Governor Gavin Newsom on Friday unveiled a new $120 million, 134,000 sq. foot coronavirus testing facility in Valencia, north of L.A.
Newsom announced the plan to increase capacity with a corporate partner — PerkinElmer, which is a leader in testing — in late August. The facility was supposed to open by November 1. With the ribbon cutting on Friday, it opened ahead of schedule and, according to the governor, “$25 million under budget.”
According to the governor’s office, the lab will enable the state to process an additional 150,000 tests per day, increasing testing capacity and reducing turnaround times for results.
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. “An absolute goal of 24 hour turnaround.”
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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.
Both Newsom and health officials emphasized that a priority is testing in underserved communities, both “rural and urban,” according to the governor. Essential workers and people of color are see higher impact rates in the state.
“The challenge has been one of scarcity,” said one health official. “Now…we’ll be able to administer tests much more equitably.”
The facility itself began processing samples this week, according to the governor. In the short term, the goal is to process 40,000 tests day in addition to the 120,000 or so already being processed. The long term goal is to ramp up to 150,000 additional tests a day early next year.
Newsom said that, despite coming in under cost, the state spent $100 million on equipment and other costs and $20 million for the facility itself.
While it is not a precise apples-to-apples comparison, according to state officials, Medicare and Medicaid both currently reimburse at roughly $100 per test, while the average cost of a COVID-19 test ranges from $150–$200 per test. Newsom estimated that test costs have averaged about $150 per. At 18 million tests thusfar, that means testing has cost the state $2.7 billion, before any reimbursement from Medicare or others.
Newsom said the agreement with PerkinElmer states that, once the facility is fully operational, test costs will come down to $30.78 at 150,000 tests per day. That could potentially save the state billions as it heads into what is predicted to be a second and worse wave of the pandemic.
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. newsom also said that $5.10 from each test’s cost will be set aside to reimburse taxpayers’ investment.
FedEx is collecting samples and the state has partnered with a company called Color to provide software that can integrate with public health testing infrastructure anywhere, including large scale laboratories and community-led testing sites such as churches, schools, and local government facilities. It will enable individuals to show up at a collection site, provide a sample quickly, and receive results within two days on their phone or computer, according to a press release.
Reliable testing software is key to the state’s investment, especially after a state system error earlier this year caused 200,000-300,000 test results to be delayed for weeks.
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