California could see a quarter-million coronavirus tests a day under new state plan

Gov. Gavin Newsom said on Wednesday that California has signed a contract with an East Coast medical diagnostics company to more than double the number of coronavirus tests that can be processed in the state, eventually expanding capacity to roughly a quarter of a million tests per day.

Under the $1.4-billion agreement, a new Santa Clarita lab will be able to provide testing results within two days, far quicker than the average five- to seven-day processing times offered by other labs.

The expanded testing capacity and quicker results will increase the ability of local health officials to quickly isolate people who test positive for the virus and to track down and test those who came in contact with them, Newsom said, which are crucial to slowing the spread of COVID-19.

“We have provisions in the contract to guarantee that turnaround time,” Newsom said at a news briefing. “That will advance our efforts to reopen our schools for in-person education, reopen our businesses in a more effective and efficient manner, in a more sustainable manner.”

The new lab is expected to begin processing coronavirus tests in November. When the lab is at full capacity in March and processing as many as 150,000 tests per day, the cost per test is expected to be a little more than $30, Newsom said. Currently, Medicare and Medi-Cal pay about $100 per coronavirus test, and the average overall cost varies from $150 to $200 per test, state officials said.

Reducing testing costs not only will save money for workers and their employers but also lower costs for Medi-Cal, the federally subsidized insurance program for low-income Californians, the governor said.

“This is exactly what the federal government should be doing,” Newsom said. “Had the federal government done this some time ago, you wouldn’t see average costs [per] test at $150 to $200 — costing the taxpayers, quite literally, tens of billions of dollars, costing employers billions and billions of dollars, costing the health plans billions of dollars as well.”

Since the pandemic began, more than 10.8 million coronavirus tests have been administered in California. Currently, private and public labs in the state process an average of 100,000 tests per day. In that time, more than 12,000 Californians have died from the virus and 682,000 have tested positive.

Up until this point, California has been conducting fewer than half the daily tests necessary to stop the virus, according to an analysis by the Harvard Global Health Institute. Some officials who served on the governor’s testing task force have also expressed concern that testing supplies were in danger of drying up in the coming months as various states compete for them.

Dr. Mark Ghaly, secretary of the state Health and Human Services Agency, said the new lab will give California “a degree of testing independence” and insulate the state from the testing delays and fluctuating supply lines plaguing the rest of the country. More testing also will give public health officials greater insight into the transmission of the virus in California, he said, and an enhanced ability to identify people when they are most infectious.

Under the agreement, PerkinElmer will provide the testing equipment, laboratory personnel and the critical chemicals needed to conduct coronavirus testing, including reagents, which are used to extract genetic material from a nasal swab sample and were in short supply at the outset of the pandemic.

The state is leasing the Santa Clarita facility and providing the swabs and the supplies needed to safely store and transport the tests to the lab. The state will also attempt to recoup a portion of the $1.4-billion price tag by billing private insurers, Medicare and other parties responsible for covering individual testing costs.

The costs of the tests depend on the number processed. If the new lab processes only 40,000 per day, the cost per test is $48. The price drops to just under $38 per test if 100,000 tests are processed and about $31 if 150,000 are processed daily, the governor said.

State Sen. Richard Pan (D-Sacramento), who is a pediatrician, said significantly expanding testing is crucial to bringing the pandemic under control in California.

“In order for us to get our kids back to school, in order for us to get our businesses back open, in order for people to get back to their jobs, we need to be able to contain this pandemic,” Pan said. “In order to do that, we have to have reliable testing.”

Newsom on Wednesday said the new state protocols for allowing counties to reopen their economies will be announced on Friday. Local officials have been expressed frustration that the Newsom administration has been slow in releasing that policy.

Under a system enacted by the Newsom administration, counties that are added to a coronavirus monitoring list are are subject to additional business closures if they experience three days of elevated disease transmission, increased hospitalizations or limited hospital capacity. Counties drop off the list if those trends reverse and they meet the state standards for another three days. Eight counties in California have been removed from the list and are waiting for the state to release guidelines.