Uncovering the Impact of Lab Testing

OR – Barry Davis – LV: Video automatically transcribed by Sonix

OR – Barry Davis – LV: this mp4 video file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Saul Marquez:
Hey, everybody! Saul Marquez with the Outcomes Rocket. I want to welcome you back to our podcast. Today, I have the privilege of hosting yet again an amazing individual, great contributor in healthcare, Barry Davis. Barry is the chief growth officer at Avalon Healthcare Solutions, and in his role, he is responsible for growing the company’s revenues and services through a national business development strategy. He has 30-plus years of healthcare experience working with and serving health plans. Prior to Avalon, he was senior vice president of Health Plan segment at OptumRx and has held various different roles at companies like UnitedHealth Group. Just an extraordinary individual, and I want to welcome him back to the podcast. Barry, so glad to be back with you.

Barry Davis:
Saul, thank you very much. Thanks for having me back. Good to see you again.

Saul Marquez:
Likewise. Likewise. So I’m excited to just catch up, you know, and really kind of help people that haven’t had a chance to meet you yet. Let’s level set for them first. So what is it that got you involved in healthcare? What inspires your work, Barry?

Barry Davis:
You know, as you said, it’s now 34 years of my career and all in healthcare. I started at a health plan, and I did 25 years in the industry across four top-tier PBMs and now six years at Avalon. And for my entire career, healthcare has always, you know, and even before me, you know, healthcare has always been important in the US. The dialogue on improving clinical outcomes, making it more affordable. And for me personally, um, my family doesn’t have very good genes. So, my mother passed away from cancer after, within seven months of diagnosis at 63. My father had two heart attacks in his 60s and a debilitating stroke at 70. So it’s kind of personal, too, that I’m, I feel that I have great purpose in the work that I do. I’m, you know, in my corner of the world, I’m trying to make things better, better clinical outcomes, help make it more affordable. So, I’m trying to make a difference.

Saul Marquez:
Very well. Look, man, I appreciate you sharing that. And it’s personal, right? And I think for everyone, healthcare is personal. And so, you know, let’s definitely hone in on how that personal experience you’ve had has translated into the work you do at Avalon. So help us understand what is it that you guys at Avalon are helping solve with innovation.

Barry Davis:
Yeah. Avalon is a lab benefit manager. And when you look at lab testing, it somewhat flies under the radar, but it is the number one utilized medical benefit. There are 14 billion tests in the US performed annually. And then COVID helped shine a light on testing, putting on the news every day, and the testing drives 70% of medical decisions. And I think it’s kind of obvious when you step back, we all go to the doctor, you get a test, and that leads to the conversations and the follow-up, and so that’s great, great stuff going on and advances in the science, but also brings big challenges. The laboratory science is exploding, and that’s across routine and genetic testing. When you look at, and that drives greater utilization and greater spend, you know, just looking up some of the Medicare numbers in 2021, Medicare spent 9.3 billion on lab testing. That was a 17% increase from the prior year. Then I looked it up from the last time we spoke in 2020, there were about 75,000 genetic tests on the market then. Today, it’s about 175,000 tests. So when I talk about the explosion in science, so more than doubling in that period, it’s about ten new genetic tests coming into the market almost every day. So that’s, some of that’s good news. You know, new innovation in testing, and that’s driving advances, but a major challenge is the, all the stakeholders can’t keep up with the science, and doctors can’t keep up with the training, and doctors would tell you they don’t know what genetic tests to order. So to help people get the right, you know, to that point about leading to your medical decisions, you’ve got to have the right test. Otherwise, you’re going down the wrong path. And then overall, for all of the testing, up to 30% of the testing is inappropriate or unnecessary, you know, tied to what I just said for genetics and then also for a lot of waste and abuse that goes on in routine testing.

Saul Marquez:
Yeah, it’s a, you know, great opportunity to dig into this, Barry, and the numbers don’t lie. The number of genetic tests out there, it’s interesting to sort of think of this space as the highest utilized space benefit, and who’s impacted by this mostly, right? Like because there’s an adverse effect. Is it employers that are most being hurt? Is it health systems? Is it the health plans that are paying more than they should? Talk to us about that.

Barry Davis:
Yeah, it’s a good question, and I think it starts with the patient. All those stakeholders are impacted, as you said, but the patient is trying to get the best care, so get the right test, and then, with all this waste, they’re paying more. And so many people, so many stories out there where they’re saying, I can’t afford healthcare, so they’re not even getting the testing. So we’re trying to address all of that. We’re trying to improve the outcomes, help you get the right test, and remove the waste and abuse that happens throughout routine and genetic testing. We’re driving 8% to 20% savings reduction in outpatient lab testing through our solutions for, to give, you know, to put some numbers to that, for a million lives, that’s $12 to $36 million in annual savings coming out of the system that goes right into the patient’s pocket. The payers, whether it’s the employer or the health plan, which then helps reduce premium costs and just make the whole system more affordable and can dive in and give a couple of examples of that.

Saul Marquez:
I would love that. Yeah, that’s very meaningful. So, how do you, imagine there’s a navigation component? Help us understand, you know, how that works. Love an example.

Barry Davis:
Yeah, I think we talked about this last time, but it’s I think it’s worth repeating. It was, I was fascinated to learn, when I joined Avalon six years ago, that the labs all get to define their panels themselves. So what does that mean? It means there’s no consistency. I thought when I would go to get my cholesterol checked and the doctor’s ordering a lipid panel, I thought that meant there’s consistency. The test should be the same, and thought the cost would be the same, like it didn’t really matter where I went. But the labs and they’re able to do this. They get to define their panels themselves, and they call it. That’s their proprietary information, what they put in there. And so what we’re doing at Avalon is we use the science. We have evidence-based lab policies that defines what should be in the panels. And then, we apply that through, for routine testing in an automated fashion and in genetic testing through automation and some prior authorization to bring consistency so it doesn’t matter where you go. You know, the labs are smart, the labs are very good companies, and they do very good testing, and they’re smart. You know the doctors all complain that they don’t have enough time and more administrative work is harmful for them. So, the labs make it easy to check one box for a panel, lipid panel. And then, we define the science. The science defines what should be in there, which is kind of straightforward for cholesterol testing, your HDL, your LDL, triglycerides, and total cholesterol. But the labs will have sub-fractionated HDL or LDL in that panel, which the doctor’s not ordering and is unnecessary. It’s got no clinical value. It’s not helping the doctor make their decision on your therapy. And then they’ll sometimes, you know, a key abuser of that is where they put vitamin D test in a lot of panels, and there’s no diagnosis code for it. So our program, through the policies and our proprietary software, looks at the claim post-service prepayment and then denies the extra units, and as payment for those extra units that were unnecessary that had no clinical value. And so, therefore, helping the doctor, helping the patient, and with outcomes, and save money. Then also, on the genetic side, talked about the growth in testing, and again, back when we last spoke in 2020, genetics represented 10% of the outpatient spend. Well, now that’s 30%. So that explosion in the number of tasks and the utilization, and these are high-cost tests. It’s predicted that genetics spend is going to go from 4,000,000,000 in 2020 to 10,000,000,000 in 2027. And a key challenge in genetic testing is those 175,000 tests in the system are represented by only 500 CPT codes that are used to submit the claim and process the claim. So you really, when the health plans process the claim or trying to evaluate a prior authorization, they have no idea. They don’t really know what the test is, so they can’t make the best decision, or it creates a lot more manual work to do the prior auth to do outbound phone call, to talk to the doctor, get more information from the doctor and lab to just to process the claim to do their prior auth and process the claim. And so we’ve been addressing that through a partnership with a company called Palmetto GBA, which, for the Medicare fee for service over ten years ago, established a proprietary program called Moldex that assigns unique codes to the genetic test. They call it a Z code, and that gives it a 1 to 1. Who’s the lab? What is the test? And they also do test validation and quality checks. Is it a good test? Out of these 175,000 genetic tests, they’re not all good tests. They’re not, you know, just because somebody markets a test doesn’t mean it’s a good test, right? And so that Z code acts like in in pharmacy world, like an NDC code, NDC number, to give it a 1 to 1, so you know what the test is, and you can now do more with it.

Saul Marquez:
That’s really fascinating. Taking it, you know, sort of from the last example to the first one, Barry, you’re allowing payers, whether patients, you know, employers, the opportunity to distinguish and differentiate what a particular test is in an automated way that then could help them make the right decisions for patients, and that’s really cool. I didn’t know there was 175,000 tests in the market. That’s crazy.

Barry Davis:
Yeah, and ten new tests almost every day.

Saul Marquez:
Every day. Oh, my gosh. And then also the stat about where it is and where it’s going from 4 billion to 20 billion, I think you said, is just staggering.

Barry Davis:
Only 10 billion, but still 10 billion.

Saul Marquez:
Only, but still, that’s huge, right? If there’s an opportunity to really, you know, do something about something that could get out of control like that, I think now is the time. So certainly very cool that you’re doing that. And then thinking about the standardization of how, you know, labs do their particular panels. It sounds like it’s the back end where, you know, once the panel is done, you take a evidence-based approach to help a payer say, hey, thanks, but we’re going to pay for these because those other ones don’t align to the care pathway that we have in place. So, two really great opportunities for savings and great care.

Barry Davis:
Exactly. And I think everybody would say this and agree, in healthcare, we should be practicing evidence-based care, but it’s not as easy to implement. And, you know, all the stakeholders from the physicians to the labs to the health plans, it’s hard to keep up with it. It’s changing rapidly, and that’s where you need technology to help you to give you that information. And because, you know, again, COVID’s a simple example. You look at the science every month, every quarter, the science was changing during the pandemic, and our policy was changing with it. There’s different testing for COVID, and the labs were promoting, you know, testing to just see if you had the antibodies, and you should never really run a test unless you know what you’re going to do with the results. So it was like nice to know those results, and you paid for it, but now what?

Saul Marquez:
Now what? Exactly.

Barry Davis:
So, the evidence-based, and we have a library of 135 evidence-based lab policies for routine and genetic testing. And we have an independent clinical advisory board made up of physicians that run academic labs, Cleveland Clinic, Yale New Haven Hospital, University of Washington, Harborview Medical Center, that review and have to approve the policy. So there’s nothing financial in the policies, it’s all evidence-based science, and our number one job is to make sure the policies stay up to date. Every policy gets reviewed on a quarterly basis or whenever the science changes, and then bring the tools, the software, the automation, prior authorization to manage and administer those policies for the health plans and the members.

Saul Marquez:
That’s fantastic, Barry. You know, and a question that our listeners might be thinking about, I’m thinking about it, is scalability, right? So this all sounds great, Barry, but how does a solution like this get embedded into an enterprise-wide solution that could work and not break?

Barry Davis:
You know, when I started with Avalon in 2017, we had two customers, two health plans, Blue Cross of South Carolina and Blue Cross of North Carolina. And I’m happy to tell you, we now have over 30 health plan clients in that six years that growth, and we now cover 38 plus million members.

Saul Marquez:
Congrats, that’s huge.

Barry Davis:
So, thank you very much. And it’s, you know, great work by the team by Avalon and our partnership with the health plans, and I share that you know, A, for the success story but, B, to help tell the story about the scalability. It does require connecting our software into the health plan, medical claim processing system to do the automation, and basically, almost real-time, they get a lab claim, they send it to us in less than a second, get their advice back to pay, reduce, or deny, and why, with the policy stamped on it, so great work by both health plans and Avalon to build those connections and to, you know, scale it. It’s, you know, the technology is great today, you know, using cloud-based technology as we keep growing. It’s a lot simpler today than it was in early in my career, you know, to have all the servers that you need to support it and, you know, we’re looking to double in size and, you know, 60 health plans and 80 million lives. That’s where we’re shooting for.

Saul Marquez:
Well, look, Barry, with the outcomes that you’re producing both financial and medical outcomes, I hope you 10x your business because this type of reduction is critical if healthcare is going to be sustainable in our country. Yeah, look, very unique value proposition; you’ve highlighted that. If you think of one healthcare trend or technology that’s going to change health and care as we know it, what would you say that is?

Barry Davis:
I think it’s the earlier identification of a disease, and genetic testing is playing one role in that. That’s one of the positives of the innovation, new blood testing to identify cancers earlier, and then, so that’s fantastic. And then at Avalon, we also have a solution that we call Lab Values Management, where we take the test results, the lab values, and digitize that, and it’s not easy to digitize lab results and then be able to use it in your data analytics. We’re doing that, and then we can, we’re focused on chronic kidney disease and oncology today. We can look at the lab values and determine somebody in stage 1, 2, or 3 earlier in the process, and I think pretty straightforward, the earlier you identify the disease, the earlier you can take action, manage it, lead to better outcomes, you know, at stage 1 or 2 versus stage 4 or 5, to get better care and improve the results. So we’re doing a lot in that space now, and we call it Lab Values Management. And so that’s, you know, we’re not, you know, between the genetic testing, I think there’s some great stuff going on to lead to that.

Saul Marquez:
Well, that’s great, Barry. And you know, the promise of prevention is, is huge. And at the same time, the weight of the numerous tests out there could be overwhelming. So I think it’s really cool that, you know, there’s an opportunity with Avalon for folks that want to embrace the science, that they do it in a really tried and true way that does the 1 to 1 matching with the test and helps you sift through what could be very confusing, so awesome example there. Look this it’s always great to talk to you like I’m always learning something new from you, and I know the listeners are too. Talk to us about what you want our listeners to walk away with, a closing thought, and then the best place listeners can get in touch with you, your team at Avalon.

Barry Davis:
A little repetitive, but you know, the growth that we’ve had, I think, summarizes the story, you know, and appreciate your comments about the solutions and the innovation and the evidence-based medicine, science and medicine, and very proud of the partnerships that we formed with some great health plans that have embraced exactly what you’ve said and leading to that growth to bring those outcomes better care and helping drive healthcare affordability to, you know, across 38 million lives now, again, back to what I opened with, you know, driving purpose. Those are the things that I look for in my career to do, and it’s, you know, you could work hard at something that you believe in, and you don’t always get the results. So, I’m very thankful and very proud that we are getting those results and outcomes. We’ve had clients do press release, Blue Cross and North Carolina did a press release on exactly that, and those are hard to get. You know, customers appreciate what you’re doing, but to get them to put it in writing and to do a press release that takes lots of reviews and approvals and, you know, but they are so passionate about it as well, so kudos to them. Those kind of organizations, those are the kind of partners we’re looking for that want to drive that difference, do it based on the science, improve outcomes, and make healthcare more affordable. And so, I thank our partners, I thank everyone at Avalon for the hard work and the lab expertise that we’re bringing to the table. And then I think you asked me, you know, where can people reach me? Obviously, they can go to our website, which is AvalonHCS.com, great resources out there. We produce the industry’s only lab trend report that gives you a lot more detail on the industry in the space. And then to reach me personally, email me at Barry.Davis@AvalonHCSHealthcareSolutions.com, and I’d love to hear from you. Let me know what you thought of the podcast and if you have any questions that I can help you with.

Saul Marquez:
Barry, thank you so much. Folks, take Barry up on an opportunity to connect. Because now is the time. And one thing I share with you all on this podcast is that outcomes, whether it’s business success or health outcomes, start with action. So Barry, I want to thank you for taking action on this podcast today, being here with us. And a call to action for everybody listening, take action, don’t stop at listening. If you’re going to blast off on the rocket, you’ve got to take action. So reach out to Barry, make your outcomes show by your action. Barry, thanks for being with us today.

Barry Davis:
Saul, thank you.