6 Creative Markets for CLIA labs to Pursue Post-Covid

The surge of COVID-19 testing is behind us, so what is the future of the labs that relied on COVID-19 tests to make their labs profitable? According to the Centers for Medicare & Medicaid Services (CMS) there are approximately 30,000 CLIA laboratory entities in the U.S. That is a lot of labs competing for a smaller volume of diagnostics tests. Experts say COVID-19 testing has dropped by 70 to 90% worldwide from the first to the second quarter of 2022. This article investigates the different options CLIA labs have to find additional sources of revenue.

Connexis Search Group, a CLIA lab recruiting firm, we have worked with numerous CLIA labs (Dianon, US Labs, Esoterics, Aurora, PathGroup, BioReference, Myriad Genetics, Transplant Genomics, Quest Diagnostics, Caris Life Science, etc.) over the last 20 years. Most of the labs we've had the pleasure to work with offer crucial diagnostics testing for patients and physicians. There are numerous specialized testing areas such as urology, oncology, cardiovascular, inherited cancers, prenatal testing, bladder cancer, women's healthcare, wound care, transplant, respiratory, and many more.

I have recently spoken to several lab owners to determine their best strategy post-COVID. Some of these labs were formed to run COVID and are not familiar with the challenges of third-party reimbursement. Getting on contract with a national or regional payer is challenging and time-consuming. To secure coverage with the national payors, you must prove the clinical utility of your tests. Conducting these studies is expensive and time-consuming and not an option for most labs that don't have tens of millions of capital. Please listen to this podcast for additional information on securing reimbursement.

Medicare coverage is more straightforward and a path that many labs pursue. For instance, numerous labs offer urinary tract infection testing to the senior population. The only issue with this option is the number of labs already pursuing this business, making it hard to gain test volume at a significant pace. Most new labs do not have the financial strength to hire a sales force and give them time to win business. They make the mistake of thinking their sales reps will be able to pay for themselves within 90 days of joining—it never happens. Many of these labs are owned by individuals or partners without previous CLIA lab experience, so their expectations are unrealistic. 

So what are the options? Are there other opportunities that may be less involved than getting on contract with a third-party payor?

1.  As concierge medicine becomes more popular, working with these groups may be an excellent alternative to seeking third-party payer reimbursement. MDVIP is one of the many concierge medical groups. I am sure they have numerous competitors.
   
2.  As Health Share Plans becomes more popular than traditional insurance, more individuals will choose which labs they use for diagnostic testing. Why not pursue a contract with Christian Healthcare Ministries or other shared plans?
   
3.  As more people focus on wellness and preventive medicine, the opportunity to do their diagnostic testing increases. Holistics and Naturopathic physicians may be good targets.
   
4. Another opportunity is to take advantage of the surge in regenerative medicine and anti-aging phenomenon. Many companies offer supplements that enhance cellular function with claims of reducing analyte levels that are bad for you, such as cholesterol, triglyceride, glucose, etc.
   
5. Offer your services to veterinary practices. Many of these practices do not have blood testing labs and send out to third-party labs. There are several large companies like Idexx and Antech in this space, but there may be an opportunity for a regional player.
   
6. Convert your lab into an FDA-approved lab that can run tests on patients in clinical trials. Your clients will be pharmaceutical and biotechnology companies with the financial resources to pay you for your services.

Conclusion

Generating revenue for an early-stage CLIA lab is challenging, especially for those labs that were formed to run COVID and have not experienced the challenges of securing third-party reimbursement for diagnostic tests. Pursuing private pay options seems like a better path forward. Hiring a business development executive to secure contracts with larger companies may be more financially rewarding than winning individual physician's offices.