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The Growing Role of Diagnostics in Healthcare

Steve Rusckowski, President and Chief Executive Officer of Quest Diagnostics, delivered a keynote speech at the 2012 Lab Institute in Washington D.C. on October 10, 2012. The following is a transcript of his speech.

Good evening. It's a pleasure to be here and to speak to you all tonight.

As we're all aware, American healthcare is changing in many ways. To start with the most individual, human level, patients are changing.

Just a few weeks ago, I went to see my mother, who's 91 years old. Fortunately, she's never had health problems, but now she's feeling more tired than she used to. She's been complaining about some headaches and saying that sometimes she just has bad days.

Well, the week before my visit, she got a call from Quest Diagnostics, which sent someone to her house to do a blood draw. I didn't know it was going to happen. Neither did she, but it seems her physician had ordered a blood draw three months after her last visit to the doctor. So I asked, "Mom, what was it for?"

"I don't know," she said. "I have no idea."

"Well, did you find out what they're going to learn from this?"

"I talked to the guy who came," she said. "He was very nice. His name is Bill, and he knows you."

"He said if there are any problems, I'll hear about it from my doctor."

That's her generation. They would go to the doctor with a problem and do whatever the doctor ordered. Usually, they wouldn't even ask any questions, much less do their own research or investigate treatment options. They didn’t always have a good grasp of what was going on.

By the way, in case I've left you in suspense, my mom said it is okay to share her story with you and that the blood sample was for a Vitamin D test.

Contrast my mom’s generation with my own, which I think of as a transition generation. Twenty-one years ago my sister-in-law was diagnosed with breast cancer about the time she was to deliver her daughter. She was told she would not see her newly-born daughter go to school. Well, the doctors were wrong. She wanted me to share with you her story, and that she is a survivor who is still going strong. And today, her daughter is a senior in college.

Back then, the only way for my sister-in-law and brother-in-law to research their options was to call up friends who were health professionals, or go to a good library and thumb through the card catalog for medical journals. They did not have immediate access to the Internet and its wealth of information, as we do today.

My two children are in their twenties and grew up in a different world. They communicate mainly through social media and texting, and they take for granted that a vast amount of information is instantly available to them. Actually, my daughter was a Harvard classmate of Mark Zuckerberg when he conceptualized Facebook.

My children’s generation certainly doesn't assume their doctor is infallible. They come prepared with questions, and they expect to participate in decisions about their own healthcare.

My daughter’s contemporaries are now starting to graduate from medical school. So not only are patients changing—doctors and other providers are changing, too.

Clinical labs need to participate in these changes in order to ensure our value is recognized and rewarded in the new healthcare landscape.

Traditionally, patients saw the lab as a sort of "black box.” Your doctor ordered some tests, blood, tissue and other specimens went into the lab, and the results went back to your doctor.

From the patient’s perspective, the lab was a bit mysterious – well, until she got the bill.

But today’s patients want to know what they're being tested for and why. They want to know what their options are, and have a say in choosing them.

Meanwhile, electronic patient health records and expanding patient-data rights are contributing to greater access to lab data.

With more engaged patients, our role in healthcare will not only grow – the way we contribute to it will change as well.

One of the ways we will need to change is how we demonstrate our value.

The lab industry is already extremely important. Consider that test results provide the basis for a majority of healthcare decisions. Yet, our industry accounts for only about 3% of overall healthcare costs.

And the role of lab testing in healthcare is destined to grow, thanks to advances in genomics and personalized medicine. 

While in the early stages, personalized medicine will eventually replace the traditional “trial and error” model of prescribing drugs. This is because testing to predict a patient’s likely response to a therapy in advance – and monitor treatment over time – may drive efficiency, reduce waste and promote better outcomes.

The importance of diagnostics to personalized healthcare explains the roughly four-fold increase between 2005 and 2010 in collaborations involving diagnostic and pharmaceutical firms. These collaborations typically focus on companion diagnostics that can help aid in predicting and monitoring response to therapies.

While the early action in this area has focused on oncology, neurology and infectious diseases have started to make inroads as well.

One example is a collaboration between Quest Diagnostics and Biogen Idec. It resulted, earlier this year, in the first FDA-authorized laboratory-developed test to help stratify the risk of a rare, but serious brain infection in multiple sclerosis patients receiving a drug from Biogen and Elan Pharmaceuticals.

Lab testing can also help pharma by identifying individuals who may be at risk of adverse reactions during clinical trials. If we can identify those patients beforehand, we may accelerate the pace of drug discovery as well as the FDA’s approval of new drugs.

Laboratory-based diagnostics may eventually help identify good candidates for implantable medical devices too, by helping to predict biocompatibility with device materials. These tests may even prove useful in evaluating candidates for certain surgery or radiation choices.

Lab testing’s role will extend even beyond working with pharma to deliver personalized medicine. By coupling diagnostic insights with consultative services, clinical labs can provide better information and even more value to help improve medical care.

Consider for a moment the vast amounts of patient data our industry generates. Quest Diagnostics alone performs testing on approximately 530,000 patients on a typical workday. Insights gleaned from these aggregated data can provide the basis for better decisions, not just by patients and clinicians, but by payers and policy makers as well.

But to harness the potential of these data and maximize their value, labs and providers must work together to develop coordinated services. These solutions should provide rapid access to actionable data while also rigorously safeguarding data and patient privacy.

Right now, healthcare is largely disjointed, with multiple providers caring for patients with little collaboration. This is a real problem, particularly for the one in two people in the United States with a chronic disease. A lack of coordinated care for these patients across many providers and venues may in part explain why costs for managing these diseases, like heart disease and cancer, account for about 75% of healthcare expenditures.

Of course, electronic connectivity provides the basis for sharing health insights. Ideally, labs should enable providers to access data seamlessly, wherever and whenever it's most needed, in a safe, secure environment that protects privacy. These data need to be actionable, and in a format that streamlines workflows.

I'm sure everyone here is curious about how the presidential election will play out. But regardless of what happens in November, the interest of both political parties in healthcare reform has created momentum that will have lasting effects—effects that are likely to be, on the whole, beneficial to the diagnostic industry in the long run.

First, payers have said they intend to keep in place certain reforms, such as the right to obtain coverage for people with preexisting conditions and allowing children up to age 26 to stay on parents’ health plans. These measures may promote greater access to testing.

And although the details are subject to debate, both sides recognize that cost-efficient, quality healthcare is important to our nation’s future. As the high value, low cost foundation for healthcare, diagnostics will play a central role in health reform regardless of the political dynamics in Washington.

The momentum for change is unstoppable, largely because there is a very real need to control costs and allocate resources efficiently. Clearly, U.S. healthcare spending is on an unsustainable path.

Total U.S. healthcare expenditures reached about $2.6 trillion in 2010, or nearly 18% of GDP.

CMS estimates healthcare costs could reach $4.8 billion, or almost one-fifth of GDP, by 2021.

Employers and patients are also feeling the squeeze. Annual premiums for employer-sponsored family health coverage reached $15,745 this year, up 4% from last year, with workers on average paying $4,316 toward the cost of their coverage.

Despite this high cost, by many measures, health outcomes in the U.S. are not as good as they should be.

Now, I realize that international comparisons of health systems can be tricky and controversial.  But some rating systems put us toward the bottom in rankings compared to other developed countries. The U.S. ranked dead last against seven other countries, including Germany and Australia, based on quality, access and other metrics in a recent study. Another found that the United States had among the highest death rates from causes amenable to health care, like diabetes and heart disease, of 19 countries.

We can do better.

In response to the need to improve outcomes and control costs, we're seeing the rise of ACOs and other coordinated care models. These alternative care systems hold the potential to create an even more pivotal role for clinical labs.

Over the past few years, coordinated care models have grown around hospital systems. And hospital systems have been buying physicians' practices at such a rapid clip that 65% of physicians are now on a hospital payroll.

Changes in healthcare usually come slowly. I've been surprised by how quickly ACOs have formed, how quickly ACOs and hospital systems have bought physicians, how they've started to form ecosystems with payers and providers. There seems to be more innovative thinking on delivering a better healthcare now than I can recall during my twenty eight years in the healthcare field. This is an important and positive development for the lab industry.

A system focused on quality, efficiency and outcomes could lead to more tests done sooner, to be able to prevent or screen for disease early. It could also lead to better tests to help steer therapy and improve clinical outcomes.

Beyond that, to accomplish their goal of improving the health of a population of patients, ACOs by necessity collect and analyze performance and outcomes measures. Lab professionals and pathologists have an obvious role to play in identifying patterns and outcomes that can be used to refine clinical pathways, control costs, and improve clinical outcomes.

The coordinated care model thus redefines the role of the clinical lab as even more central to healthcare: it becomes the integrator of data and information, and the provider of critical insights.

This trend to coordinated care and the shift in reimbursement and payment structures will inevitably lead to more emphasis on the right diagnostic tests. The more healthcare moves to a value-based system, the greater the need for diagnostics to guide decisions about management of care.

And the under use of preventive and other tests is a serious issue. Studies by the RAND Institute found significant under use of testing for various cancers, HIV, heart disease and diabetes.

Lab professionals, including pathologists, have a key role to play in all this. They are uniquely qualified to help develop clinical pathways, test algorithms and clinical decision support services to help guide healthcare professionals and consumers in test selection and interpretation.

So, in the face of this emerging brave new world of healthcare, what should our industry do?

The first—and most important—thing is to move away from the mindset of a commoditized service. Instead, we need to position the industry as a consultative enabler of higher-quality healthcare at a lower cost.

Given that lab testing is the basis for many healthcare decisions but accounts for about 3% of healthcare costs, we have a lot of value to defend, and we should make it more visible.

One way to do that is to amass clinical evidence. I'm often amazed by how much of medicine is actually based on tradition rather than evidence. This is the age of evidence-based medicine, and we need studies to demonstrate the impact of diagnostics on patient care. The ideal studies of the future will have two arms – one with diagnostics and one without — and will evaluate impact on costs as well as outcomes. But we also need to do more to work with payers, regulators and others to develop research models that produce clinical evidence without stalling innovation or breaking the bank.

We also need to focus on providing convenient, accessible services and communication of information. The ability to exchange data seamlessly and facilitate the coordination of care will naturally—almost inevitably—result in cost savings and improved health outcomes.

Clinical labs and IVD diagnostic companies also need to ensure better information flow is designed into IVD products. This will streamline data exchange.

There's another thing our industry needs, and that's a seat at the table. One way or the other, reimbursement is being reconsidered, not just for labs but all of healthcare. We need to be more proactive in playing a role here.

The lab industry needs to have more of a say in determining how our value is assessed.

This is particularly true as new payment delivery models, like ACOs, which intensify the focus on quality metrics, take center stage. If we sit back passively, policy makers and payers may consider actions that, while well intentioned, limit appropriate testing in the name of short-term cost savings.

Beyond this, the lab industry needs to engage other facets of the healthcare system. We should develop closer collaboration with pharmaceutical firms and medical device companies with an interest in companion testing. We need to engage physicians and other providers, with decision support services to help navigate the thousands of tests to choose from. And we need to engage patients, such as through mobile health apps, so they understand testing’s role in their care.

We also need to push for the development of industry standards that allow for the easy exchange and portability of information between systems. Healthcare professionals treating patients should be able to access a common platform with all the information about a specific individual. We shouldn't have to repeat a test just because someone moves from one health plan to another.

The healthcare industry is uniquely fragmented in this respect. Virtually all other industries have essentially crystallized around two database companies, SAP and Oracle. In healthcare, everyone has their own IT strategy, and there are hundreds of software solutions. They contribute to this digital mess. Yet, besides its relationships with physicians' offices, effective electronic connectivity is probably the most essential aspect of any lab's long-term strategy.

Given the importance of data exchange, Quest Diagnostics has focused on building a robust capability in health information technology. These capabilities range from our Gazelle patient mobile app to our Care360 connectivity solutions used by approximately 200,000 physicians. Our investment in technology reflects our belief that labs must underpin the sharing of vital health information and electronic connectivity drives this access.

Our industry also needs to address certain regulatory issues. For example, some people in government would like to regulate all tests, including laboratory-developed tests, as if they were test kits and have them cleared by the FDA. This additional oversight could stifle innovation and slow down test development. This would neither help our patients nor our industry.

Finally, clinical labs need to always keep the big picture in mind. Ultimately, successful labs will be those that align their strategic objectives with those of the larger ecosystem, whether that happens to be a hospital, an ACO, another health system or, for a company like Quest Diagnostics, the entire healthcare system.

As an industry, we face both a great challenge and a grand opportunity. I'd be among the first to admit that contending with the pressures that confront any lab today can be difficult. But as someone who has the unique privilege to lead a high quality company that is also the world leader in laboratory testing, I am optimistic about the future. The opportunity before us is nothing less than the opportunity to help shape the future of healthcare in this country—to transform the present system into one that is both more effective and efficient, a system that provides unrivaled quality of care, a system in which the clinical lab functions as the central hub for critical insights.

To this end, labs should get in early.

We need to take an active part in the formative phases of development of coordinated care models and ACOs. We need to leverage outreach relationships and integrate ourselves within health systems. By consistently delivering and demonstrating the enormous value we have to offer, labs can help mold these systems.

We are at a rare pivot point in the evolution of healthcare. The economic, social and demographic pressures pushing these changes along are inexorable, but the outline of the future has yet to harden. Things are still in flux. This is why we need to act now.  

We can assume a large role, not just for delivering test results, but as providers of critical insights and decision support.

In 1971, when I was still very young, John Lennon asked us all to imagine a utopian world without countries or borders, without ideologies or religions or possessions that could divide people from one another. I'm not going to be quite so utopian or ambitious.

But I ask you: Imagine a future where all the barriers that now divide and fragment diagnostics and clinical information have evaporated. A future where lab tests, pathology results, imaging and patient history are all integrated, all digitized, all available at the click of a mouse—or whatever we'll be using then.

A future where doctors and other healthcare professionals can use evidence-based tools to analyze all this and determine which treatment each patient will best respond to and payers will pay for its proper value. A future of seamlessly integrated quality healthcare with diagnostics at the very heart of the system.

To my 91-year-old mother, such a future might seem alien or bewildering. But I'm pretty sure my twenty-something children, who are shaping that future, will expect no less.