Today, we went though the implications of ~*$20B* being funneled into the equipment and supply companies, especially HOLX, DHR, and QDEL. The expansion of manufacturing capacity for instruments and consumables will have a long term effect on the pre-COVID large reference laboratory model. Now that DGX is getting into reselling ABT rapid antigen tests and pivoting to value-based care, along with every other health care company without a post-COVID model, that time may be nearer than we think.
Replay with associated slides here.
Audio only replay here.
Format: 45 min presentation; ~25 slides.
Timestamps:
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0:00 - 1:52 Introduction and goals of federal policy for diagnostic testing 1:51 - 5:04 Top Three Things for Diagnostic Testing: Federal Funding, Decentralization of Testing; Development of New Assays and Reimbursement 5:04 - 6:41 Testing: A National Obsession 6:41 - 9:48 Baseline testing post-COVID; health care facilities, congregate living; and those that want a revenue stream 9:48-10:03 Response of labor force 10:30 - 14:04 What to do with $20B? Expand equipment and consumables manufacturing capacity! 10:04 - 16:54 Contracts by manufacturer/lab: ABT, DHR, QDEL, HOLX, TMO, ALR, BIO, DGX, LH, PKI 16:54 - 19:29 DHR & QDEL contracts by NAIC code 18:29 - 21:05 HOLX contracts by NAIC code 21:05 - 22:30 Contract awards, lumpy and with a long tail 22:30 - 24:41 Effects on private investment in medical equipment 24:41 - 26:29 The need and mechanism to reverse testing duopoly and send market concentration in reverse 26:29 - 27:40 Increase in CapEx at DHR, HOLX and QDEL 27:40 - 28:42 Explosive growth in CLIA certified and waived labs 28:42 - 31:24 CLIA certified and waived labs by site of service 2012-2021, capacity decline reversed in 2021 31:24 - 32:53 CLIA certified and waived labs by site of service 2020-21; pharmacies were big 32:53 - 34:58 Growth in FDA cleared assays; chick and egg scenario of equipment and assays 34:58 - 36:05 FDA cleared assays by complexity; trend toward waived and moderate 36:05 - 38:23 HOLX & DHR cleared assays by test systems; waived and moderate v. high complexity 38:23 - 44.20 Increased prevalence of Molecular Diagnostic testing during COVID translating into new revenue streams for hospitals and other sophisticated providers; leaving low margin testing with reference labs. |
Feedback, arguments and questions always welcome.
Emily Evans
Managing Director – Health Policy
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