'It will bankrupt my department': How private labs are paying the price for testing

As more private and university labs administer their own COVID-19 test to help get Americans tested for the virus, many are fronting the astronomical costs themselves, even if it means taking a loss.

Dr. Geoff Baird, the acting chair of laboratory medicine at the University of Washington School of Medicine -- home to one of the largest COVID-19 testing labs in a state at the epi-center of the outbreak-- told ABC News his lab has spent about $10 million since it first began testing on March 1.

"It will bankrupt my department in a month," Baird said in an interview with ABC News. "But I don't have an option; it's what's needed."

His lab is just one of the many labs outside the public sector that have stepped in after the federal government stumbled at the start of the outbreak.

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Baird's lab has tested almost 20,000 patients since it began three weeks ago; that's nearly double what all the public health labs across the country combined had managed to test since the start of the outbreak by early last week, according to an ABC News analysis.

“If you want to get the kind of blanket testing and availability that anybody can get it,” Dr Anthony Fauci, the nation’s top infectious disease expert, said, “you have to embrace the private sector.”

And although the Trump administration promised testing would be free for all Americans, many of these labs are keeping themselves running by fronting the money for the costs.

The University of North Carolina School of Medicine health department, which officially started testing for the virus this week at its lab, is currently paying for lab supplies, extra equipment to increase the lab’s capacity, and additional staff needs on top of the cost of testing, a UNC spokesperson told ABC News.

And the American Clinical Lab Association, which includes private lab giants LabCorp and Quest, has conducted over 88,000 tests since Feb. 29 -- "all without knowing they would ever be paid for them," according to ACLA President Khani.

The UNC spokesperson tells ABC News they have decided to “hold all bills until the emergency situation is resolved."

Though UNC has not asked for any additional funds from the state, and are still “sorting out charges for the various tests and treatments,” the spokesperson continued, the lab does “expect that the federal and state funding will help reimburse costs down the road.”

The ACLA, however, is looking for federal help immediately. The association has requested that Congress fund a $5 billion emergency fund to help pay for the “free testing promised by the White House” and to keep these private labs up and running.

“We are growing increasingly concerned that the federal government is not recognizing the strain on the laboratory industry to meet the demand for testing for COVID-19,” Khani wrote in a letter to congressional leaders on Thursday. “As our industry extends considerable resources to meet demand, we seek support from the federal government so that we can continue our vital work for many months to come.”

The coronavirus emergency aid package Trump signed into law on Wednesday, known as the "First Families Act," does require "the National Disaster Medical System to reimburse the costs of COVID-19 diagnostic testing provided to individuals without insurance," though is it is not clear if this will also include reimbursements for costs incurred outside of testing.

Viracor Eurofins, a private testing lab based in Lee's Summit, Missouri, told ABC News that "government and commercial reimbursement is a significant issue that labs -- especially smaller labs -- are facing at this time."

"The reimbursement prices that have been set are simply not enough to cover the costs associated with the increased demand to purchase existing tests, develop tests, buy more supplies and expand staff," the spokesperson explained.

Importantly, the the UW Medicine lab has received some funding from the State of Washington to increase its capacity, Dr. Baird told ABC News.

Dr. Christopher Polage, the medical director of the Duke University Health System’s Clinical Microbiology Laboratory, told ABC News, “Institutional responses to epidemics like this are incredibly expensive.” The response involves huge unbudgeted costs and lost expected revenue, he explained.

“The cost to develop and perform COVID testing and other respiratory virus testing that goes with COVID patients is extremely high," Polage said.

Still, the labs are continuing on with their work.

"The research community has answered the call, we are doing what we can to help this," Dr. Baird said. "But it's not without an enormous amount of effort and resource consumption, and we can use all the help we can get."