‘Mysterious’ healthcare system helps Reditus and others make big bucks on COVID testing

As WGLT previously reported, Beijing’s Reditus Labs has seen a sudden and dramatic rise as the leading company providing coronavirus testing across the state.

You may have wondered how they are paid.

If you’ve driven to a coronavirus testing site in the past two years to get tested, you didn’t have to pay a dime. But health care advocates are quick to point out that we all pay every time we swab our noses or spit into a tube — and the companies that run these tests make big money.

In the spring of 2020, COVID testing was in high demand. The offer was low. The supply of companies capable of carrying out large-scale coronavirus testing was even weaker.

Stepping into Reditus Labs, the Beijing-based company that opened a year earlier to study body organs, blood and tissues to better diagnose disease. Reditus had recently started testing for infectious diseases. Reditus took the demand for testing as an opportunity.

Starting with just 10 employees, Reditus began processing thousands of nasal swab PCR tests every day at its Beijing facility.

CEO Aaron Rossi said Reditus needs to ramp up quickly. “We had to hire more than 100 employees in less than a year, maybe even more. It’s a bit of a blur, but we were bringing people in quickly,” Rossi said.

Reditus got a $100,000 loan from the city of Beijing to expand. Soon Reditus was performing coronavirus tests in Bloomington at the Interstate Center and in schools, malls and even prisons across the state.

Reditus Laboratories said it has invested more than $15 million in its new Beijing factory and has more than 300 employees.

Benefits of COVID testing

Reditus said it has performed more than 4 million coronavirus tests since the start of the pandemic. How much did Reditus earn from testing? It’s hard to say because funding comes from so many public and private sources, even though the federal government ultimately pays for most of it.

According to COVID financial records that the Illinois Comptroller’s Office posted online, Reditus earned about $222 million from the state for COVID testing. It’s right across the state of Illinois. This does not include tests carried out in private companies or even in public schools.

For example, Illinois State University paid Reditus $2.9 million for testing before switching to University of Illinois COVID saliva testing last year. The university has not yet received reimbursement for those fees, but spokesperson Eric Jome said the ISU still expects the federal government to cover those fees.

Reditus also performed COVID testing at Illinois Wesleyan University. The private school would not disclose how much it paid Reditus.

The $222 million haul also doesn’t include what Reditus gets from insurance companies or tests it does in other states. Reditus said he is getting COVID specimens from about 15 states.

Reditus isn’t the only company that’s done COVID testing for the state of Illinois. Other companies have also done well. According to financial records posted on the Illinois comptroller’s website, Chicago-based Tempus Labs withdrew $37 million from the state of Illinois for COVID testing. Testing giant LabCorp secured $2.4 million from the state for COVID testing in the early months of the pandemic. Chicago Simple Labs has earned more than $1 million in state COVID testing.

Adam Taner

Adam Tanner, writer at Harvard’s Institute of Quantitative Social Science and contributing editor at Consumer Reports.

“COVID has been a big money-making opportunity,” said Adam Tanner, a writer at Harvard’s Institute for Quantitative Social Sciences and editor-in-chief of Consumer Reports.

Tanner said COVID testing costs have varied wildly from under $30 to over $1,400. Tanner said companies that can handle large-scale COVID testing should be able to do so for less.

“They’re running a lot of tests with one machine at the same time, so it should be priced over $29, but not 10 times that,” Tanner said. “That seems to be the expert consensus.”

But companies that can do large-scale testing are exactly what the government needed. The Illinois Department of Public Health (IDPH) said it was working with Reditus because it could handle a large volume of testing.

Early in the pandemic, IDPH sought out labs that could support testing and handle large volumes, IDPH spokesperson Melaney Arnold said. “We also worked to have labs located across the state and not just in one area or region. We have worked with many labs since the start of the pandemic…and continue to work with many of them.

How they are paid

Reditus does not charge anyone to take a test. He tries to collect insurance, then bills the state when he can’t. The state is paying with federal COVID relief funding.

Reditus initially charged the State of Illinois $113 per test. The state then renegotiated the price to $93. The charge for testing inmates and prison staff is $90.

Rossi said Reditus used Medicare’s reimbursement rate of $100 as a baseline to set the price. He said the company’s costs have come down over time.

Rossi said he thinks insurance companies should be responsible for footing the bill – not taxpayers, but he said insurers are often slow to pay and he says it’s often difficult to get the bills. personal insurance information online.

“Some of these things are a lot more complex than you might imagine, especially in universities. We have college kids coming in,” Rossi said. “I think one of the least important things for them is probably to give us some insurance information. They are ready to go back to class and do what they are trying to do.

When this happens, the government ends up paying for the test.

A study last summer by U.S. health insurance providers put the average provider cost for a test at $130. The insurance trade group recently sent a letter to Congress asking it to stop what it called “pandemic profiteers” who are defrauding insurance companies for costs.

A Johns Hopkins University professor who has studied the costs of COVID testing says companies that charge more than $100 per test are charging too much.

Portrait of Ge Bai

A Johns Hopkins University professor, Ge Bai, has studied the costs of COVID testing. She says companies that charge more than $100 per test are charging too much.

Accounting professor Ge Bai said she blamed the high costs of COVID testing on the federal government, not the providers. She said when Congress guaranteed insurance companies would pay for testing — and the public wouldn’t have to pay out of pocket — it led to windfall profits for insurance companies.

“It created a perfect opportunity for vendors to price high,” Bai said. “They have a high negotiated price with the insurance company but without making the patient feel the price at the time they receive the tests.”

Bai said ideally the public should cover at least some of the cost of COVID testing. She said it would create price competition. “Once providers understand that patients are in the game and patients have choices, they will automatically lower their price and enter a price war,” Bai said. “That will end up being the best-case scenario for the patients and the payer.”

Bai said she understands the government has kept free testing to make sure people don’t avoid getting tested if they need to. She suggested that grants for low-income families might have helped. She said we will pay for all tests later with higher insurance premiums.
Price disparities are also apparent when it comes to rapid COVID tests you can perform at home. The federal government recently made free home test kits available by mail, but before that, it was the Wild West.

Consumer Reports’ Adam Tanner did a global price comparison. “You can look in Germany or Japan or the UK or the US and you will find that the cost in the US is often two, three or four times higher for these rapid home tests than they are. are in some other countries,” Tanner said.

“We manually check (quality control) each test with our own eyes.”

Aaron Rossi, CEO of Reditus

Bai said some testing companies have taken advantage of what she calls a “mysterious” US healthcare system, but she said it culminates in a much-needed truth about for-profit healthcare – money drives money. ‘innovation.

“Unfortunately, without monetary incentive, few organizations are willing to sacrifice their time and opportunity costs to do things that are very much in line with social welfare and maximizing the best interest,” said Bay.

Reditus CEO Aaron Rossi said not all testing companies are the same. He said some of the biggest companies in the northeast used robots to process the tests, but not at Reditus. He said customer service and quality control are important to him. “We manually perform quality control (QC) of each test with our own eyes,” Rossi explained. “We don’t use analysis software to spit out the results every time. We are very, very thorough.

Reditus donated $500,000 to the Unit 5 School District in Bloomington-Normal to help expedite COVID testing early on. He said Reditus has also invested more than $15 million in its Beijing factory to meet increased demand. Reditus has grown three times and now has more than 300 employees.

Rossi said Reditus will have plenty to deal with when the COVID tests are done. He says it’s been two years of almost total focus on the pandemic, they’re all “fed up” now.

Reditus recently reduced COVID-19 testing to three days a week at the Interstate Center in Bloomington due to a drop in demand.

About Kristina McManus

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