GS Labs' responses to questions from APM Reports
[In response to question about reporting of testing results in Nebraska and Minnesota]:
It is worth starting with some context. Since October 2020, GS Labs has conducted more than 2.1 million tests nationwide. Your question implicates less than 1.5% of the tests that GS Labs has reported. Aside from the rare examples that you have highlighted, GS Labs has consistently reported test results to patients and to public-health authorities on time and accurately.
It is also important to recognize that a delay in reporting to public-health authorities is distinct from a delay in testing samples. The situations that you have identified involved delays in reporting to government entities, not delays in performing testing or reporting results to the patient. Importantly, the situation you have asked about represent only 2 to 4 days of results. It did not, as you put it, “take so long to process tests.”
The Nebraska situation you reference occurred 18 months ago, during GS Labs’ second month in the testing business. The 2,000 results you reference represent less than 1 percent of the more than 200,000 tests we have conducted in that state alone.
At the time of this issue, the Nebraska state reporting system required manual entry of all testing data in a spreadsheet requiring more than 20 different data fields. GS Labs was conducting nearly 1,000 tests per day in the state. GS Labs has long since adjusted its staffing and processes to accommodate this reporting structure.
The Minnesota situation resulted from the convergence of two factors. First, it occurred during the Omicron surge, while GS Labs was conducting approximately 10,000 tests per day in Minnesota. Second, GS Labs was transitioning to a new laboratory reporting system that enhanced and accelerated patient access to PCR test results. The combination of these two factors led to a temporary backlog of results reported to the state. Again, the 28,000 tests you cite represent about three days’ testing. It’s also worth noting that GS Labs has completed more than 780,000 tests in Minnesota — so again this situation represents a small fraction of our tests and timely reported results.
We have received positive feedback from many public-health officials, who valued GS Labs’ diligence and transparency in the reporting process. We have also helped several agencies transition from inefficient and burdensome manual reporting processes to digital reporting that enhanced the agencies’ operational efficiency and effectiveness. Where we have seen negative responses, it has generally come from agencies that were reluctant to adopt processes that are commonplace in most sectors, like the use of SFTP transfers.
GS Labs has invested heavily in its efforts to make timely reports to public-health agencies. The company hired dedicated reporting teams for each state who worked exclusively on data entry for reporting purposes. GS Labs also worked with a vendor to develop jurisdiction-specific custom electronic reports, which enabled faster reporting and reduced the risk of data-entry error.
GS Labs also prioritized transparency with public-health agencies, even when that transparency did not paint the company in the best light. When reporting backlogs arose, GS Labs did its best to keep agencies in the loop.
While GS Labs aimed for perfection, few businesses can credibly claim to have achieved perfection operating during the pandemic. The vast majority of the 2.1 million tests performed by GS Labs were timely reported. And where some infrequent reporting delays may have occurred, they largely resulted from unique or temporary factors, like a reporting software upgrade. Those delays were addressed in real time, as quickly as possible. GS Labs has never stopped striving to get better in this aspect of our business.
When GS Labs decided to begin testing in a new jurisdiction, one of the top priorities was engaging with public-health authorities to get integrated into the applicable reporting system. In some cases there were delays in this process, including situations where government entities were unresponsive or slow in adding GS Labs to the applicable system. No agency ever suggested to GS Labs that the company should hold off on testing until reporting issues were fully resolved. Instead, agencies consistently expressed gratitude that GS Labs was entering the market to add critical testing capacity.
[In response to a question about a backlog in processing samples from PCR tests during the increase in Covid cases due to the Delta variant]:
The backlog occurred during a significant spike in PCR testing due to the Delta surge. As a direct response to this increase in PCR testing, GS Labs made significant investments to dramatically expand its laboratory capacity. Through investments in a new laboratory, additional equipment, and expanded lab staffing, GS Labs quickly increased its PCR testing capacity to five times its prior capacity.
The new laboratory in La Vista, Nebraska, has four Roche 8800 PCR machines (pictured), state-of-the-art fully automated robotic PCR machines that ultimately gave us the capability to test 15,000 PCRs per day. GS Lab has invested tens of millions of dollars in this new laboratory.
In the process of transitioning to a highly complex laboratory during the Delta surge, GS Labs also added 15 Medical Laboratory Scientists and Medical Laboratory Technicians. These career lab professionals have been accredited through the American Society for Clinical Pathology and hold degrees in chemistry and/or biology. GS Labs also hired 75 lab assistants during the Omicron and Delta surges to assist the lab’s technical staff.
These upgrades to staff and equipment increased GSL’s PCR capacity from 3,000 PCR’s per day to 15,000 PCRS per day. This investment during the Delta surge to add capacity proved critical as we broke record volumes during the Omicron surge and processed near our new capacity for weeks on end with the lab operating 24/7.
To be frank, while the transition to the new laboratory created some unexpected delays last year, at a time when testing volumes spiked, the issues you ask about — from months ago — have long since been resolved.
GS Labs did, in fact, turn away patients. In October and November of 2021, GS Labs halted all PCR testing, nationwide, for nearly 30 days, both to catch up on the testing backlog and to implement systems improvements to minimize future backlogs. On several occasions during the Delta surge, GS Labs halted collecting PCR samples on weekends, to control the volume of tests performed by its laboratory. As noted above, GS Labs invested millions of dollars to increase its daily PCR testing capacity by 500 percent to avoid future backlogs.
It is important to emphasize that GS Labs has performed more than 2.1 million COVID-19 tests, and results for the overwhelmingly vast majority of those tests were provided quickly to patients. Delays of “weeks” were extremely rare.
During high-volume periods, GS Labs always included on its website a notice to consumers that PCR results may be delayed. Importantly, patients can only sign up for testing via GS Labs’ website, and thus every patient should have received these notices.
[In response to a question about actions by a lab employee in Maplewood, Minnesota, that allegedly resulted in 87 false positive test results in December]:
In this isolated incident, a single lab technician used incorrect procedures to review test results on a single day. GS Labs identified the issue the very next day through its routine audit procedures. GS Labs promptly notified patients and government officials of the issue. The relevant technician was immediately removed from a lab-related role. After additional investigation, the employee was terminated, less than a week after the incident in question.
While GS Labs absolutely regrets the errors made by its lab technician, this incident reflects internal oversight procedures working like they should: GS Labs quickly identified the issue through its standard audit procedures; the company was fully transparent with consumer and regulators; and the company took swift and significant action against the employee who caused the issues.
[In response to a question about reporting test results to health officials in Washington]:
Washington was the only state that did not allow for statewide reporting of data using industry-standard bulk data reporting mechanisms. Instead, Washington required providers to send PCR and antibody results to each of the State’s 39 counties via fax, while antigen results were reported to the State. This balkanized and inefficient system necessitated the hiring of three employees to do nothing other than fax test results to Washington counties. Even though this was inefficient in terms of resources and time, we did what we had to do to comply with state law.
These unnecessarily burdensome procedures disproportionately impacted GS Labs, which had much higher testing volumes in Washington than most other providers. For example, for a substantial period of time, GS Labs accounted for between 20% and 25% of all antigen tests administered in the State of Washington.
Certain problems raised by the Washington State Department of Health, particularly issues relating to the accuracy of patient demographic information, resulted directly from patient error. With regard to patient demographic information, GS Labs had to rely on the information provided by patients, and it reported that information to governmental entities. If a patient entered erroneous demographic information, GS Labs generally would not be in a position to validate or correct that information. Thus, erroneous demographic information provided by consumers would, in turn, be transmitted to public health agencies.
[In response to a question about allegations of patients not receiving results or receiving another person’s results]:
We are not aware of these complaints, and without reference to specific examples, we cannot provide specific answers. We are not aware of instances where GS Labs provided different results for the same test to patients and public-health officials.
GS Labs invested heavily in a hotline staffed full-time by registered nurses to help patients interpret and understand their test results. That hotline has assisted more than 30,000 patients with understanding and interpreting their test results.
[In response to a question about reporting of results in Clark County, Washington]:
At the time, Clark County required providers to send all test results via fax. Our team members use the fax number provided by the county to send results. Unbeknownst to GS Labs, GS Labs’ faxes were not being successfully transmitted to Clark County. When GS Labs was finally notified that the county had not received the results it sent, GS Labs immediately worked with Clark County to create a customized electronic report that GS Labs could transmit via secure electronic communication rather than via fax. This collaborative step by GS Labs directly addressed Clark County’s concerns and created an enhanced reporting mechanism moving forward.
GS Labs worked with the Washington State Department of Health to develop a statewide electronic report that allowed GS Labs to report all test results to a single state point of contact, rather than engaging in piecemeal reporting to 39 separate counties, most of it via fax. We are unaware of any county objecting to this streamlined reporting approach created in conjunction with state officials.
As noted above, the demographic information reported by GS Labs came directly from patients. As a testing provider, we did everything in our power to report this information to public health officials; however, if we did not receive all the necessary information from the patient, we could not report it to the state health officials. Thus, to the extent that the patient-entered demographic information included errors or omissions, those also appear in the information provided to government agencies.
[In response to a question about a letter the company sent to customers in May 2021, stating "Our quality control process for this test inadvertently deviated from applicable laboratory standards for testing facilities. There is a chance that this circumstance may have impacted your test results.”]
No GS Labs PCR testing equipment ever failed any quality control or validation processes, and there is no reason to believe that any of the test results during the relevant time period were inaccurate or unreliable.
This incident you cite related to PCR testing using the ePlex testing system. Lab personnel followed the quality control guidance provided by the ePlex system’s manufacturer, which called for daily validation of the relevant equipment. However, the internal policies we developed to exceed manufacturers’ standards called for validation for each shift and each lot. Thus, the manufacturer’s recommendations — which our team members followed — differed from our own internal policy.
For that reason, GS Labs sent the correspondence you have referenced to approximately 7,000 patients whose samples were tested during the relevant time period, in a good-faith effort to remedy potential CLIA violations for deviating from internal policy and to provide maximal transparency to patients.
[In response to a question about September 2021 inspection of the company’s PCR testing lab in Omaha that classified the lab as an “immediate jeopardy]:
Your question assumes that the initial inspection provides the final word on this issue. It does not.
Consistent with basic CLIA processes, when an inspection finds suspected issues, the laboratory has an opportunity to respond to the allegations. Here, GS Labs submitted a detailed response to the inspection. For many of the allegations, GS Labs explained why the allegations lacked merit or did not establish a violation. For certain issues, GS Labs proposed remedial measures to address regulators’ concerns.
After reviewing GS Labs’ response and conducting a follow-up inspection, the Nebraska Department of Health and Human Services “determined that your [i.e., GS Labs’] allegation of compliance is credible and evidence of evidence of correction is acceptable.” (See enclosed December 2, 2021 letter.) That is a far cry from “astounding . . . sloppiness” or results that “are not to be trusted.”
The PCR rejection letters you have referenced were unrelated to the CLIA inspection.
GS Labs halted PCR testing at the Wright Street laboratory while the CLIA process played out. However, GS Labs was able to begin testing at its new, state-of-the-art laboratory in La Vista.
GS Labs has consistently passed all other CLIA inspections. We are enclosing correspondence relating to other CLIA-related inspections.
[In response to a question about patients taking three Covid tests — rapid, PCR and antibody — at GS Labs]:
GS Labs’ policy has never been to “push” tests on anyone. Instead, GS Labs trained and instructed its nurses to provide patients with information regarding each available test to enable patients to make an informed decision about what tests, if any, they wished to undergo. Many patients selected different test combinations based on their individual needs and judgment. To standardize patient experiences and to ensure that patients received accurate information, GS Labs provided its employees with scripts that were to be used in describing available testing options to patients. We are enclosing a copy of that script with these written responses.
GS Labs phased out antibody testing in mid-2021 and ended all antibody testing in October 2021. This decision was related to the relative ineffectiveness of antibody testing on patients who have been vaccinated for COVID-19. As vaccination rates around the U.S. rose, the need for antibody became less pronounced.
For unvaccinated individuals, rapid antibody testing provided information that could be clinically important for patients. For one thing, as reflected in the diagram below (copied from a scholarly article), different kinds of COVID-19 tests are capable of detecting infection at different stages of an infection.
As the diagram above reflects, there may be a stage of symptomatic infection where a rapid antigen test cannot detect COVID-19 infection but an antibody test could via detection if IgM antibodies are present. (Antibody tests can detect two different types of COVID-19 antibodies, IgM and IgG.) Thus, for some patients with more advance infections, the only rapid test capable of detecting infection would be a rapid antibody test. And rapid testing can be essential in allowing patients to promptly quarantine or seek treatment.
Antibody testing also can play an important role in diagnosing cases of “long COVID,” a phenomenon that has generated substantial concern in the medical and public-health communities. And during at least certain portions of the pandemic, CDC guidance indicated that a non-symptomatic individual with a positive antibody result after exposure generally did not need to quarantine.
For these and other reasons, antibody testing provides potentially important and actionable clinical information to patients. However, antibody testing offers substantially less clinical value where a patient has received a COVID-19 vaccine. For that reason, as the COVID-19 vaccines became available to the general public, GS Labs implemented a policy of not offering antibody tests to vaccinated individuals. Later, as vaccination rates increased and demand for antibody testing concomitantly decreased, GS Labs phased out antibody testing altogether.
[In response to a question about the cost of tests]:
GS Labs was a startup focused entirely on one business: COVID testing. Unlike many other providers — like hospitals and chain pharmacies — GS Labs did not have the ability to spread costs, leverage testing into future business, or sell complementary products or services. An intellectually honest comparison of GS Labs’ pricing would focus on comparable providers.
While GS Labs’ cash prices were higher than some testing providers, they were lower than others. For example, a white paper by the insurance lobbying group AHIP indicates that between 7% and 12% of COVID testing providers charged prices higher than GS Labs, depending on the time period. That analysis contains numerous providers that are not economically defensible comparators to GS Labs. For example, some large testing providers (like national pharmacy chains) could use COVID testing almost as a loss leader or to entrench customer loyalty. Other providers — like hospitals — faced lower marginal costs and had much more opportunity to spread costs over a diversified line of business.
Importantly, GS Labs invested an extraordinary amount of money in its operations — more than $150 million in less than two years. Profit margins provide a better metric for comparison than raw price, because they take these significant investments into account. GS Labs’ profit margins are only slightly above the industry average for U.S. diagnostic laboratories. And that is only if one assumes that GS Labs can collect 100% of the money owed to it by insurance companies. In reality, insurers continue to withhold tens of millions of dollars that they clearly owe under the CARES Act. Taking into account that financial reality, GS Labs has barely turned a profit.
It’s not uncommon for disgruntled former employees to make allegations disparaging a former employer — and for those comments to find their way into media hit pieces. In this case, the claims are completely false.
At a time when our communities desperately needed increased COVID testing capacity, GS Labs took action to deliver that testing, investing more than $150 million in a business whose prospective success and lifespan were extremely uncertain. By filling a critical gap in COVID testing, GS Labs literally saved lives, and we are extremely proud of the service that we have provided to the communities we serve.
GS Labs conducted background checks on all employees, and it verified the medical credentials of all lab employees. All lab employees satisfied the experience and education requirements set forth by CLIA regulators.
GS Labs performed more than 2.1 million COVID-19 tests, and results for the overwhelming majority of them were delivered to patients in a timely manner. We regret that in some instances, PCR results for some patients were delayed. As described above, GS Labs took numerous steps to improve turnaround time and minimize backlogs, including very substantial investments in expanded laboratory infrastructure and personnel.
If any GS Labs employee ever “pressured” a consumer to undergo testing, that conduct would have violated company policy. A hallmark of GS Labs’ business model has been patient choice, providing scheduling flexibility and access to a diverse range of testing options that few (if any) other provides in the country could match.
Each of these three kinds of COVID tests provides different and complementary information. Rapid antigen testing identifies current infections, generally in the early stages of infection. Rapid antigen results are available very quickly, often in as little as 20 minutes. Thus, rapid antigen testing can enable patients to take quick action to seek necessary healthcare or avoid exposing loved ones to COVID. However, rapid antigen tests have a materially high false-negative rate. Thus, a negative rapid antigen result does not necessarily mean that a patient is COVID-free.
PCR testing is extremely sensitive and thus has a very low false-negative rate. However, processing PCR samples generally requires more sophisticated equipment, and results often take a matter of days. Pairing rapid antigen and PCR testing allows patients to reap the advantages of both tests: a fast antigen result that can enable prompt action in the event of a positive; and a PCR result that provides a definitive answer regarding infection status. Indeed, CDC guidance directly supports this use of “confirmatory” or “reflexive” PCR testing. Importantly, GS Labs only billed for PCR testing if the rapid antigen test was negative. The low false-positive rate of antigen tests in areas with community spread make confirmatory PCR testing of those results unnecessary.
We have described the clinical value of antibody testing above.
As is clear from the discussion above, each kind of test provides distinct information that can complement the information provided by other tests. Depending on a patient’s needs and infection status, all three tests could be necessary to reliably diagnose the patient.
As described above, antibody testing can provide important and actionable clinical information for many patients. However, that value is substantially diminished if a patient is vaccinated. For that reason, as the COVID-19 vaccines became available to the general public, GS Labs implemented a policy of not offering antibody tests to vaccinated individuals. Later, as vaccination rates increased, GS Labs phased out antibody testing altogether.
[In response to a question about GS Labs not participating in government health care programs]:
Several factors led GS Labs to decide not to participate in the Medicare and Medicaid programs. First, the Medicare reimbursement rate for COVID testing is substantially lower than the per-patient and per-test expenses incurred by GS Labs. Thus, each test performed for a Medicare patient would result in a loss for GS Labs. Systematic testing of patients covered by those programs would have imposed substantial financial losses on GS Labs.
Second, like many healthcare providers, GS Labs made the determination that the additional administrative burdens and red tape associated with certain government programs outweighed the benefit of participating in those programs. GS Labs is hardly unique in this regard. For example, as of March 2022, nearly 26,000 healthcare providers have opted out of participating in Medicare. Many healthcare providers find that participating in Medicare and Medicaid results in increased billing problems and additional time lost to dealing with administrative issues. For example, a 2021 study found that claim denial is five times more frequent with Medicaid than with private insurance. As another example, in the 2021 Annual Regulatory burden Report, 71% of respondents reported that the Medicare Quality Payment Program was “very” or “extremely” burdensome, and 93% of respondents stated that the incentives of participating do not cover the cost of time and resources spent preparing for and reporting.
As one survey respondent explained regarding one Medicare program: “Being required to meet [program] requirements during a pandemic is pretty much impossible. Our focus is on patient care.”
[In response to a question about why GS Labs started]:
In mid-2020, when COVID-19 was racing through Omaha, the pandemic turned personal for City+Ventures. Our loved ones had been exposed to the coronavirus, but they couldn’t find a test. No one had testing kits, and there were no open appointments if a test was available.
As entrepreneurs, we knew we could do better for our families, communities, and neighbors. That’s why we pivoted GS Labs, initially founded in January 2020 with a focus on men’s health and anti-aging, toward COVID testing. We performed our first COVID-19 rapid antigen and antibody tests in October 2020.
As the pandemic rampaged across the country, we saw it as more than an Omaha crisis. It was a full-blown national crisis. Over the past year and a half, GS Labs has invested more than $150 million to open testing sites across the country. At the height of the pandemic, these drive-up locations were staffed seven days a week, 12 hours a day. We hired thousands of registered nurses and essential workers, and we set up a 24-hour hotline staffed by RNs to help interpret results. We also invested in state-of-the-art technology capable of serving 1,000 patients a day at each of our locations. Our unique platform allows patients to book within 15 minutes of their appointment and receive accurate results in about 20 minutes.
GS Labs’ mission is to help communities in crisis. We have tested more than 1.2 million Americans, quickly and efficiently providing patients with COVID-19 diagnostic information.
Importantly, we have identified more than 200,000 positive results thus far. That’s the equivalent of a good-sized city positive for COVID-19. This critical medical information has allowed these patients to safely quarantine away from family members and colleagues and to seek medical assistance when necessary.
By helping to slow the spread of the pandemic in communities across the country, we have helped saved millions of dollars in hospital costs and helped keep emergency rooms from overloading.
88MED was an Omaha-based medical practice geared toward men’s health. That partnership included Dr. Darin Jackson, an emergency room physician with 20 years’ experience, including 11 years as a U.S. Army medical doctor. Dr. Jackson completed two international tours in Iraq and Bosnia and received the Bronze Star while in the Army.
You also asked about Gabe Sullivan. A veteran men’s health clinic operator, Sullivan helped found GS Labs with the intent of partnering with 88MED as its in-house laboratory solution.
Both men remain working with GS Labs — Dr. Jackson as medical director and Sullivan as a Vice President responsible for purchasing.
We founded GS Labs in January 2020 to provide an in-house laboratory solution for 88MED. Within months, to address the critical need for testing at the outset of the pandemic, we pivoted GS Labs to focus on COVID-19 diagnostic testing. Once we began to expand our COVID testing beyond Nebraska via GS Labs, we closed 88MED. We subsequently renovated the 88MED headquarters into a comprehensive PCR testing laboratory.
88 Med and GS Labs were started by Daniel White and Christopher Erickson, from City+Ventures, and Gabriel Sullivan and Darin Jackson, who had worked together in men’s health clinics. Was anyone else involved in founding the Covid testing companies?
Dr. Darin Jackson, an emergency room physician with 20 years’ experience, including 11 years as a U.S. Army medical doctor. Dr. Jackson completed two international tours in Iraq and Bosnia and received the Bronze Star while in the Army.
It is hardly unusual for investors to use their capital and unique entrepreneurial skills in business to start a company where they rely on and collaborate with industry experts who have deep relevant experience.
A case in point: Dr. Darin Jackson, the current Medical Director and Lab Director for CLIA-waived Testing Sites for GS Labs. Dr. Jackson completed his residency in emergency medicine at Darnall Army Community Hospital in Fort Hood, Texas in 1997. He is a decorated war veteran who served more than a decade on active duty in Bosnia and Iraq. An emergency room doctor who has practiced for over 25 years, Dr. Jackson is licensed to practice medicine in Nebraska, Iowa, Oklahoma, Louisiana, and Florida, and he is Board Certified by the American Board of Emergency Medicine.
Dr. Lindsey Nielsen is another GS Labs operational leader who works with Erickson and White, providing relevant experience and medical expertise. Dr. Nielsen is the current Laboratory Director for the CLIA-certified high complexity laboratory located in Omaha, Nebraska. She has a bachelor of science degree in biology, with a minor in biochemistry, from the University of Nebraska-Lincoln and she earned a Ph.D. in microbiology from Iowa State University. Dr. Nielsen, also a veteran, served active duty as an officer in the United States Army for six years and continues to serve today as a Major in the Army Reserves.
Another leader on the GS Labs team is Dr. Steven Powell, who holds the title Ordering Physician. Dr. Powell, who has served as the Chief Medical Officer for both private sector healthcare companies and a hospital, is Board certified by the American Board of Preventive Medicine and the American Board of Psychiatry and Neurology. He is also Board eligible in internal medicine and completed residencies in both preventive medicine and internal medicine.
Finally, City Ventures Health recently hired Dr. Joann Schaefer, former Chief Medical Officer (CMO) for the State of Nebraska and Executive Vice President at Blue Cross Blue Shield of Nebraska. Dr. Schaefer was hired to help shape growth for patient and business services in the health sector, and it is expected that her work will involve interfacing with GS Labs to some degree.
Drs. Jackson, Nielsen, Powell and Schaefer are the types of individuals with whom White and Erickson partner to ensure that any of their business ventures are conducted in a compliant and industry-leading fashion.
You also asked about Gabe Sullivan. A veteran men’s health clinic operator, Sullivan helped found GS Labs with the intent of partnering with 88MED as its in-house laboratory solution.
As the pandemic was raging in various communities, we saw a need for greater testing resources. Thus, we expanded into geographic areas that were underserved at the time for testing. Within those cities and towns, we chose our individual locations based on available commercial real estate, accessibility to community population centers, available parking lot space suitable for a drive-up testing location, and the layout of the building. A primary concern at all times was whether the location would be safe for our patients and staff members.
In every single instance, each testing site we opened had a dedicated lab area that was up to or above the standards set by CLIA, the Clinical Laboratory Improvement Amendments, regulated by the federal Centers for Medicare & Medicaid Services.
All of our locations meet CLIA standards and we have CLIA licenses for all our sites. The results of our past inspections, which as you know are public records, prove that our sites have been in substantial compliance with these standards. In every single instance, our testing sites also passed inspections required by a range of regulatory bodies, often including city inspectors, building inspectors and fire inspectors.
GS Labs has staffed and trained a location set-up and launch team which travels to each new site in advance of the site opening. This team ensures that the labs have adequate space, ventilation, signage, and equipment to accurately process tests. The team also ensures that each sites passes inspections and is in substantial compliance with applicable building codes and laboratory regulations.
As a general matter, GS Labs has grown when and in ways we felt comfortable to handle. We continue to constantly seek ways to improve. We prioritized our nationwide expansion, especially early in the pandemic, because we were compelled to offer diagnostic testing services to communities in dire need of COVID-19 testing options.
Like virtually every business, our decision to open or close a facility is based on the need for the services we deliver. Throughout 2021 and into 2022 as the pandemic evolved, infection rates and the need for testing fluctuated on a daily, weekly and monthly basis. We have worked hard to be nimble as a business, shifting resources to areas where they’re needed most. If we opened a site and saw greater needs elsewhere, we reallocated our resources to meet those needs. For example, when the need for testing in Fargo was lower than in the Minneapolis metro area, we moved testing sites.
We are a private business at every turn trying to effectively allocate our resources — money, time and people. We provide a service — COVID-19 testing amid a wildly fluctuating pandemic — that has seen consumer needs shift quickly over the past year and a half.
As stated above, we have opened testing sites when we see demand in metropolitan areas across the country. We have closed those sites as demand has ebbed (sometimes reopening sites in areas where demand again surged). We continue to do our best to get ahead of the fluctuating demand for testing as the pandemic and the focus on testing changes.
Our in-house PCR testing laboratory was not closed. Rather, we moved this lab to a location about 25 minutes away to better accommodate the upgraded testing analysis system we installed to handle significantly greater testing volume. This move to a larger space with a more efficient building layout has enabled GS Labs to operate more efficiently, thus improving the patient experience by providing results to more people more quickly.
This move enabled us to install new state-of-the-art laboratory equipment and to hire additional team members and management personnel. Again, as with new locations, this was all done based on the needs of those we serve and to meet the demand for testing we have experienced as a company.
[In response to a question about lawsuits filed by health insurance companies against GS Labs]:
It should come as no surprise that we believe those insurance companies’ arguments are entirely meritless. That is why we are vigorously litigating each lawsuit — and it is why we have filed a number of counter-lawsuits underscoring the insurance companies illegal and anti-competitive conduct.
The insurers’ claims rest on a combination of factual misrepresentations, fundamental mischaracterizations of GS Labs’ structure and operations, and unmitigated greed on the part of insurers. There is considerable irony for insurers to accuse anyone of pandemic profiteering when insurers have raked in record-setting profits over the past two years. The only entities price-gouging here are those insurance companies that have failed to pay us, failed to negotiate in good faith, and done everything in their considerable power to put testing companies like ours out of business — making it far more difficult to focus our resources and personnel on testing in communities all over the country.
As you are surely aware, Section 3202(a) of the CARES Act plainly states: “If the health plan or issuer does not have a negotiated rate with such provider, such plan or issuer shall reimburse the provider in an amount that equals the cash price for such service as listed by the provider on a public internet website, or such plan or issuer may negotiate a rate with such provider for less than such cash price.”
A number of insurers nationwide have agreed to follow that very clear law and pay GS Labs the cash price or a negotiated rate for various COVID-19 tests. In addition, GS Labs’ prices are comparable to other similarly situated providers’ tests. According to a study conducted by America’s Health Insurance Plans (AHIP), 54% of out-of-network labs like GS Labs charge between $185 to more than $400 per test. Additionally, a survey by Kaiser Family Foundation found that about 20 percent of COVID-19 diagnostic tests have a cash price of over $300. In addition, as GS Labs’ litigation economic expert witness has demonstrated, GS Labs’ profit margins are in line with industry averages for testing laboratories.
When insurers attack GS Labs’ pricing, they ignore the company’s substantial investments and the fact that it cannot spread those substantial investments across a wide range of business operations, as can a pharmacy chain like Walgreens or a highly diversified lab company like Quest Diagnostics.
[In response to a question about GS Labs’ testing site in Vancouver, Washington]:
GS Labs never stopped performing rapid antigen tests at the Vancouver location while the site was operational. GS Labs closed the Vancouver site in June 2021 due to decreased demand for testing. GS Labs closed more than a dozen sites across the country at the same time, all due to decreased demand for testing.
GS Labs reopened the Vancouver site in September due to substantially increased demand stemming from the Delta surge. GS Labs never took any actions in an effort to minimize state oversight. In addition, as noted above and as reflected in the accompanying documentation, a January 28, 2022, inspection of the Vancouver facility found no violations.
[In response to a question about the GS Labs site in Council Bluffs, Iowa]:
GS Labs closed the Council Bluffs testing site because the company determined that the facility could be better used for other corporate purposes. The company continued to use the facility for non-testing purposes. After closing the Council Bluff’s testing site, GS Labs opened a new site in Omaha, less than 15 minutes away.
[In response to a question about federal investigations]:
In no uncertain terms, we deny the false suggestion that GS Labs has in any way committed what you characterize as “fraud, waste and abuse.” Our company got into the COVID testing business to help communities grapple with a pandemic that has had widespread health and life implications for millions of Americans. We are proud of the important and life-saving work that this company has done over the past two years, and we believe that any such investigations stem from willful misrepresentations made to the government by insurance companies single-mindedly focused on padding their profits.
With that said, certain government agencies have asked us not to discuss their investigative steps. Out of respect for those requests, we will not directly discuss specific inquiries, except to say that we are fully cooperating in each and every instance. We welcome the opportunity to provide full transparency into GS Labs’ operations.
[In response to questions about state investigations]:
Our customers know us first-hand. They have received convenient, fast, and reliable testing that helped protect them and their loved ones. It is no surprise, then, that GS Labs has numerous repeat customers; in some markets, as many as 20% of patients are repeat customers. And a large segment of our business comes from word of mouth. We are proud of that reputation, which we have earned through hard work and a service-first mindset.
We cannot control what others say about us, especially greedy insurance companies pushing false information in order to add to their already record-setting profits. GS Labs has gladly cooperated with all government oversight. We welcome the opportunity to provide transparency into our operations and to address whatever questions the government may have.
Given the adversarial nature of this story, GS Labs does not feel comfortable divulging the names of these public health officials, essentially volunteering them to be interviewed.
However, GS Labs is happy to provide additional context. Certain praise has come relative to our HL7 reporting project. Reporting PCR results directly from the system via HL7 messages is the most automated and secure way to share such data. We have worked tirelessly and hand-in-hand with our vendor and the different departments of health to provide this efficient reporting to one state (Missouri) in real time and close to real time in three additional States (Minnesota, Nebraska, Washington).
The HL7 reporting project is just one example of GS Labs’ commitment to investing resources in accurate and automated reporting. This investment of financial resources and man-hours underscores that any reporting issues the company had in the past was not due to lack of commitment or effort.
[In response to a question about the company sending out PCR rejection letters]:
These letters occurred at a point in time when GS Labs upgraded to a new molecular platform and procedure to accommodate the higher volume of testing required by considerable public demand. This new equipment and procedure required us to change how we stored specimens, including changes to temperature and length of storage.
These new specimen storage requirements could be met only through the use of specialized ultra-low freezers. These ultra-low freezers were extraordinarily difficult to acquire at the time, due to the supply chain crisis and more notably because these were the same specialized freezers required to store vaccines. Due to the delay in the delivery of sufficient ultra-low freezers, certain specimens were not stored at the temperature recommended for our then-new testing process.
GS Labs voluntarily paused PCR testing beginning on or about September 22, 2021 at the advice of our Lab Director. It was brought back online in an incremental fashion on or about October 28, 2021. To ensure that we were following all new testing protocols pursuant to our upgraded PCR testing platform, we resumed PCR testing by geography, reinstituting such tests one site at a time in a strategic manner out of an abundance of caution.
The new lab in La Vista started offering PCR tests to customers on October 28, 2021. To your statement regarding two labs, you are correct that there are two labs sites located in the same commercial development. We acquired the second space and outfitted it with sophisticated PCR testing equipment to ensure we had the capacity to keep up with demand for testing.