Starting a Drug Testing Business – The Basics

Are you interested in starting a drug testing business, but aren’t really sure where to begin or what will be involved? This article will provide you with some basic information about the drug testing industry to help you understand what you are getting into to and what your options for your business model will be.

First off, we are talking about drug testing in regard to testing individuals for illegal drugs or illegal abuse of legal drugs (prescription). Major uses of drug testing are to detect the presence of these drugs in applicants selected to be hired for a job, existing employees, individuals involved in sports, probationers, parolees, students, parents in child abuse cases, and in many other unique situations.

IS CONTINUED MARKET SHARE AVAILABLE IN THIS INDUSTRY? YES, ABSOLUTELY.

The industry continues to grow as drug use continues to grow.  The latest survey conducted by the United States Department of Health and Human Services (2017) showed that 30.5 million people aged 12 or older used an illicit drug in the past 30 days (i.e., current use), which corresponds to about 1 in 9 Americans (11.2 percent).  Marijuana use is up significantly across the country.  In 2017, an estimated 11.4 million people misused opioids in the past year, including 11.1 million pain reliever misusers and 886,000 heroin users.

Legalization of marijuana has not slowed down drug testing sales.  Recreational marijuana is now legal in 10 states; medical marijuana is legal in 33. Drug testing companies report increased business in states where marijuana is legal, particularly in Colorado.

Research company MarketsandMarkets™ INC. reports that the US drug testing industry is growing each year and expected to reach 8.63 Billion by 2022.   “This high growth rate is attributed to factors such as growing drug and alcohol consumption; government funding in major markets, enforcement of stringent laws mandating drug and alcohol testing, and regulatory approvals and new product and service launches.”

HOW DOES ALL OF THIS DRUG TESTING HAPPEN?

There are segments of the industry with various industry players. You will need to think about which segment or segments of the industry that you fit into.

Some new businesses start out in one segment and grow into a few others, some folks jump right into providing many of the services offered by each industry segment. Let’s take a look at each of the players and you can get an idea of what direction you might want to go into.

These players are referred to as service agents (SA) by the United States Department of Transportation (DOT) and in general, are the service providers for the drug and alcohol industry.

Specimen Collectors (the collector)

These folks operate on a mobile basis traveling to and from client locations and/or work from a brick and mortar facility.  The specimen collector works directly for the client, the laboratory, the third party administrator (TPA) or others. 

The collector is collecting a biological specimen (urine, hair, blood, sweat or oral fluid-saliva) for a testing device or a laboratory to determine the presence or absence of specified parent drugs or their metabolites. 

Collection Site

A facility where specimens are collected. This could be the employer place of business. Typically this is a brick and mortar facility, it could be a TPA office, a medical facility, hospital, occupational health clinic, walk in clinic, doctor’s offices – any type of business that might have a set up and employ collectors to collect specimens. 

Major laboratories such as Quest Diagnostics and LabCorp operate brick and mortar facilities that employ collectors to collect specimens; these are commonly referred to as Patient Service Centers (PSC’s). Other laboratories have contracts with occupational health clinics, walk in clinics, doctor’s offices and other facilities that operate brick and mortar facilities to collect specimens. 

Breath Alcohol Technician (BAT) and/or Screening Test Technician (STT)

Commonly a collector also, the BAT or STT is a person who instructs and assists persons in the alcohol testing process and operates an evidential breath testing device (Bbreathalyzer) or alcohol screening device. These folks also operate on a mobile basis traveling to and from client locations and/or work at collection site; they also work directly for the client, the laboratory, the third party administrator (TPA) or others. 

Laboratories (Lab)

After collection from the donor, a specimen is sealed with a tamper-evident seal and sent to a laboratory for analysis. The primary advantages of utilizing a laboratory for testing include compliance with regulations, accuracy, legal defensibility, and the ability to customize tests for a particular demographic group. 

A laboratory is a brick and mortar facility that does the testing, not the facility that collects the specimen. Folks get confused about this and say I’m going to the lab for my drug test, they actually mean they are going to the collection site for specimen collection.

A very big investment is required to own and operate a laboratory.  Laboratories currently involved with drug testing include Quest Diagnostics, LabCorp, MEDTOXand Clinical Reference Laboratory (CRL) – there are many others also both regional and national players.

Instant Testing Manufacturers and Distributors

On-site instant or rapid drug testing is becoming more widely used as a more cost-efficient method of effectively detecting drug abuse amongst employees, as well as in rehabilitation programs to monitor patient progress.

These instant tests are available for both urine and saliva testing. The kits are visually read and subject to interpretation by the collector. They provide an indication of drug use within minutes but they are only equivalent to the immunoassay stage of laboratory testing; confirmatory laboratory testing is required for test results that are not negative. 

There are many industry players in the business of selling these test kits as a distributor of products.  Also, many service providers use these kits in conjunction with other testing methods and services they make available to their clients. Note that under some state laws as well as DOT rules and under HHS rules for Federal workplace drug testing, these instant testing devices cannot be used.  

Medical Review Officer (MRO)

A Medical Review Officer (MRO) is a person who is a licensed physician and who is responsible for receiving and reviewing laboratory results generated by an employer’s drug testing program and evaluating medical explanations for certain drug test results. The MRO receives the laboratory drug test results from the lab and reports the results to the employer. 

Many TPA’s have in house MRO’s working for them.

Walk In Clinics, Hospitals, Doctors Offices, and Occupational Health Clinics

All of these types of facilities might be in the drug and alcohol testing business perhaps as collector sites, third party administrators (TPA) and/or Medical Review Officers (MRO).  All are potential competitors and/or potential clients and most definitely potential strategic partners.

Employee Assistance Program (EAP) Provider

EAP’s are employee benefit programs offered by many employers, many times in conjunction with a health insurance plan. EAPs help employees deal with personal problems that might adversely impact their work performance, health, and well-being.

EAPs generally include assessment, short-term counseling and referral services for employees and their household members. Employers will refer employees with drug and/or alcohol problems to the EAP.

Substance Abuse Professional (SAP)

Under DOT regulations, the SAP is a person who evaluates employees who have violated a DOT drug and alcohol program regulation and makes recommendations concerning education, treatment, follow-up testing, and aftercare.  There are credentials and certifications required for one to be a SAP.

Third Party Administrator (TPA)

This is basically a service provider that provides two or more of the services involved in the drug testing process. A TPA might coordinate for an employer the entire process of the specimen collection, breath alcohol testing, the laboratory testing, the review and reporting by the Medical Review Officer (MRO) thereby providing all of these services under a one stop shop.

A TPA will typically provide everything to the employer client to keep the client in compliance with the applicable regulations – DOT, State Laws etc. 

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So now you have an idea of the various players involved in the industry, you can think about where you might fit in. Some folks might start out as a collector and a BAT providing specimen collections and alcohol testing to various employers and on behalf of TPA’s and or Labs. This can be a home based business or can be a brick and mortar facility – a collection site or a mobile collection business or both.

Joe Reilly & Associates Inc provides drug industry training and consulting to businesses throughout the United States. Our online training programs are great for those who are looking to expand their business, while a one-on-one consultation may be required for new businesses or those looking for very specific training. To learn more, contact Joe Reilly at 321-622-2020 or joe@joereilly.com