Buy vs Build: 6 Problems with Launching Lab Testing on Your Own

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In the era of personalised healthcare, granular health insights have become crucial for companies to stay competitive. The most invasive of these insights can include blood, urine or saliva tests analyzed in labs.

Whether you are a men’s health company looking to launch testosterone test kits or a diabetes management company testing for HbA1C and lipids, venturing into the realm of lab testing can be complex and fraught with challenges.

This article will be your go-to-guide on the complexities of launching your own lab testing operations and may get you to think again about whether to buy vs build 😉

Compliance: Navigating Regulatory Hurdles Direct Access Testing (DAT) or consumer-directing testing is defined as a consumer (as opposed to a physician) ordering a test. Consumers can purchase lab tests directly from a clinical digital health company online by paying out-of-pocket for the test.

For many consumers, DAT has been great news, allowing them to take more responsibility over their health - whether they wanted a second opinion, privacy for certain tests types, or wanted to obtain tests not covered by insurance.

Despite increasing popularity among consumers, each U.S. state has its own set of laws governing testing, complicating the process for digital health companies.

Some states have no limitations on DAT, allowing consumers to directly request tests, others require consumers to have a consultation with a clinician for review and authorisation, giving the lab prescriptive authority, or have limits on the type of DAT allowed.

To further complicate matters, states requiring physician authorisation can only be approved by a licensed doctor in the state where the consumer lives.

Takeaway: You have to invest time understanding the intricacies of DAT regulation in relation to your scaling plan and think carefully about how to service customer nationwide.

Physicians Requisition Forms and Follow-ups: Seamless Collaboration

If you want to scale your testing across all 50 states, you will need a clinical physician network in order to be compliant with your lab orders and follow ups when needed, so you need to secure an independent physician network to cover all states.

As a note, physician oversight is potentially needed at 2 stages:

Pre-Test review: Here the physician reviews a patient’s (customer’s) health information to determine whether a test is clinically appropriate. If it is, they approve the lab requisition, enabling the customer to complete the test with an at-home test kit or have their blood drawn at a lab.
Post-Test Results: Should the lab results come back with any abnormalities or critical values (reference ranges are determined by the labs), the physician will need to contact the patient to flag these results and offer guidance to the patient.

Choosing the right physician network is crucial for developing compliant lab offerings. A poor clinical service could damage your brand experience, customer safety, and leave you vulnerable to regulatory investigation.

Establishing relationships with these physician networks is a time-consuming and expensive process.

Not only do physician networks need to be assessed for their:

Independence - Truly putting patient needs first

Clinical quality standards - Appropriate test approval and interpreting results coming from different labs- physicians need to use their own clinical knowledge to offer guidance to patients

Adherence to HIPAA guidelines

You also need to consider…

Time to to integrate - It takes around 8-12 weeks at a minimum to integrate with a physician network

Non-Robust APIs - Many physician networks lack flexible integrations, which could slow your time to market, and unless integrated properly, could lead to inefficient clinical workflows and data transfer.

High minimums - Many independent physician networks have minimum monthly order spending requirements, starting at $15K

Takeaway: Consider if you have the time to assess and negotiate with different physician networks and the engineering resource to build out a robust integration.

Logistics: Streamlining the Supply Chain

Delivering a product experience that reflects your brand is an important competitive differentiator and key for customer retention. Customised kits and box design are one aspect but equally as important is the ordering, tracking and communications with your end customer.

Taking on responsibility of your test kits would require you to:

Source test kits, lancets from suppliers, and ensure quality customisation of boxes (many promise quality but in our experience it takes a few tries to get a high quality box!)

Negotiate prices, as many manufacturers have minimum quantities and requirements

Manage lead times, and understand optimal shipping options for both outbound and inbound

Integrate with 3PLs for ordering and fulfillment of test kits

Build out communication flows so your customers have greater visibility of the status of their kits

Given the multiple layers of complexity, the logistics process in itself is error prone and requires continual streamlining.

Takeaway: Do you have a killer ops person who can solely dedicate their time to logistics?

Partnering with labs: Establishing partnerships and securing pricing

When choosing an appropriate lab partner you need to ensure they a) carry our your lab test analysis, 2) have the appropriate CLIA (Clinical Laboratory Improvement Amendments) or CAP (Centers for Medicare and Medicaid Services) certification, among other state and local requirements to ensure quality control.

There are approximately 320K CLIA labs in the US so partnering should be a breeze no?

Wrong! It can take anywhere between 3-6 months to establish a partnership with a lab and pricing is largely driven by network and volume.

You may have overcome the hurdle of partnering with a lab only to find out your competitor has better pricing. It is a chicken and egg problem, without the customers you can’t drive volume, and without the volume you can’t negotiate lab processing prices.

Say you have done the hard work of integrating with a lab, chances are it is just one lab! You won’t have visibility into whether you could get better pricing for the same test elsewhere.

Takeaway: Consider if you have the volumes to get the best pricing for your tests, and the time to research the massive catalog of labs available.

Integrating with Labs: Data Exchange and Notification Systems

Building direct integrations with labs can be a large technical challenge.

Labs often have limitations imposed by their Laboratory Information Management Systems (LIMS). LIMS are often complex, require expertise to operate effectively, and are incompatible with other technologies without specialized developers.

Additionally, lab results are shared via a SFTP (Secure File Transfer Protocol), whilst highly secure, the results are not human readable and requires interpretation after validation and management of SSH keys.

In cases where lab results come in PDF, they are often not designed for customer readability, so there is additional parsing and processing needed for the results to be useful to you and your customers .

You may obtain updates on when the kit arrives to the lab, but from that point on what is happening in the lab can remain a black box, meaning you can’t communicate the status of labs back to your customers.

Labs lack robust notification systems to track and obtain updates on the progress of tests, and this becomes a big issue in cases where sample quality issues arise i.e. the test becomes invalid due to hemolysis, and the patient will need to retake the test.

Takeaway: Consider if you have the engineering resource and depth of knowledge of lab systems to build out integrations.

In-Person Phlebotomy or At-home phlebotomy: Avoiding complexity?

You may be thinking a quicker way to avoid the complexity of Stage 3 logistics is to provide in-person or at-home phlebotomy, where the customer goes to a local lab or a phlebotomist comes to the home.

Organizing an in-person lab draw still requires integration with the lab, and considerations of your UI for orchestrating at-home phlebotomy would require you to partner with an at-home phlebotomy network.

We could write a whole article on the at-home phlebotomy landscape (stay tuned!) and the different offerings of providers, but for the sake of simplicity, it is important to realize each network has different zip code coverage, different pricing, some require you to ship kits before the draw, others provide the vials, some are more tech-savvy others less so. All this to say, choosing a provider(s) is not an easy undertaking and still requires significant integrations and consideration of how to enable a unified customer experience no matter where your customer lives.

Yes, in-person or at-home phlebotomy services handle the blood-drawing component but they only solve for part of the problem.

The challenges related to physician requisition forms and data retrieval from labs persist even after the blood collection.

After the specimen is dropped off at Quest or LabCorp, obtaining the data from their accounts can be cumbersome and costly. Additional expenses may arise if third-party integrations, like PWN or Health Gorilla, are required to exchange data.

What’s more, customer convenience is king. It shouldn’t be a case of choosing which modality of testing according to simplicity- companies who are able to meet their customers where they are and offer all 3 will win.

Takeaway: Avoiding the logistics of at-home test kits by phlebotomy will not solve the guaranteed complexity reflected in the requisition form and data exchange.

Getting these steps set up is only the beginning, maintaining consistency and reliability across all steps is paramount and you must ensure your in-house infrastructure has the scalability and flexibility from day one, to accommodate increased volumes and new testing requirements. The time and money invested in setting up the steps outlined above would be better spent actually leveraging the health data you access to personalize the care you provide and drive better outcomes for your customers.

So what problems does a good lab-testing provider solve?

Take it from us - we’ve worked long and hard to orchestrate and optimize the different steps. We recommend you consider the following when you’re looking for a Lab-Testing Provider.

Accurate Lab Results: Integration with CLIA and CAP certified labs to ensure reliable and accurate test outcomes.

Three Modalities of Testing: A provider that can help you best meet your customer preferences whether thats test-kits, in-person phlebotomy, or at home phlebotomy.

Control over Your Omnichannel Experience: A reliable provider offers customized branding options and the ability to tailor lab panels to suit your specific needs.

Full Visibility: From the moment of ordering a test, to communication updates, a robust lab-testing partner provides comprehensive tracking capabilities, keeping you informed at every step.

Efficiency: Streamlining the kit assembly, ordering, tracking, and results processes through automation, minimises errors and leads to increased efficiency. Pre-registering kits further expedites the overall experience for users.

Standardization: Retrieving structured and easily interpretable results data facilitates seamless integration with your existing systems.

Physician Follow-ups: Comprehensive coverage across all 50 states ensures physicians can effectively follow up with patients based on the lab test results, regardless of their location.

By choosing Vital's API for end-to-end lab testing, digital health companies can overcome the significant challenges associated with launching lab testing independently. By addressing compliance issues, streamlining logistics, enhancing collaboration with physicians, and ensuring accurate and reliable results, we empower companies to focus on their core business and leverage the granular health insights in a way that moves the needle.

(Note: The content provided above is for informational purposes only and should not be considered as specific advice or endorsement.)