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Quest for success: Company continues to modernize as it begins its next 50 years

By ,
Quest Diagnostics CEO Steve Rusckowski.
Quest Diagnostics CEO Steve Rusckowski. - ()

Loaf of bread. Gallon of milk. And a blood draw. Such a scenario is already the norm in parts of a country, thanks to a pilot program by Madison-based Quest Diagnostics.

The company, which is moving to Secaucus in the fall of this year, has 65 retail locations in other states and more on the way.

CEO Steve Rusckowski said it’s just the latest example of how a 50-year-old company known in New Jersey as simply a place to go for a blood test is modernizing into a facility that can serve a number of health-related issues.

And do it with the type of convenience the modern consumer demands.

“Medical offices are not where retailers are,” he said. “Those retailers have already identified where consumers want to be, so what better way to provide access than to tag along where retailers are?

It’s in the genes

Quest Diagnostics does more than just blood draws. In fact, CEO Steve Rusckowski said the company is creating many new products, including one based on geneotyping, which can detail a person’s ancestry.

“You know, 200 years ago, we didn’t move very far, and so that’s where our ancestors are from,” he said. “We believe it helps in understanding your family health. Most of us have a general idea of what happened to our parents or siblings.”

People, however, do not always the clinical terminology for specific conditions, Rusckowski said. Because of this, he said, genotyping is a consumer-facing service that helps an individual’s care.

“People come in, we sign them in electronically, they go out in the store to shop, we beep them when we are ready — just like you have at restaurants.”

In addition, parking is never a problem, because the retailers already have provided that.

Even more, being convenient will help build the business — and keep people healthier, Rusckowski said.

“What you find is that 20 percent of orders doctors fill in our space go unfulfilled, because it’s not convenient,” he said. “So we believe we can actually move the needle and provide good health care as well. So, multifaceted energy around the brand.”

A brand that has changed quite a bit since 1967.

•••

For many, Quest Diagnostics is known as being one of the two leading companies that provides blood draws and drug-test screenings.

But that wasn’t the case in April 1967 — a time with fewer standards and regulations — when the idea to pursue better pathology results was born.

The company, then known as MetPath and based in New York City, wanted to provide better lab testing to area hospitals. It accomplished the feat using a variety of methods. In fact, as one of the famous in-house stories goes, bathtubs in an apartment were used to stain Pap test slides for cervical cancer.

At least, that’s the way Paul Brown remembers it.

Brown, the company’s founder, was on hand a few weeks ago to celebrate the company’s 50th anniversary.

He said he is overwhelmed by the growth of the company.

When Brown sold the company to Corning Glass Works in 1982, it had 3,600 employees in three countries and revenues of $110 million. Not bad, Brown said, for a company he started with $500 from his in-laws.

Now, Quest has 43,000 employees, locations in 130 countries and a 200,000-square-foot "Laboratory of the Future" in Massachusetts.

“The whole story is so exciting,” he said.

The publicly traded company generated $7.5 billion in revenues in 2016, according to the company’s website.

“I’d like to see it get to $10 billion in revenue next,” Brown said.

Brown is convinced Quest can reach that goal by staying nimble and updating its services to meet the demands of a changing health care industry.

“I think what is nice about this is the company has changed with the program, but one thing I think is missing is getting more in consumer marketing,” Brown said. “There are labs that are not getting the type of attention from the regulators, and perhaps more advertising to point out the differences might make a difference.”

•••

Rusckowski is bullish on the future, too.

Since consumers are taking on a greater burden of their own health care costs, Rusckowski said he feels they will be looking for the best brand with the best quality at a price they can afford.

“Seventy percent of the next decision patients make is based off of laboratory data,” he said. “Small fraction of the cost, big portion of the decision making. We have challenges in this country around the growing cost of health care. I would argue … more information means better decisions. With better diagnostics … you’re going to have better health care costs and better health care outcomes.”

The existing options people have in the industry mean there is competition for who gets the customers through commercial insurers, Rusckowski said.

“It’s like restaurants … on a Zagat rating,” he said. “Quest is a one-dollar sign. Least expensive. I would argue some of the best quality. Smaller labs will be two dollar signs. More expensive, especially in areas that are harder to serve. We are mostly in densely populated, metro areas.

“And the hospitals that compete with us make up one-third of the market … they are three- to five-dollar signs. So, it’s a wide range.”

To reach consumers, Rusckowski said Quest is investing in its information technology infrastructure and becoming more mobile-friendly.

•••

The business model for the next 50 years is interesting.

As more health care providers look to provide lower-cost care, Rusckowski believes Quest is well-placed to be competitive since it is only 2 to 3 percent of a provider’s cost.

Competitors, however, don’t always have to be rivals, Rusckowski said.

So, while Quest is competing with hospitals for this revenue stream, it also is slowly making inroads to partner with some, too.

NJBIZ has previously reported a partnership with RWJBarnabas Health, as well as insurer United Healthcare through its data arm, Optum.

“Things are changing,” Rusckowski said. “As consumers are more important … what is happening now is consumers are pushing back on their doctors.”

Rather than just go where the doctor tells them to for lab tests, they will find other in-network labs with their insurer. And often times, the doctors have no idea the hospital bills are in the hundreds, Rusckowski said.

“It’s a complicated industry, and very fragmented; we actually in the last five years have changed the way we organized ourselves,” he said.

That means centralizing administrative operations, but also dividing the country into six regions — each region divided into roughly 100 sales districts about $50 million to $100 million in size.

This allows the company to be both global and local simultaneously.

“We are putting a lot of energy into becoming the best consumer brand in what we do,” Rusckowski said.

Even if that means working out of a grocery store.

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