Health care continues to grow: Quest Diagnostics CEO
The CEO of quest Diagnostics Steve Ross Kowski joining me right now and it is good to see you Steve you've got some new products out you're talking about growth that quest tell us where the growth is first and what you'll be talking about later but also I want to I want to really get your opinion on how the consumer and what the consumer wants is really driving your decision well Victoria opportunity we see a 19 is that we have new access with some relationships.
we have with healthcare insurance companies and particularly we got back in network with United Healthcare and so a 19 we actually have 43 million new lives in this country that have access to quest Diagnostics and that affords us a big opportunity for billion-dollar opportunity and if you look at our market share with healthcare insurance companies it's probably about a billion dollar opportunity for quest Wow that's great so where does the growth come from then ad quest let's call it the next three years we serve about 50 percent of physicians 50 percent of hospital systems and so what the patient goes into the physician's office and they have United Healthcare has their insurance company when they have that opportunity to the physician now could recommend quest is the laboratory that they use that's a big deal we know that the hospitals haven't been under tremendous pressure there's been all this consolidation mergers in the hospital business hospital medical providers taking cues from consumers to improve the experience you also have a deal with Walmart yes so there's two pieces of this one is the hospital systems either helped as well and we're working on those hospital executives on their lab strategy many consumers are now asking the questions about the wide variation in healthcare cost and many consumers are paying for a larger portion of the healthcare cost if you look at our industry there's live wide variation and the differences between laboratory costing and consumers are now getting a becoming aware of that and so now they have access to data that suggests that they should go to the best value provider the quest Diagnostics is one of the best value providers so you've added consumer oriented programs like telemedicine urgent care centers so that people can be in charge of their own health care it's interesting to me that when people want information about their health care.
They google it yeah I mean there's all this information they're feeling more you know empowered to make decisions on their own digital technology to our space so they experienced today's completely different in the last three or four years ago so with that digital experience with quest Diagnostics is far different Florida was secretaries you mentioned earlier Bria this relationship with Walmart so we're going into better space better physical space with a partner like Walmart where we actually so I have some more patient service centers in their stores and it finally were bringing products where consumers now can order directly laboratory testing in 22 states without an order from their physician let me ask you about the state of business today because at the end of the year last year you lowered guidance you try to get the market set for lower numbers in revenue and earnings why and tell me how they came out we came out in 2018 with a lot of expectation around growth and frankly we we saw a lot of growth through acquisitions we actually grew faster with acquisitions in 2018 so actually we are consolidating the marketplace but what we did see in the back half of year particularly is some headwinds with some reimbursement changes but a couple of our test categories in cycle utilization of back half of this year with the amount of healthcare to people were using the back half we're lower than expectation how do you change that well the access for healthcare insurance what we started with with the united healthcare is a big opportunity for us second is continued to make sure that brand of quest Diagnostics is really second to none and third is the opportunity around the consumer where consumers gonna be asking their physician to use question you you raised your dividend nonetheless and basically you continue raising your dividend since 2011 for shareholders watching this out.
There is there any sort of threat to the dividend given the fact that you are seeing these issues we we are the market leader and a very own consultant at a marketplace we consider you see big opportunities to continue to gain share nineteen is a year for us to community gain share and when we do that we're very profitable because our scale is really second to none all right so when we're hearing about this potential economic slowdown is that hitting you is that part of this or not health care continues to grow we continue to see mid-single digit growth in overall healthcare we're essential to health care we're about 2 percent of healthcare costs seventy percent of health care decision making is based what we do one-third of all patient encounters above what we do so we're critical and our volume is actually gonna go up next year let me ask you about the new Medicare pricing for lab tests under the protecting access to Medicare Act of 2014 how do you navigate that so it's it's a big change for us because actually how we get reimbursed from Medicare will go down the cut was larger than we expected and we actually think CMS got it wrong how they implemented the bill we're working to to change that but what we have done is plan for the worse and so we're actually looking at what we need to do to drive productivity what we need to do to drive share and by doing so continuing our leadership position consolidate the marketplace it will benefit us and benefit the people we serve our patients and those physicians they go to according to Johns Hopkins the United States spends more on health care than any other country but what do you see as the solution here they get you know if you look at the data health care costs for sure but if you look at social programs and you put the two together we're not necessarily on top a lot of what healthcare does and what medicine does is actually around those social issues those social determinants and I think the opportunity we see is how do you really bend the cost curve you know healthcare costs continue to rise at 5% we really haven't put a lot of energy in this country around transforming how healthcare really works in my view is if you look at the population that really drives healthcare it's 5% of the population 50% of the cost if we can get after that 50% of the population we could definitely start to flatten out that class curve all right we believe there she was great to have you on the protein for Evan will be watching the developments and your plans for sure Steve Rakowski joining us CEO of quest Diagnostics
