Businessmodel of Quest Diagnostics

Customer Segments

Quest Diagnostics provides a broad portfolio of products and service to a diverse customer base, spanning individuals and large organisations. These customers can be organised broadly into the following categories:

• Individuals, comprising individual patients and sufferers of a broad range of conditions and diseases, including cardiovascular, metabolic, general health, and infectious diseases;
• Healthcare Organisations and Professionals, including clinicians, health plans, independent delivery networks, accountable care organisations, independent practice associations, hospitals, and specialist facilities; and
• Commercial Entities, comprising medium and large companies and employers across multiple business sectors. Quest Diagnostics serves an extensive domestic customer base in the US, with direct operations in 12 US states, including California, Massachusetts, Florida, Georgia, and Illinois.

Value Propositions

Quest Diagnostics provides value to its customers in the following ways:

• Its industry sanding and size, with the Company one of the best-known providers of medical diagnostic products and services in the US, with a track record for providing market-leading solutions;
• Its broad range of products and services, with the Company offering an extensive portfolio of products and services, including risk assessment services, health information technology solutions, and diagnostic products, to a varied customer base spanning individual patients, companies and healthcare providers;
• Its commitment to innovation, with the Company committed to developing and implementing innovative products and solutions, committing a substantial portion of its resources on research and development activities;
• Its partnerships, with the Company maintaining a number of important partnerships, that enable it to provide exhaustive and efficient services to all of its clients; and
• Its industry expertise and experience, with the Company employing specialist personnel, including those with medical training, across its operating segments, as well as an experienced team of industry executives. ### Channels

Quest Diagnostics operates a website at www.questdiagnostics.com, through which its provides information on its products, services, and locations. Its website and online customer portal also allow customers to find healthcare providers, pay invoices, book appointments, manage their accounts, and access resources.

Quest Diagnostics’s Information Services business provides services principally through a unified commercial organisation that is focused on the sale and marketing of its information services. This coordinates closely with the Company’s clinical franchise organisations, which are responsible for product marketing. Quest Diagnostics’s commercial organisation is centrally led, and is arranged regionally, in conjunction with its operations organisation, to ensure aligned and efficient delivery for its customers. The Company maintains a separate sales and marketing organisation for its employer drugs-of-abuse testing services.

The Company’s Diagnostic Solutions business also maintains separate sales force that focuses on selling diagnostic products, healthcare information technology solutions and risk assessment services.

Additionally, Quest Diagnostics operates its own network of data centres, billing centres, call centres, distribution centres and patient service centres at locations throughout the US. It also operates offices, patient service centres and clinical laboratories in locations outside the US, including in Puerto Rico, Mexico, India and Ireland.

Customer Relationships

Quest Diagnostics offers certain services to its customer, in particular individual patients, on a self-service basis. The Company’s website and online client portal enable customers to search for healthcare providers, pay bills and invoices, access resources, and arrange appointments without interacting directly with members of the Company’s sales and support teams.

Quest Diagnostics serves its clients directly, consulting with them closely in order to provide services and solutions that are tailored to each client’s individual needs and circumstances. This ensures that the Company’s services and products are used effectively and reliably. The Company also provides personalised after sale care, with a dedicated support team that is on hand over the phone or via email to provide assistance on a case-by-case basis.

Quest Diagnostics additionally offers a range of online resources and tools, including FAQs, and guides on billing, receiving test results, and making appointments. The Company also operates a number of social media accounts – including with Facebook, Twitter, LinkedIn, and YouTube – through which it can update customers on company developments and interact with them directly.

Key Activities

Quest Diagnostics is a provider of diagnostic information services. The Company operates through two businesses: Diagnostic Information Services, which develops and delivers diagnostic testing information and services to patients, physicians, health plans, hospitals, accountable care organisations, integrated delivery networks, other commercial laboratories, employers and others; and Diagnostic Solutions, which offers a range of diagnostic solutions for insurers and healthcare providers.

The Company also provides risk assessment services for the life insurance industry, and provides healthcare organisations and clinicians with health information technology solutions and diagnostic products. Quest Diagnostics operate principally in the US, serving an extensive domestic customer base through a network of offices, patient care centres, and distribution centres.

Key Partners

Quest Diagnostics works closely with a broad network of partner companies and organisations in order to offer innovative and effective solutions to its customers. The Company’s partners can be categorised broadly as follows:

• Supplier and Vendor Partners, comprising providers of technologies, equipment, and materials that are used in the development of the Company’s products and solutions, as well as providers of services and equipment that are utilised more broadly across the enterprise;
• Medical and Healthcare Partners, comprising various medical organisations and bodies, such as hospitals and independent delivery networks, through which the Company provides healthcare services to its customers and helps to develop effective medical practices;
• Technology and Innovation Partners, comprising technology and diagnostic product developers, with which the Company collaborates on the development and implementation of innovative products and services; and
• Strategic and Alliance Partners, including market-leading companies across multiple sectors, with which the Company collaborates on various joint projects, including in relation to marketing and branding. Quest Diagnostics has launched a number of partnerships in recent years. This includes a development partnership with IBM’s Watson unit, a laboratory services partnership with HealthONE, and a broad collaboration with Optum.

Key Resources

Quest Diagnostics’s key resources are its technologies and intellectual properties, its research and development laboratories, its online platform, its IT and communications infrastructure, its sales and distribution channels, its partnerships, and its personnel.

Quest Diagnostics owns numerous patents and trademarks that are key to its provision of innovative and unique solutions. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in the Company’s name, including applications entitled ‘Mass spectrometric determination of fatty acids’, ‘Methods for the diagnosis of bacterial vaginosis’ and ‘Methods for detecting vitamin C by mass spectrometry’.

Quest Diagnostics also owns and or leases a number of physical properties that are key to its operations. This includes its network of offices, data centres, billing centres, call centres, distribution centres and patient service centres.

Cost Structure

Quest Diagnostics incurs costs in relation to the development of its products and solutions, the development of its online platform, the maintenance of its IT and communications infrastructure, the operation of its sales and distribution channels, the management of its partnerships, the implementation of marketing campaigns, and the retention of its personnel.

In 2015 Quest Diagnostics accrued cost of services in the amount of $4.66 billion, and selling, general and administrative costs in the amount of $1.68 billion.

Revenue Streams

Quest Diagnostics generates revenue through the provision of various diagnostic services and products to individuals, commercial entities, and healthcare providers. The Company’s revenue is derived principally in the form of client or patient fees, billed on a fee-for-service and product sale basis.

In 2015 Quest Diagnostics generated total revenue for the year of $7.49 billion, up slightly on the $7.44 billion recorded by the Company in 2014. The vast majority of the Company’s revenue was derived from its Diagnostic Information Services business, which alone recorded annual revenue of $6.97 billion. The Company’s Diagnostic Solutions business generated $528 million.