Versant Diagnostics and In-Office Pathology Team Up

by Jondavid Klipp | Apr 28, 2023 | Versant Diagnostics

Versant Diagnostics and In-Office Pathology Team Up

Versant Diagnostics (Grapevine, TX) has signed an agreement with In-Office Pathology LLC (Nantucket, MA). Versant will offer professional pathology services to IOP’s network of in-office labs, and IOP will build histology labs at select Versant Diagnostics specialty clinics and physician practices.

IOP was founded by Joe Plandowski and Bernie Ness in 2004. Over the past 18 years, IOP has developed in-office histology labs at 99 specialty groups in 30 states. The majority of these labs are located at gastroenterology practices and others are located at urology, dermatology and podiatry groups.

Under the new agreement, IOP’s lab clients will continue to directly bill payers for global lab services, including professional and technical fees. Versant’s pathologists will provide professional interpretations at a negotiated fee. Initially, Versant is expected to provide professional services to IOP’s lab clients in the greater Chicago area. In the future, new and existing IOP lab clients from around the country will have the option of installing slide scanners so that Versant’s pathologists can provide professional interpretations from digital images.

Plandowski says that finding and hiring pathologists has become one of IOP’s biggest challenges. He notes that after a pandemic slowdown in 2020-2021, IOP has since signed seven new clients, including three gastroenterology groups, three podiatry groups and one derm group.

Versant is a startup pathology company founded by Ven Aduana, MD, Jim Billington and Brian Carr in 2021 (see LE November 2021). Versant, which currently has 15 pathologists, has $100 million in financing (both equity and debt) from Iron Path Capital (Nashville, TN). Versant is acquiring pathology practices and then seeking to add volume through the use of digital pathology.

PathAI Announces 13 Lab Contracts for Its AI Tools

by Jondavid Klipp | Mar 17, 2023 | Artificial Intelligence, Digital Pathology, PathAI

PathAI Announces 13 Lab Contracts for Its AI Tools

ePathAI (Boston, MA) has won contracts with 13 lab organizations that will be using its FDA-cleared AISight digital pathology image management and viewer analysis system. These new clients will also be using PathAI’s software algorithm AIM-PD-L1 NSCLC RUO, which quantitates the percentage of PD-L1 positive tumor and immune cells in non-small cell lung cancer samples.

Among the 13 labs that will be using PathAI’s AI-based software algorithms is PathAI Diagnostics (Memphis, TN)—formerly named Poplar Healthcare. PathAI acquired Poplar Healthcare in August 2021 (see LE, August 2021). PathAI Diagnostics is a full-service anatomic pathology lab with 350 employees, including 25 pathologists.

Other labs that will be using PathAI’s software tools include Caris Life Sciences, NeoGenomics and University of Pittsburgh Medical Center (see table below).

These labs will have early access to additional AI algorithms that PathAI expects to bring to market for research use only (RUO) within the next few months. These products include AI software tools for quantitative PD-L1 tests for melanoma, head and neck, and bladder cancer, as well as an
algorithm for the automated quantification of HER2 IHC images in breast cancer tissue.

Labs will have the potential to validate PathAI’s RUO products so that they can be used as lab-developed tests for clinical diagnostics, according to Andy Beck, MD, PhD, Chief Executive of PathAI.

The new clients were all signed by PathAI within the past six months. Beck anticipates more lab client announcements soon. Eric Walk, MD, Chief Medical Officer, and Parth Chodavadia, Head of Commercial, Digital Diagnostics, are leading the marketing efforts at PathAI.

PathAI has raised a total of $255 million since being formed in 2016. Major backers include Labcorp, Kaiser Permanente, Merck and Bristol Meyers, as well as the private equity firms General Atlantic and General Catalyst.

Aegis Sciences Leads In Toxicology Testing

by Jondavid Klipp | Feb 16, 2023 | Aegis Sciences Corp., Toxicology

Aegis Sciences Leads In Toxicology Testing

Aegis Sciences Corp. operates the nation’s largest toxicology lab as measured by Medicare Part B carrier allowed payments for calendar year 2020 (the latest available data). Aegis received Medicare payments totaling $32.4 million for 214,348 test services for five key toxicology codes (G0480-G0483 & 80307) in 2020. The acquisition of the HealthTrackRx toxicology line of business brings Aegis additional annual Medicare payments of $2.6 million with total allowed test services of 17,716.

On a consolidated basis, Labcorp had total Medicare Part B allowed payments of $45.3 million for 378,083 test services performed at 22 lab locations.

Quest Diagnostics had total Medicare Part B allowed payments of $33.5 million for 328,888 test services performed at 28 lab locations.

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Spotlight Interview with Proscia’s Nathan Buchbinder

by Jondavid Klipp | Jan 27, 2023 | Digital Pathology, Proscia

Spotlight Interview with Proscia’s Nathan Buchbinder

Proscia Inc. (Philadelphia, PA) markets a digital pathology software platform (Concentriq) that helps upload, organize into patient cases, annotate, and store whole slide images. Concentriq is currently being used by more than 6,000 scientists and pathologists at 300+ clinical and research organizations around the world. Proscia has also developed AI-based applications, including a program for quality control of digitized images (currently for the research market only). Here’s a summary of our recent interview with Nathan Buchbinder, Co-Founder & Chief Product Officer at Proscia.

Describe when and who founded Proscia.
Proscia was founded in 2014 by myself and two other computer scientists from Johns Hopkins University and University of Pittsburgh. These include our Chief Executive David West and our Chief Technology Officer Coleman Stavish. We currently have 100 employees.

How much capital has Proscia raised?
We raised $37 million in June 2022 bringing our total funding to $72 million. More than 10 private equity firms have invested in Proscia, including the following that have board seats: Emerald Development Managers, Flybridge Capital Partners, Razor’s Edge Ventures and Scale Venture Partners.

Why were drug development research firms so quick to adopt digital pathology?

Because their return on investment (ROI) on digitizing slides was self-evident and nearly immediate. Ten of the top 20 pharmaceutical companies, including Amgen, Bayer and Bristol Myers Squibb, are using Proscia to help manage their digitized slide images. These companies operate research sites and collaborate with third-party contract research organizations all around the world. Concentriq gives them a single hub where digitized slide images can be accessed and shared.

What’s the current status of digital pathology for clinical diagnostics?
Adoption started much slower in the clinical market. Some of our early adopters, including Thomas Jefferson University Hospitals and Johns Hopkins’ Department of Pathology, initially used digital pathology primarily for research and education.

However, over the past two years, we’ve seen a huge surge in demand from the clinical market, including integrated delivery networks, reference labs and even smaller pathology practices (~5 pathologists). These labs are using digital pathology for peer reviews, conferencing, consults, and tumor boards, as well as primary diagnosis of cancer cases. Most of our customers are in life sciences and research, but that’s quickly changing.

What’s your advice for pathology labs planning to transition to digital pathology?
Number one, get everyone involved at the start, not just executives and pathologists, but lab managers and histotechs. Number two, don’t underestimate the value of having an archive of digitized slides, not only in terms of internal research and education, but also its value to third-
party life sciences and pharmaceutical companies.

What’s your outlook for digital pathology adoption in the United States?
It will be widespread with nearly 100% adoption within five years. Drivers include the new Category III CPT codes for digital pathology and the potential for Medicare reimbursement. In addition, the application of AI, which requires digitized slides, will increase pathologist accuracy and efficiency.

The shift from microscope to monitor will be transformational. Winners and losers will be determined based on how fast and how well they implement technology. It could help the biggest commercial labs gain share in anatomic pathology or result in a different outcome that we can’t imagine today.

Quest To Buy Outreach Lab In Maine

by Jondavid Klipp | Jan 5, 2023 | Hospital Outreach Laboratory, Quest Diagnostics

Quest To Buy Outreach Lab In Maine

Quest Diagnostics has agreed to acquire certain outreach lab assets from
Northern Light Health (Brewer, ME), an integrated healthcare system,
in an all-cash transaction. In addition, Quest will manage nine of Northern
Light Health’s inpatient hospital labs, along with its cancer center lab at
Northern Light Cancer Care in Brewer, Maine.

Northern Light Health’s outreach lab services business does business as Northern Light Laboratory (formerly named Affiliated Laboratory Inc.). It has 225 employees and is based at a core laboratory in Bangor, Maine. It serves 250 physician practices throughout the region and provides
reference testing services to more than two dozen hospitals.

Northern Light Laboratory is operated as a hospital-owned independent lab. It collected $1.5 million of Medicare Part B Carrier allowed revenue from 135,489 allowed tests in 2020 (the latest year of available data). Laboratory Economics estimates that overall revenue for Northern Light Laboratory is between $10 million and $20 million per year.

Northern Light Health has a systemwide laboratory department budget of $88 million, according to hospital cost reports for 2021. Its largest inpatient lab is at Northern Light Eastern Maine Medical Center (377 staffed beds), which has a lab department budget of $35 million per year.

Non-urgent routine clinical lab testing and reference testing now performed by Northern Light Laboratory will be shifted to Quest’s regional lab in Marlborough, Massachusetts (about 250 miles from Bangor). A Quest rapid response lab in the Bangor area and select Northern Light Health hospital labs will perform tests requiring rapid results.

Northern Light employees working in the labs will become Quest employees, and no one is being laid off, according to Northern Light spokesperson Suzanne Spruce.

In addition, Spruce says that the agreement with Quest will not affect anatomic pathology services that are now provided at Northern Light Health by Dahl-Chase Pathology Associates (Bangor, ME).

“This agreement will bring Quest scale in Maine. This market is largely a white space for Quest and the transaction makes strategic sense to both parties. It will create a low-cost consolidated lab in a state currently dominated by NorDx Laboratories,” observes David Nichols, President of
Nichols Management Group (York Harbor, ME).