Three Labs Make Big Bets to Build Major New Facilities

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EVEN AS SOME CLINICAL LABORATORY COMPANIES are closing or selling following the deep cuts in what Medicare pays for lab tests, three major lab organizations are building new, super-sized laboratory facilities.

Those three companies are ARUP Laboratories, DaVita Labs, and Quest Diagnostics Inc.

In September, DaVita Labs, a division of DaVita Kidney Care, opened a 150,000 square-foot lab in DeLand, Fla., adding 100 new jobs at the site. The new facility is an expansion of a lab on an existing site.

One month later, ARUP Laboratories broke ground for a new building to house 200,000 square feet of new lab space. The new lab will be the company’s fifth building at its headquarters in Salt Lake City. As a nonprofit enterprise of the University of Utah, ARUP is the only one of the three companies that is not publicly traded.

Lab to Serve Seven States

At the end of November, Quest said it would build a flagship laboratory in Clifton, N.J., to enhance the service it provides to more than 40 million patients in seven states (Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia) and in the District of Columbia.

Since that announcement, Quest began serving as an in-network lab for UnitedHealthcare, Horizon Blue Cross Blue Shield of New Jersey, and Anthem Blue Cross and Blue Shield of Georgia. As Quest’s flagship lab, the Clifton facility will open in 2021, employ 1,100 employees, and will be the largest of the company’s 20 labs nationwide, Quest said.

All three companies are experiencing  increased growth, but for different reasons. ARUP is one of the nation’s largest academic nonprofit reference labs and has had near double-digit growth in recent years, executives told The Dark Report.

DaVita’s business has grown as many Americans develop kidney disease. The lab’s parent company provides kidney care services to more than 200,000 patients each year. The lab runs 47 million tests annually. DaVita expects to add one million more tests to that number by 2023, the company said.

New Lab Automation

To manage the increased growth in lab test volume, each company will use new automated equipment to boost efficiency to handle as much specimen volume as possible. Automation is needed because workforce shortages make it difficult to find qualified applicants when the unemployment rate is low.

“Automation absolutely is a key reason why we decided to build this new lab,” said Jonathan R. Genzen, MD, PhD, ARUP’s Section Chief, Chemistry, and Medical Director of the Automated Core Laboratory. In a reference lab, automation is more challenging than it would be in most clinical labs, he said.

“As a lab company, we recognize that scalability, efficiency, and automation are important to keeping up with the overall lab marketplace,” he added. “All clinical labs are dealing with a critical workforce shortage of lab professionals and we have to find solutions to that problem.

“One way to do so is to automate processes that don’t require the advanced technical skills that lab professionals bring to the job,” he noted. “That’s why preanalytics are where labs tend to automate. Those are repetitive steps.

“In the new facility, we will dedicate significant automation to streamline pre-analytic processing and handling,” he added. All labs have pre-analytics processing but a reference lab such as ARUP faces more complex challenges, not only because it manages a large volume of specimens, but also because it has many complex assays on its test menu and varied specimen-handling requirements.

Specimen Requirements

“We have unique specimen requirements and storage conditions because we get a large volume of frozen specimens,” he said. “All of which is different from a hospital lab that receives most specimens at ambient temperature.”

In the new building, ARUP will use automation to sort and distribute specimens to other sorters and to its 65 different subsections within its four interconnected buildings, he explained.

In the new four-story building, ARUP will devote the second floor to receipt and distribution of specimens coming from its client labs and other shipments. “For all those specimens, the staff handles accessioning, aliquoting, and preliminary sorting for the different labs on our campus,” he said.

“Almost the entire second floor of 36,000 square feet in the new building will be devoted to accessioning. The whole floor is 50,000 square feet, but some of that will be left for infrastructure and future needs,” he added.

Automation is such an important part of ARUP’s processes that the new building will be connected via a footbridge and an automation line. “By bringing automation across the bridge, we can distribute specimens across the network of buildings,” Genzen commented.

In ARUP’s design, the third floor is devoted to automated testing and the fourth floor will be designated for mass spectroscopy testing. The first floor will include a cafeteria for employees and visitors, conference rooms, and an onsite machine shop and bioengineering support.

Double-Digit Growth

ARUP does not want to disclose the volume of tests it runs every year, said ARUP’s President Andrew A. Theurer, CPA. “What I can say is that we’ve seen near double-digit growth for about five years now,” he added. “And when you compound that growth every year, you end up with a significant jump in our overall test volume.”

Like ARUP, Quest also is automating as many processes as possible for its new laboratory and has similar reasons for doing so—scalability and efficiency. In May, Quest learned that it would add more test volume when UnitedHealthcare announced that Quest would become a national in-network provider of lab testing. UHC has 49 million members nationwide. The anticipated volume Quest could get from the UHC deal is substantial. Quest also added volume from Horizon and BCBS of Georgia.

“We anticipated the need for more capacity and the need for increased turn-around time because—with those three contracts—we added 43 million additional lives to the testing we already do,” said Scott Jeffers, Quest’s VP of Enterprise Operations. “Those contracts were all new and effective as of January 1.

Millions of Tests Per Day

“Even before adding the volume from the new contracts, we currently manage about a quarter million patients a day in our patient service centers and from our in-office phlebotomy and other locations,” he said. “Those patients generate about 2.5 million to 3 million tests a day.

“So, with the new lab facility we needed both additional capacity and increased efficiency,” he added. “Of course, automation plays a significant role in all labs today, and it will have a bigger role in the years ahead.”

Replaces Teterboro Lab

The lab in Clifton will replace Quest’s lab in Teterboro, N.J. Also, Quest will convert facilities it has in Baltimore and in Horsham, Pa., into rapid response labs, Jeffers explained.

The new Clifton facility will be modeled on what Quest calls its lab-of-the-future in Marlborough, Mass., a facility that opened in 2015. “When we were designing the Clifton lab, we saw how important it was to get employees involved in the design,” Jeffers commented. “In the months leading up to the announcement last fall, we called on employees from the region and staff from our Marlborough lab to offer suggestions about how to design this new facility.

Involving Lab Staff

“They were closely involved in reviewing the different designs and even in optimizing the workflow in the new lab,” he added. “That’s a lesson that smaller labs can take away from our experience because getting our team engaged up front to help design the best workflow within this new lab building was a terrific lesson for us. I expect we will enjoy the benefits of applying that lesson for many years to come.”

Another design feature from Marlborough that Quest will adapt for the Clifton lab is a command and control center that Jeffers called “the eyes and ears and the brains, if you will, of the operation.” Located above the analyzers and automation lines, the command center allows staff to monitor operations throughout the lab.

One other design attribute that Quest will bring from Marlborough is a plan to leave some floor space open for future expansion. “But that decision will depend on the volume we see over the next two to three years,” Jeffers said. “From the start, we’ve had every intention of including space in this laboratory site for future expansion. But we won’t know exactly how much extra space will be available until the lab opens in 2021.

“In the high-volume areas of the lab—meaning the general diagnostics areas—we plan to fill only about 70% of that space with automated equipment. But if volume rises faster than forecast, we may need to fill that added space with more capacity.”

DaVita Builds New Lab in DeLand, Florida

IN AN ANNOUNCEMENT IN SEPTEMBER, DaVita Kidney Care said its clinical lab division opened a new 150,000 square-foot lab in DeLand, Fla. The new lab expands on one already in place in DeLand for more than 20 years and puts all lab operations under one roof, the company said.

In the announcement, DaVita said its labs do more than 47 million laboratory tests annually and they employ some 450 employees in DeLand. “The campus is home to DaVita’s newly designed, advanced automation lab, which aims to increase the volume of tests processed daily and provide enhanced test capacity and capabilities,” the company said.

In the news release, DaVita Group Vice President Kenny Gardner said, “We expect our lab to touch an additional one million test tubes annually by 2023. Building this campus has enabled us to reimagine the lab and intentionally design a space outfitted for the future.”

DaVita did not want to provide further comment beyond what it announced on Sept. 12.

Contact ARUP at 800-522-2787 or Quest at 866-697-8378.


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