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. Those will be polymerase chain reaction — or PCR — tests. They are generally considered “the gold standard” for coronavirus detection.
California Coronavirus Update: Governor Gavin Newsom Denies Controversial
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.
Today, California opened a NEW state funded #COVID19 testing lab.
Tried it out myself.
– DOUBLE CA’s testing capacity
– Guarantee 24-48 hour turnaround for results
– Cut the cost of a test from $150 to $30.
We’re not waiting around for the federal government to act. pic.twitter.com/OKII180d7J
— Gavin Newsom (@GavinNewsom) October 30, 2020
Newsom and health officials emphasized that a priority is testing in underserved communities, both “rural and urban.” 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.”
Newsom said there will now be enough testing “for everyone who needs it” in the state, and those tests will cost 75% less, according to the governor. That will be music to the ears of studios, networks and producers who have likely been shoveling out a premium for each test as they restart production.
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 statewide. The long term goal is to ramp up to 150,000 additional tests a day early next year. That timeline would also put the effort ahead of schedule, as Newsom said in August that the goal was to “run at full capacity by no later than March 1, 2021.”
On Friday, the governor revealed 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.
The governor said that there will be long term uses for the facility, as well. “Diseases will go away,” he reminded, saying the state was “looking at contract provisions to potentially partner” with academia and others to “make this permanent.”
“Why the federal government hasn’t done this is beyond me,” said Newsom about making the investment in infrastructure and using scale to drive down price. On Friday, positive tests in the U.S. topped 9 million, according to Johns Hopkins.
The announcement came as California’s daily new case number has begun to rise over the past week. It “was in the middle 3,000s last week,” observed the governor. On Friday, that number was up to 4,014 and the rolling 14-day average was above 3,000. Hospitalizations were up 2.5%.
Newsom said that with increased testing, he was now more focused on the test positivity rate. On Friday, the 14-day average positivity rate had risen to 3.0% from 2.5% two weeks ago, and that as tests have increased, meaning that infections are truly rising in the state. Newsom said the 7-day positivity rate was up to 3.2%.
Watch Governor Newsom’s Friday press conference below.
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