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Fall 2017 NewsBeat Feature Story
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Looking Ahead with LabCorp 

 

 

With a mission to improve health and improve lives, LabCorp delivers world-class diagnostic solutions, brings innovative medicines to patients faster, and uses technology to improve the delivery of care through a national network of primary clinical laboratories and specialty testing laboratories. Using scientific expertise in esoteric testing, genomics, and clinical and anatomic pathology, LabCorp processes tests on approximately 500,000 specimens each day.

 

LabCorp operates a sophisticated laboratory network, with corporate headquarters in Burlington, North Carolina, and more than 50,000 employees worldwide. Its 220,000 clients include physician offices, hospitals, managed care organizations, and biotechnology and pharmaceutical companies. 

 

Expanding its reach in the Pacific Northwest, LabCorp recently completed its acquisition of Pathology Associates Medical Laboratories (PAML), based in Spokane.

 We talked to LabCorp CEO David P. King about what's next for his industry and the world's leading health care diagnostics company. 

 


 

 

LSW: You’ve served as CEO of LabCorp since 2007. What are the most significant developments you’ve seen in your industry in the past 10 years?

 

DK: The last 10 years for the laboratory industry have been highlighted by capitalizing on the benefits of scale, innovation, and globalization, while also dealing with increased reimbursement pressure. 

 

We have seen both sides of the equation seek scale. The national “big four” private payers have continued to seek scale through membership growth, and the laboratory community has continued to use acquisitions as a means to achieve greater scale and efficiency.

 

LabCorp is a great example of the power of scale; when I became CEO in 2007, we had 24,000 employees, did business in fewer than ten countries, and our revenue was $3.6 billion, in 2017, we employ 57,000 people, do business in 60 countries, and our revenue guidance is nearly $10 billion. We also added a significant new line of business in drug development with the acquisition of Covance in 2015.

 

Our industry has led the way in technological and clinical innovation. We have led the way to innovative test methodologies such as next-generation sequencing; innovative testing and care delivery through companion diagnostics, where LabCorp is the industry leader; innovative use of our large volume of data through strengthened data analysis capabilities to allow us to derive greater insights and help providers manage patient care; and innovative use of robotics and automation in our laboratories to improve quality and reduce turnaround time for critical patient results.

 

Our industry also has become more global. This spans everything from our supply chain to the scope of our business. Nearly 20 percent of our 2017 revenue will come from outside the United States and Canada, which we anticipate will continue to increase, and we see global expansion in both the clinical laboratory and drug development businesses as an excellent growth opportunity.

 

Finally, we have seen considerable pressure on our reimbursement rates. This is consistent with the broader trend in healthcare that the system must deliver better care at lower cost, but it sends the wrong message to providers and consumers because it tells them that labs are not a valuable part of the care equation. In fact, the laboratory result is one of the most critical components in correctly diagnosing and treating disease, and laboratories inform some 70 percent of medical decisions but represent only 3 percent of total healthcare spend.

 

We also see growing awareness that consumers are becoming increasingly engaged in managing their own healthcare. So we’ve introduced tools to help the patient directly access their test results, to determine their out-of-pocket costs before their testing is performed, to be in more convenient locations, and improve the patient experience when they visit our locations.

 

 

LSW: What’s the greatest challenge ahead in the next 10 years for LabCorp?

 

DK: We face multiple challenges on the regulatory and reimbursement fronts. We also face the challenge of a very dynamic healthcare system, in which payment models are rapidly changing, the individual patient is taking greater responsibility — financial and otherwise — for their care, and it is imperative that we help to improve the quality of care and improve patient outcomes. These challenges have an impact on every stakeholder in healthcare, not just us.

 

To meet these challenges, we’ve invested to expand technology offerings, improve our patient-facing tools and capabilities, and broaden our expertise and scope by moving into new lines of business. We can meet the challenges ahead by creating a more global, diversified company that participates end-to-end in the full spectrum of patient care. This provides LabCorp and our 57,000 dedicated colleagues greater means and opportunity to deliver on our purpose-driven mission to Improve Health and Improve Lives.

 

 

LSW: LabCorp recently completed the purchase of PAML. What excites you about Washington state as a life sciences community?

 

DK: LabCorp has long-standing, deep relationships in the state of Washington. Prior to our acquisition of PAML, these relationships were primarily in the Seattle area and through our mutually successful partnership with Swedish Health, which for the past several years has been part of Providence Health & Services. We also owned a next-generation sequencing lab in Seattle that, ironically, we bought from Covance prior to the acquisition. So we already knew that the region had a significant focus on life sciences with great healthcare systems leading the way.

 

Washington state also has a great history of delivering healthcare innovation to the developing world, through such outstanding organizations as the Gates Foundation and PATH. We view providing high quality, affordable healthcare to less fortunate regions of the world as an area of great interest to LabCorp in the years ahead.

 

Through the PAML acquisition, and the close ties that PAML has within the greater Spokane area, we’ve been able to extend our engagement across the entire state, and we’ve had the chance to learn more about the region and meet many of the organizations and individuals in business, research, academia and government that are committed to Washington state being a life sciences leader. There is an enormous amount of healthcare and technology innovation in Washington state, and we are very excited to become more broadly involved in the community.

 

 

LSW: We are seeing a lot of innovation in the digital health/health IT space.  How do you see digital health/health IT technologies impacting the diagnostics industry in the future?

 

DK: We have moved from providing the service of laboratory testing to playing an important role in each stage of patient care, and we have the opportunity — and the challenge — to do even more through our unique combination of technology, tools, people, and innovation.

 

Increasingly, digital tools and technology are helping us more conveniently and effectively reach the customer, whether through phones, tablets, computers, or electronic health records. We continue to invest in expanding and improving our technology to provide a most customer-friendly experience, and to more effectively deliver medical knowledge and content.

 

 

LSW: You recently announced a collaboration with Walgreens to make your services more accessible to patients. Do you see patients becoming more directly involved in accessing testing services and monitoring their own healthcare data?   

 

DK: Absolutely. Patients are playing a more active role in managing their healthcare and paying a greater portion of healthcare costs. We want to help patients take control of their health by making testing affordable and convenient, and by delivering information and insights to help them make sound decisions.

 

LabCorp at Walgreens is one example of how we are responding to that trend, by bringing our lab testing services to a high-quality, healthcare-centric retail environment. This partnership creates a new channel for delivering testing, enhances patient convenience, increases direct patient engagement, broadens our reach, and builds brand loyalty.

 

We are committed to helping consumers understand the cost of laboratory services through price transparency. We now offer a pre-draw estimate to patients with most commercial insurance plans that shows the patient’s anticipated out-of-pocket costs. In addition, we continue to enhance the patient experience and convenience in patient service centers through appointment scheduling, as well as our expanding self-check-in options, and opportunities to learn more about clinical trials.

 

We also see the increased need to provide high quality, reliable testing in settings outside the traditional healthcare system, such as the home. We are working on a number of innovative technologies and programs in this area, and look forward to announcing further developments on this front in the near future.

 

 

David P. King, LabCorp CEO & Chairman, will give the keynote address at the 2017 Governor's Life Science Summit. Tickets are available here

 

 

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