New Market Dynamics Poised to Reshape Clinical Lab Services and the Role of the Pharmacy

In May, I had the privilege of addressing the audience at the National Independent Laboratory Association (NILA) Lab Leaders Forum to discuss the market dynamics that are reshaping clinical laboratory and pharmacy services. This blog provides a summary of several of these important trends.

The healthcare industry continues to experience a data explosion. Industry leaders are combining claim data, diagnostic data, and risk assessments with nontraditional data sources. Meanwhile, consumers are on their phones more than ever. These phones are powerful, handheld computers that continuously collect and synchronize thousands of data points to make everything from reading the news to staying fit more personal. 

Research shows that consumers are willing to share their health information for the right value proposition, such as ensuring high-quality medical care. Consumers also report willingness to share shopping data if it helps to ensure top-notch medical services. This kind of consumer information provides opportunities for companies beginning to merge consumer data points together to better manage health costs and empower and engage consumers. This kind of information can also help companies launch new consumer-friendly features and business models that create value.

There are several related market dynamics that are actively shaping our industry:

Healthcare Deserts

Healthcare deserts impact access to quality care in a surprising number of U.S. states. For example, more than 2.2 million women of childbearing age live in maternity care deserts that have no hospital offering obstetric care, no birth center, and no obstetric provider. Surprisingly, one-third of these women live in a large metropolitan area or urban setting.

Shift to self-insured plans drives provider collaboration

More than half of U.S. workers are now covered by some type of self-funded medical plan. The self-insured employer is interested not only in cost but in maintaining the health of employees, which drives provider collaboration on care rather than cost.

Consumer-driven healthcare shifts to patients owning their data

The global direct-to-consumer (DTC) lab test market is predicted to see 26% annual growth through 2031, according to a report by Albany, N.Y.-based Transparency Market Research. The growth will likely far outpace that of the overall clinical lab test market, forecast at a 7.3 percent annual growth rate through 2028. Thirty-seven states currently allow DTC testing, though CA is limited to Pregnancy, Glucose, Fecal Occult Blood, Cholesterol, and HIV.

This anticipated growth is attributed to aging populations, rising demand for early disease detection and diagnosis, and the increasing prevalence of lifestyle-associated and infectious diseases including obesity, hypertension, diabetes, cancer, and sexually transmitted diseases (STDs). Genetic testing dominated the direct-to-consumer market in 2020, according to the same report, and it’s predicted to continue doing so through 2031.

Growth in specialized diagnostic care

There is a growing prevalence of specialty-focused diagnostic providers who provide both imaging and laboratory testing for specialties such as oncology, cardiology, OB/GYN, and urology. We are expecting to see greater consolidation of laboratory and imaging catering to specialty care.

How pharmacies can help

Pharmacies can help support healthcare deserts. More than 90% of Americans live within 2-miles of a pharmacy and 95% live within 5 miles.¹ Pharmacies are expanding operations to include health screenings and medication therapy management. U.S. consumers visit pharmacies ten times more frequently than other healthcare providers.

According to the JD Powers 2021 US Pharmacy Study, more than half of pharmacy customers have used pharmacy-provided health and wellness services during the prior 12 months. There is a clear dynamic of routine/basic healthcare moving toward neighborhood pharmacies and telehealth.

There are more than 63,000 storefront pharmacy locations in the U.S., and this number is expected to grow to more than 66,000 by 2025. U.S. pharmacies have the potential to provide ~450 million clinical service encounters per year based on current capacity, which is about 1.5 times the current volume. In 2021, for example, retail pharmacies administered almost 3,900 COVID-19 vaccinations per store.

Also, new legislation recognizes pharmacists as providers. Introduced in the U.S. House of Representatives on March 24, 2022, the Equitable Community Access to Pharmacist Services Act, H.R. 7213, would authorize pharmacists to provide care and receive reimbursement for pandemic-related services for our nation’s seniors. This bill would grant pharmacists “provider status” under specific circumstances and establishes a federal reimbursement mechanism for pharmacists’ services under Medicare Part B.

Evidence shows that pharmacists make a significant impact on patients’ health outcomes and reduce health care costs. The new legislation would align reimbursement with the services pharmacists are trained to provide and give underserved patients more access to crucial care.

The role of clinical laboratories can also grow

Clinical laboratories can help doctors manage their patient populations by:

• Identifying care gaps
• Supporting early diagnosis
• Monitoring and tracking patients at risk for an acute event.
• Flagging patients who are at high risk for chronic conditions, such as diabetes, chronic kidney disease, and cardiovascular disease

Community Oncology is also mobilizing to meet patient demand close to home.

The Opportunity: Expansion of Pharmacy Clinical Services

There are several important linkages between laboratory diagnostics data and pharmacy data. Laboratories provide critical diagnostics for patients, while pharmacies both prescribe and fulfill patient treatments. Understanding the real-world impact of diagnostics on patient treatment decisions is broadly considered critical for advancing personalized medicine initiatives. Certain patient treatments are increasingly shifting away from the physician’s office to the pharmacy setting because it is more convenient and less expensive.

Market leaders are embracing consumer-driven healthcare focused on convenience, expectation, and a digital experience. Telehealth, pharmacies, and community-based healthcare services provide easier access to care and provide a better cost model. Quality is established through deep domain expertise, vertical specialization, and cross-collaboration. Finally, tech stacks must support cross-collaboration and specialization while enabling appropriate data sharing based on patient preference and control.

Recommended Webinar:

Interested in learning current trends related to the gains in pharmacist prescriptive authority and how the right technology can provide the synergies in data systems to offer a seamless, unified patient experience? Watch the recent CAP Today webinar, “How Labs and Pharmacies Can Collaborate to Grow Their Respective Businesses” with XiFin’s Kyle Fetter and David Pope of OmniSYS.

Watch Now

¹ Qato, Dima & Zenk, Shannon & Wilder, Jocelyn & Harrington, Rachel & Gaskin, Darrell & Alexander, George. (2017). “The availability of pharmacies in the United States.”