Quest Diagnostics CEO Steve Rusckowski joins Yahoo Finance Live to discuss the state of the coronavirus pandemic, testing demand, manufacturing capacity, and the outlook for the industry.
AKIKO FUJITA: Well, now we're heading out to my colleague, Anjalee Khemlani, who is joined by a special guest. Anjalee.
ANJALEE KHEMLANI: That's right, Akiko. Thank you so much. We are joined now by the CEO of Quest Diagnostics, Steve Rusckowski.
Really a legendary individual in the health care space. Over the last 10 years, at the helm of one of the most important health care companies. Steve, thank you so much for joining us here today.
STEVE RUSCKOWSKI: Anjalee, thanks for having me.
ANJALEE KHEMLANI: I want to start off with, obviously, the pandemic-- one of the most unprecedented situations that any CEO has had to contend with. You, of course, seeing that demand on testing, like never before. Tell us about it, and how you got through it.
STEVE RUSCKOWSKI: Yeah. So it's been a busy 2 and 1/2 years, Anjalee. It all started in the Fall-- excuse me, in the Spring of 2020, when we first realized that this pandemic would be here, and really sink its teeth into us.
And so in March of 2020, we actually first started to bring up our testing. And then we brought it up-- not just in one laboratory, but throughout our whole system of laboratories. And we thought it would be kept within the year.
But it extended itself into '21. And we continue to have substantial testing this year as well. So, fortunately for us, we've responded to what we needed to do from a testing perspective. And we're continuing to advance the science to provide serology testing and other ways for us to start to understand where people are in their protection for COVID, going forward.
ANJALEE KHEMLANI: Yeah. I want to talk about that continuation. Do you feel like the company is at a place now where you can really continue to scale up and scale down as needed, considering the fact that we might be facing future pandemics?
STEVE RUSCKOWSKI: Yes. We have now about 300,000 test capacity per day. We've been at a fraction of that for the last several weeks.
We actually have seen the testing volume for what's referred to as PCR-- the central lab testing capability for COVID, come down. But we're prepared. In the event that it starts to ramp up, they'll be able to bring on more tests. So we're not closing down that capacity. But we're prepared in the event that it comes back up.
ANJALEE KHEMLANI: Fair enough. Looking at-- a look back at the company. 10 years now at the helm. Talk to me about what the industry's been through?
I mean, it's been, really, a push into consumer-driven health care decisions. We're talking about, you know, a virtual care, really, on the horizon. So talk to me about how you've seen those changes, and where you see Quest's role in all of that?
STEVE RUSCKOWSKI: Yeah. It's been a remarkable decade. If you think about it, we put in place the Affordable Care Act, we've had substantial cuts in how we get paid by Medicare in this industry. And then, finally, as we just spoke, we just came through the pandemic.
And so it's been three big changes within health care delivery. But through all that change, we've also seen emergence where-- when I joined 10 years ago, we said, we're much more than a lab. What we do is empower better health.
With that insight, we deliver every day for physicians and, increasingly, for consumers. And we also believe that the consumer is now playing a much bigger role in their health care. And so we've brought up a capability, a number of years ago, to offer testing capability to consumers, where they can go on and directly engage with Quest Diagnostics, that gets the test they need.
ANJALEE KHEMLANI: One of the other major milestones that the industry really went through was the Theranos saga. And everything that came after; the questions about testing. What do you think has been the biggest learning from that episode? And do you think that the industry is in a different place today?
STEVE RUSCKOWSKI: Yeah. You think about what that dialogue brought to this industry. It was a dialogue around the importance of testing.
The reality is we're about 2% of health care costs in this country. But we represent around 75% of the information that a clinician, a physician, a nurse, and an individual, use to make that important next choice in health care. So, very important portion of that information that's needed every day.
And then, secondly, what that period of time showed us is that we can test consumers in a much simpler, more convenient way. And that Quest Diagnostics-- we actually have brought up our patient service centers. And we have around 2,200 of those. And many of those are now in retail-like settings.
And we've actually started to partner with retail partners like Walmart, where we have some of our patient service centers in their actual stores. And so the convenience of getting access to testing, and the ability for you to directly order it has been a new capability. All that came out of that dialogue around the importance of testing, and the need for it to be much more available to consumers.
ANJALEE KHEMLANI: Another big issue in the health care industry today still is costs. I know that you've seen the conversation over the past several years. And I know right now the company is also doing something interesting, when it comes to helping to balance out the cost of access to health care.
STEVE RUSCKOWSKI: Yes, we have. Actually, a number of years ago, we said, we need to do something about our health care costs for our employees. We self-insure about 60,000 people at Quest Diagnostics.
So what we did is we put in place a different approach of managing our health care costs. We hired a physician with health care insurance background. And we started step-by-step, see what we could do ourselves, to bend the cost curve.
And, fortunately, I'm pleased to tell you that we did bend the cost curve. And actually, this year, what we just introduced in the Fall-- for 95% of our employees, there'll be no increase in their payment for their health care. For 5% of those employees, there will be a fee increase. And that's primarily for the highest paid people at Quest Diagnostics. So, real good progress of bending the cost curve for our own employees.
ANJALEE KHEMLANI: And definitely a push into health equity. I've got to end with just a look back on everything that you've achieved-- before Quest, also working at Philips. So you've really been in the health care industry for quite some time. What's next?
STEVE RUSCKOWSKI: Well, you know, I've got a long bucket list for my personal life. I've got four great grandchildren, two kids, and a lovely wife. And so we're going to spend more time, personally.
But professionally, I'll do something. I'm still thinking my way through that. I'm still actively managing Quest Diagnostics as a CEO. I'll stay as the Executive Chair until the end of March of '23. And then we'll enter the next chapter of my life.
ANJALEE KHEMLANI: Sounds good. Well, we'll have to leave it there. And hopefully, this isn't the last we see of you. Quest Diagnostics CEO, Steve Rusckowski. Thank you again for joining us today.