Liquid Assets:

PAML SEEING FAST GROWTH IN DRUG SCREENING

The positive cash flow at Spokane's largest medical test lab is
yellow, not green, and comes in 30-milliliter bottles shipped from
around the western United States.

Pathology Associates Medical Laboratories, owned by Providence Health
and Services, has seen a steady increase in the number of tests it
does on urine specimens provided by companies and facilities from as
far away as Wyoming and Alaska.

Six years ago PAML's labs performed tests on about 600 urine
specimens per day, collected in the Inland Northwest.

Today it handles 1,000 urine specimens gathered by employers or
agencies and shipped by courier or airplane to Spokane. About 85
percent of the samples come from companies that want to know if
workers are using illegal drugs or if those drugs played a part in a
work-related accident or event.

By far the largest percentage of those companies want to test for the
"NIDA 5" - the five most commonly used illegal drugs identified by
the National Institute on Drug Abuse.

Those five - marijuana, cocaine, methamphetamine, PCP and opiates
including morphine - are the five drugs the federal government
specifically looks for when testing its employees and others in
private industries involved in safety-sensitive jobs.

When bus drivers for Spokane Transit need to go through a random
urine test, their results are shipped to PAML, where workers process
the specimens using expensive equipment that can produce 2,400 test
results an hour. Each specimen, after delivery, can be tested for a
wide array of drugs.

When county or city governments think of hiring firemen or police
officers, one of the first steps in the process is for PAML to
collect a specimen and test if they're using drugs.

PAML's drug-testing group - called forensic toxicology - has been in
operation about 20 years. In recent years it has grown about 15
percent a year, and is expected to continue at that pace, said Dave
Michaelsen, PAML's toxicology group manager.

That growth, at least in recent years, is tied to an expanding
regional economy, said Tom Tiffany, chief executive of PAML, whose
offices are on the South Hill two blocks south of Sacred Heart Medical Center.

"When the job market is strong and hiring is up, we get an increase
in business (for drug tests)," Tiffany said.

PAML's overall business doesn't depend on workplace drug tests;
toxicology only accounts for about 10 percent of the company's total
revenue, said Tiffany.

But the annual 15 percent to 20 percent growth in the toxicology
group is impressive: "It's more (growth) than the entire PAML total
figure," he said, which is closer to half of the toxicology group's
growth rate.

Of those 1,000 daily urine samples coming in, about 85 percent are
from workers, either looking to be hired or required to take a test
on a recurring basis. The other 15 percent are tests done for clinics
and drug treatment programs needing information to track patients and
ensure they're either not using controlled drugs or are correctly
taking medications at prescribed doses.

Mike Mackay, owner of Mackay Manufacturing Inc. in the Spokane
Valley, requires all job applicants to submit to drug tests as a
condition of hiring. He's done that for 10 years and considers the
cost of the test - about $120 - worthwhile. That $120 is for more
than a drug screen at PAML; it includes a complete physical exam and
hearing test provided by other firms, Mackay said.

He knows the screening eliminates some qualified workers in a tough
hiring market. "But I know it's worth the trouble. We end up with a
better quality work crew," he said.

The money PAML charges for drug tests varies widely, depending on the
complexity of the tests, the volume of specimens a company produces
yearly and the overhead involved in collecting and shipping the
specimens to the Spokane lab.

For most tests for the NIDA 5, PAML would charge a customer an
average of $15 per specimen, said Michaelsen.

He and others in the industry keep track of how their competitors in
the drug-test market are doing. PAML's major regional competitor is
the Seattle office of LabCorp., a national company with more than $3
billion in annual sales.

"There are a triad of factors we offer - speed, accuracy and price,"
said Michaelsen. "But you can't get all three. If you want cheap and
fast, you won't get accurate. If you want fast and accurate, you give
up (low) price," he said.

Accuracy is a key issue for customers. Many companies have a human
resources employee whose job includes tracking drug test results and
insuring that any positive test results can be confirmed.

Each time a urine sample tests positive for a substance, PAML's
technicians then have to take a second sample from the specimen and
verify the results.

The second step in the process usually weeds out false positives and
results that come about due to the equipment reacting to other
chemicals or drugs in the urine, said Michaelsen.

For instance, out of all tests conducted at PAML in 2005 for the
presence of marijuana, about 3.2 percent of samples tested positive
at first. The number of confirmed marijuana tests dropped to 3.04
percent when additional tests were done - from 5,660 to 5,337
instances - according to Michaelsen.

That PAML number, incidentally, is higher than the national rate
reported by Quest Diagnostics Inc., a New Jersey-based publicly
traded firm that performs millions of workplace drug tests each year.
Quest officials reported that marijuana was positively identified in
2.65 percent of all workplace tests it did for its U.S. customers during 2005.

PAML keeps all positive test samples for at least a year. Tests that
are clean are discarded in about three days.

Tiffany sees nothing but positive growth numbers for PAML's
toxicology services over the next few years. But changes in the
toxicology industry will lead PAML to invest in new equipment, he said.

One change on the horizon is the introduction of saliva testing and
hair testing, both of which are considered more accurate, less-error
prone methods of screening. Both methods would cost more to do and
will require PAML to invest in additional technology, said Tiffany.

The industry is already moving in that direction, said Barry Sample,
the director of science and technology for employer accounts at Quest
Diagnostics.

"It's become a big discussion nationwide, the need for a more
accurate system of testing for workplace drugs," he said. New methods
could allow companies like PAML to end the cat-and-mouse game of
tracking the assorted ways people adulterate urine samples, said Sample.

He pointed to the 2005 incident at a Minnesota airport when a
professional football player was found carrying a product sold as a
way of disguising the presence of marijuana in a drug test.

"Using hair or oral fluids will make the collection of samples much
simpler. There will not be the question of unobserved collection. You
just get the hair or the oral fluid, and put it in a sealed
container," said Sample.

Michaelsen said the best way to spot invalid or adulterated urine
samples is a lab test of specific gravity - a number closely tied to
its chemical composition.

"If people try to add water, or even Mountain Dew, it changes the
specific gravity that we should be seeing in our tests," he said.

As PAML continues to watch where the workplace drug test market is
headed, it also listens to the changing needs of individual
customers, said Michaelsen.

Every year, it adds tests to track for the presence of drugs now on
its customers' radar screens. In recent years, for example, PAML
added tests to identify MDMA, the clinical term for the drug Ecstasy.

This year, PAML will be adding two or three new drugs to its sexual
assault date-rape panel. In cases of suspected date rape, law
enforcement asks hospitals to gather a victim's urine sample. It's
then sent to PAML to identify which drug was used, said Michaelsen.

A focus on customer satisfaction also means learning when not to
report some drug results, Michaelsen said.

In recent years some customers have told PAML not to report positive
results for marijuana use among some employees.

"My guess is that the company has no problem tolerating what it
considers a social drug," he said. "Or it may be that they don't want
to lose a large number of their workers" who might test positive for
marijuana, he surmised.