The pandemic has allowed the American public to see the dysfunctions in several public institutions that have responsibility for responding to outbreaks of disease.

Stated differently, many important,¬†long-standing assumptions as to¬†how the government, regulatory agencies,¬†Congress, and state officials would¬†respond to a public health emergency‚ÄĒsuch as the outbreak of a new infectiousdisease‚ÄĒhave proven to be out-of-date.

One simple explanation for this is that¬†society has moved forward in steady steps,¬†but government institutions and political¬†thought have remained anchored in cultural¬†norms of older generations.¬†This outbreak revealed the mismatch¬†between consumers who use new technology¬†and are willing to share private¬†information about themselves, and a government¬†organized to respect individual¬†rights‚ÄĒwith limits on how it gathers and¬†uses information about its citizens.

In many ways, it is a simple case of science and society moving ahead at a pace that far exceeds the capabilities of government to recognize these changes and respond to them with solutions that are acceptable to the voting public. It is appropriate to mention here that vested interests that benefit from the status quo represent formidable barriers to elected officials who recognize the need to update and reform certain laws and regulations.

These vested interests are consistently effective at keeping government locked into a status quo that is contrary to the interests of average citizens.

Response to COVID-19

Notwithstanding the institutional inertia of government and bureaucracies, it can be expected that there will careful study of the monumental failures in how the U.S. healthcare system recognized the novel coronavirus outbreak and responded to it. One likely change to benefit the clinical laboratory industry will be long-overdue reforms in how regulators oversee both clinical laboratories and research laboratories.

As you will read on pages 25-26, several research labs in the United States quickly developed an accurate test for COVID-19, but were stopped by state and or federal regulators from using those tests against patients known to be infected by some type of respiratory virus.

Similarly, clinical labs certified under CLIA had to comply with regulations issued by the CDC, the CMS and the FDA. Also, as all three federal agencies reacted to the COVID-19 outbreak, they issued new rules and guidance which sometimes prevented clinical laboratories from moving more quickly to validate COVID-19 tests and make them available to physicians and hospitals.

In some cases, these new rules and guidelines were changing daily, thus creating more uncertainty and delays for labs working to develop their own COVID-19 tests.

On the topic of clinical laboratory testing, the CDC, CMS, and FDA will need to recognize new technologies and how they advance the art and science of diagnostics. Benefiting from regular scientific breakthroughs are gene sequencing, molecular diagnostics, analytics, machine learning, and artificial intelligence.

Use of New Technologies

It is true that elected officials and government regulators did not make speedy use of new technologies here in the U.S. that were successfully deployed in other tech-savvy nations as they worked to control their own COVID-19 outbreaks. Consider the multi-year interminable skirmishing over whether or not the FDA should regulate laboratory-developed tests (LDTs) in this country, with how quickly multiple labs in South Korea, China, Taiwan, and Singapore were able to develop and validate COVID-19 tests and make them available to doctors in their respective countries.

Smart Uses for Smartphones

Another challenging issue for Congress and regulatory agencies is how to leverage the smartphones, websites, and software apps citizens could use during disease outbreaks to stay informed and learn how to access physicians, hospitals, and other healthcare providers, while also protecting the individual’s privacy.

Additionally, widespread use of smartphones offers healthcare systems new, unimagined ways to follow a disease outbreak. Smartphones can be a way to identify people exposed to a new disease and track them as a way to identify who else may have been exposed to the disease. Once this COVID-19 outbreak ends, all of these issues will confront lawmakers and regulators, though they may not have much time if COVID-19 reappears in strength at the start of next fall’s influenza season.


Can Clinical Labs, Pathology Ever Produce a National Figure Like a Dr. Fauci or a Dr. Oz?

ONCE AGAIN, THE PROFESSIONS OF LABORATORY MEDICINE AND PATHOLOGY  lost a golden opportunity to educate the American public, the news media, and elected officials about why lab testing is essential to speedy and accurate diagnosis, particularly during the widespread outbreak of a novel infectious disease like SARS-CoV-2.

Back in January and February, as the first cases of COVID-19 were diagnosed in the United States, news reporters were quick to call labs throughout the nation and ask the pathologists and PhDs to answer two questions. First, why was it taking so long for COVID-19 tests to be available for physicians to use with their patients?

Second, why have so few COVID-19 tests been performed in the United States, particularly when compared to countries such as China and South Korea?

Missing a Big Opportunity

However, at this moment of heightened national attention about the availability of an accurate medical laboratory test that could identify SARS-CoV-2, the pathology profession and the clinical laboratory industry missed its biggest opportunity in decades. It failed to produce one or more national experts who could educate all stakeholders about these points:

‚ÄĘ Why laboratories and the tests they¬†perform are literally the only clinical¬†tool physicians can use to diagnose¬†and manage every aspect of an infectious¬†disease outbreak, particularly a¬†new one like SARS-CoV-2;

‚ÄĘ How federal and state laws and regulations¬†prevented qualified labs from¬†moving rapidly to develop and validate¬†accurate tests for SARS-CoV-2; and,

‚ÄĘ Similarly, how these same federal and¬†state laws caused delays in how labs¬†could move validated new COVID-19¬†assays onto automated platforms, thus¬†allowing them to perform high volumes¬†of tests during the earliest stages¬†of this COVID-19 outbreak.

A Public Face for Labs?

As of today, the clinical laboratory profession¬†lacks a pathologist, a PhD, or a lab¬†scientist who can be the public face of¬†laboratory medicine‚ÄĒan expert trusted by¬†the news media and the public, an expert¬†who has credibility with presidents, governors,¬†and healthcare policymakers.

Two examples illustrate the vacuum that exists in pathology and laboratory medicine. Think of Anthony S. Fauci, MD, Director of the National Institute of Allergy and Infectious Disease (NIAID) since 1984. At the moment, he is one of the best-known physicians in the United States. He stands next to the President during daily COVID-19 news briefings. He is interviewed multiple times per day on every cable news station.

Similarly, think of Mehmet √Ėz, MD,¬†who is a cardiothoracic surgeon and on¬†staff at New York-Presbyterian Hospital.¬†Thanks to his exposure on the Oprah¬†Winfrey show years ago, he‚Äôs become¬†a go-to expert on all things medical¬†for news reporters and the American¬†public.

Given these two nationally-known physicians, what if a reporter from the New York Times, The Wall Street Journal, or a cable news channel like CNN or Fox wants to interview an expert on clinical laboratory medicine and anatomic pathology? Who could they call today who can speak as an expert on the subject and will be immediately recognized and trusted by the American public?

Certainly the time is ripe for the lab profession to develop an expert who can tell the lab test story in a media-savvy manner.

Contact Robert Michel at


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