The evolution of lab partnerships

“Working with healthcare systems, you’d better have honed your listening skills,” says Mike Lukas, senior vice president of health systems of Quest Diagnostics, “to make sure that you are solving your customers’ problems, and not completing your own objectives.” Lukas described his own professional journey in the healthcare industry, and his evolution as a leading executive at Quest, in a recent ACHE podcast.

Lukas came to Quest from General Motors in 2007. He says what really struck him, coming from a large automotive company, was the laser focus on patients. “When I came here, it was so clear to me at every level within the company that there is a passion around getting it right, because there's a patient on the other end of it.” It is uplifting to work for such a company, he says, “and that part of it has been true for every day I've been here.”

Lukas began as vice president for Finance, but, under the leadership of its CEO at the time, the company was beginning a major round of modernizing their organizational structure, and Lukas was approached about taking on a new role. “He said to me that the company would really like to focus on building a service business for hospitals,” to expand beyond the reference laboratory offerings the company was primarily known for. As VP for Health Systems, he took on overseeing both the testing arm and the new enterprise of hospital lab services. “I was employee 1 of this new organization inside Quest.”

After a year of developing a vision and building a value proposition, he and his team were ready to go to market. Professional lab services now make up almost half of the company’s hospital business. “There have been some major learnings for us along the way,” Lukas says. “When you are building something new, you really need to be flexible.”

One of the most important missions of the enterprise is to work with hospitals to support their laboratory needs. The need for this support became apparent to many healthcare systems during the pandemic. “The supply chain got stretched and pushed,” with a resulting significant pressure on costs. “I think we've resolved a lot of the issues that were related to shortages during COVID,” Lukas says, but an underlying crisis remains, that of finding, retaining, and compensating skilled lab workers. “If you're a healthcare executive, I suspect that your cost of labor has gone up significantly, and acquiring the skill sets that you need to run your business has become significantly more challenging. We've had to get much, much more creative on attracting talent.”

One of the advantages for a large health system can be in economies of scale, but it takes expertise to understand how and where to apply those most strategically. “Does it make sense to run every diagnostic test at every site” within the system, or would centralizing some testing, or outsourcing it, be advantageous? “That's probably a really big lever to look at if you're a health system, to drive value,” says Lukas. The supply chain is another place where there may be value in consolidating and potentially in partnering.

At Quest, Lukas says, “we're definitely going beyond the test and trying to build tools and services that are going to help health systems address some of the longer-term and medium-term challenges.” That has given Lukas the opportunity to really bring his listening skills to the fore. “I get an opportunity to put together these really complex relationships [with healthcare systems] that are trying to tap into these longer-term value creation plays, and you have to be listening to be successful, otherwise it's just never going to work, and you're never going to be solving your customer’s problems.”