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Published on June 27, 2017

CCHC to Partner with Quest Diagnostics for
Lab Testing Services

Cape Cod Healthcare (CCHC) announced today it has signed a Letter of Intent with Quest Diagnostics, a global leader in providing healthcare diagnostics and lab services, for the acquisition of the CCHC outreach lab services business. The change is expected to reduce costs while retaining the same high-quality lab testing and diagnostics.

Diagnostic tests are currently provided under the CCHC umbrella at 14 freestanding lab services programs throughout Cape Cod. Under the new model, Quest will be responsible for all diagnostic testing at these freestanding centers and core labs, performing testing at its full-service, state-of-the-art clinical laboratory in Marlborough, MA.

Lab services associated with inpatient, oncology, Emergency Department, and outpatient services provided at Cape Cod Hospital and Falmouth Hospital will not be impacted by this change.

“Our cost of providing these services is higher than those of other competitors in the marketplace; insurers and government payers have demanded that we lower costs and made it clear that they do not expect to continue reimbursing us for the full cost of our testing in the long term,” said Michael Lauf, President and CEO of Cape Cod Healthcare. “With Quest as our partner, we can be confident that not only will quality and continuity of services be maintained, but we will also lower costs.”

As a result of both the overlap between existing Quest services and the greater efficiency they have in performing testing, processing and reporting results, this decision is anticipated to impact approximately 55 Full Time Equivalent positions at the existing freestanding centers, as well as at core labs at Cape Cod Hospital and Falmouth Hospital. Impacted employees will have the opportunity to apply for other positions within CCHC, per the terms of existing labor contracts.

Approximately 250 lab employees will remain as CCHC employees after the transition of testing services to Quest.

Third-party research shows that Quest Diagnostics often provides lab services that cost significantly less than those provided by hospital-based labs. The Massachusetts Health Policy Commission 2015 Cost Trends Report found that “the price difference for the same service between different settings of care supports the need to explore opportunities to address both price variation and site-neutral payments.” For example, for a basic metabolic panel, the median price at a hospital outpatient department was $29, compared to a median price of $12 at Quest.

“As hospital health systems consider their outreach lab strategies in light of reimbursement pressures and the growth of high-deductible plans, which place a greater share of cost on patients, many are turning to Quest to help them deliver on their core mission of delivering patient care,” said Steve Rusckowski, chairman, president, and CEO of Quest Diagnostics. “We work with many other hospitals across the country that recognize our clinical expertise and scale, which allow us to deliver great value. We are delighted to be partnering with Cape Cod Healthcare.”

With a primary focus on diagnostic and lab services, Quest has invested in training, technology and automation, and the innovation necessary to provide the best results in a timely manner. The analytics and software used by Quest to track and assess the results of diagnostic testing will provide an important tool to CCHC and physicians using these services to more effectively manage patient health. Quest can also provide over 3,000 different diagnostic tests, ensuring that clinicians have access to the very best diagnostic options to meet their patient care needs.

“Quest has been able to invest in technology tools that are far more sophisticated than any ‘off the shelf’ programs CCHC would have access to; this will allow our clinicians and partners to access and track patient care information more easily,” said Lauf. “I am confident that they are a partner that will be flexible and responsive, something that is critically important in the rapidly changing and innovative field of diagnostic testing.”

The transition of testing services to Quest requires approval by the Commonwealth’s Health Policy Commission.