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New California Lab Increases COVID Testing Capacity

Governor Gavin Newsom recently announced the opening of an innovative new laboratory in California that will increase the state’s COVID-19 testing capacity, reduce test turnaround time and create hundreds of new California jobs.

The $25 million lab, built in conjunction with major diagnostics company PerkinElmer, will begin processing tests starting in November and work toward full capacity of 150,000 tests by March 2021. The lab was constructed ahead of schedule.

The additional testing capacity will allow California to better serve schools, health care providers and hard-to-reach communities like essential workers, those in congregate settings and communities of color, who are at higher risk of contracting COVID-19. The additional capacity comes just as flu season arrives and the need for testing is expected to spike statewide because the symptoms of COVID-19 and flu are similar.

“Earlier in this pandemic, our ability to test Californians for COVID-19 and get results quickly was hampered by supply chain challenges and overwhelmed laboratories – so we built our own supply chain and our own lab with PerkinElmer,” said Governor Newsom. “This new laboratory will allow California to ensure its testing capacity is timely, equitable and cost-effective – just when Californians need it most.”

The laboratory has already created 300 new California jobs. When the lab is running at full capacity, it will employ 700 people, with an emphasis on California hiring.

Under its contract, PerkinElmer is contractually required to turn around test results in 24-48 hours. That timeline is critical to boxing in the spread of COVID-19 because it allows for timely contact tracing, quarantine and isolation.

Under the contract with PerkinElmer, the state will utilize polymerase chain reaction (PCR) diagnostic testing, which is considered the gold standard of testing. The state continues to evaluate new technological breakthroughs in testing, which is why the contract includes provisions that enable the contractor to adopt new technology at a lower price point. Additionally, the state plans to leverage multiple technologies or modalities with multiple laboratory partners to ensure that we diversify our testing capabilities.

The per-test cost would be $30.78 at 150,000 tests per day. While it is not a precise apples-to-apples comparison, Medicare and Medicaid both reimburse at roughly $100 per test, while the average cost of a COVID-19 test ranges from $150 – $200 per test. To support this contract at the lowest cost to taxpayers, the state will enter into a contract for third-party billing services to recoup costs from health insurance companies or other payers.

In addition, California worked with Burlingame-based Color, a health technology company, to create a user-friendly front-end interface for its expanded testing program.