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Core Labs Grapple With Revenue Loss From Pandemic-Related Shutdowns

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NEW YORK – As core labs remain shuttered or working at a reduced capacity due to the COVID-19 pandemic, core lab directors and administrators worry about the effects on their businesses.

In March, many university administrators moved to send students home and began to limit their campuses to essential workers as concerns regarding the spread of COVID-19 grew. Local leaders and state governors also started to issue stay-at-home orders to encourage social distancing and help stop the spread of the disease.

Following this, many core lab facilities on university campuses also closed or limited their work to essential research. But many core labs are reliant on user fees to bring in revenue, and this decline in work, while necessary, is raising concerns among core lab directors and administrators as they look ahead to both how long the shutdowns might last and what cores might look like when they start to open up again.

"Like most cores, we are supposed to be cost neutral," said Sridar Chittur, director of the microarray and next-generation sequencing core at the State University of New York at Albany's Center for Functional Genomics. "So this is really going to be weighing on everybody's mind. It gives me sleepless nights."

Essential or not 

At the University at Albany, Chittur and some of his staff are considered essential workers, so they are continuing to come into work, though they work remotely when they can. "I tell my staff to come in, do what they need to do, and then go home and work from home," he said.

Work that is coming into core facilities is limited to projects that have also been deemed essential. Broadly that means any work related to COVID-19, some other clinical studies, and, in some instances, longitudinal studies that need to collect key time point data, or animal studies. Those cores that are open are often keeping staggered schedules to limit the number of people in the core at any one time and keep that key social distance.

The University of North Carolina, Chapel Hill's medical school is on reduced operations, and Chris Gregory, director of the Office of Research Technologies, estimates that the 35 cores he oversees are at about 30 percent operating capacity. Six cores are closed, he said, and the rest are open but operating at a reduced capacity and often only working on critical research. The vice chancellor for research has been assessing what is and what is not critical work, Gregory added.

Justine Kigenyi, administrative director at the University of Kansas Medical Center's Hoglund Biomedical Imaging Center, noted that clinical trials are among the projects there that are continuing while others have ramped down. 

Other core labs are fully shuttered. Richard Cole, who directs the Light Microscopy Core at the New York State Department of Health's Wadsworth Center, said his core is closed. As his lab is part of the health department, public health testing has largely taken over, he noted.

Funds lost 

Being closed or even operating at reduced capacity is a source of worry for cores. Many of them operate as sort of small businesses and rely to varying extents on the fees their users pay to keep afloat. Kigenyi's core at Kansas, for instance, is supported through roughly equal contributions from the university, grants, and user fees.

Revenue from user fees is, unsurprisingly, down. People are scrambling to figure out how to deal with this loss of income, Cole said.

"It's definitely a concern for all of our cores," Gregory added.

He and his colleagues are going through a forecasting exercise to try to predict what downstream effects this loss of revenue might have for their cores, and Kigenyi estimated that her core is losing more than $100,000 a month. 

So far, though, it has been able to stay in the black by drawing on a reserve of funds it had built up through its income from industry-sponsored studies. Kigenyi added that her core is continuing to pay all its employees, whether or not they are able to work from home, at least through June when the fiscal year ends.

But many cores can't carry a large surplus of funds, Gregory noted, and those at UNC that do are using it to try to continue to pay employees as long as they can. "We really do not want to lay off anybody or furlough anybody in the cores. We just don't want to lose the talent," he said. "We have such good scientists working in these cores and it's key for us to retain them as best we can."

The lack of certainty as to how long cores may stay closed or at reduced capacity also makes planning budgets difficult. "We plan for the worst case scenario, hope for a better case scenario, and fall somewhere in between those, most likely," Gregory said.

He added that administrators at UNC are being flexible and are allowing internal funding, such as equipment grants or research development grants that can't be spent at the moment, to be carried over to the next fiscal year. Likewise at KU, Kigenyi said the reserve fund they had was put aside for research and development and new hires, but instead, they are drawing on it now to meet their short-term obligations. "And then we'll have to think about long-term commitments and how we can manage those at the same time," she added.

Federal research funding agencies have also been making allowances. The National Institutes of Health has said it would allow salaries and stipends to continue to be paid out of grants, even if no work is occuring due to the pandemic, and that grantees can request project extensions. The National Science Foundation has said it would be flexible with application deadline dates as well as allow salaries to continue to be charged to grants. Gregory noted that a number of core lab researchers' salaries at UNC are partially paid through grants, and his team has been able to continue to pay those salaries out.

Additionally, a handful of organizations representing research universities, medical schools, and teaching hospitals included core labs as one of their concerns in a letter to Congress earlier this month. In it, they sought government relief for researchers, including core labs, and asked in particular for institutions to be able to apply for emergency relief funds for core labs to cover gaps in personnel and operating costs.

In the meantime, cores are looking for ways to save even a little money. Kigenyi's core took a look at its instrumentation, including its biomagnetometer. While she said it enables interesting studies of brain activity in utero, it's complicated, hard to use, and expensive to maintain. Because of this, they have decided to sunset the machine. "It really has given us time to pause and reflect and really balance the value and the financial perspective and the long-term sustainability of some of these programs," she said.

Others are renegotiating service contracts or even purchase agreements. As the pandemic was spreading, a number of equipment purchases at UNC were pending. Those vendors are hurting now, too, Gregory noted, and have been flexible on negotiating on pricing because they need the sale.

Keeping busy at home 

Even while working from home, core directors, researchers, and administrators are keeping busy. Some cores are offering technology talks online, are doing consultations with users about their projects over Zoom video chat, or are setting up ways to give users access to data that has already been collected. Others are catching up on paperwork, such as refining their standard operating procedures and re-examining their cost-recovery approaches, or sprucing up their websites.

"Those aren't revenue generating, but they're essential for when the cores do reopen," Gregory said of activities he's encouraged his core directors to focus on at this time.

Core lab directors, researchers, and administrators are also turning to each other for support. ABRF is offering weekly virtual town hall meetings via Zoom to enable members to discuss how they are coping with the crisis as well as a few technology-focused sessions every other week.

"This is a time to pull together as a community," Cole, who is currently president of ABRF, added.

Slow reopen

Cores are also starting to look toward possible reopenings. In the US, a few governors have started to lift stay-at-home measures. While opening cores to full capacity may yet be premature, their directors are starting to think about what the reopening process might look like. It's likely to occur in fits and starts, they said, and some cores may have to make more changes than others. 

This is also where ABRF may be able to help cores by developing best practices, Cole said. The process will likely be technology-specific, as microscopy cores have different requirements than genomics cores.

For instance, microscopy core labs typically have welcomed users in to use instruments themselves. This may have to be managed differently, Cole noted, adding that he'll likely no longer train users in groups in the small microscopy rooms as he used to. He is also considering purchasing new keyboards and mice that are more indestructible and might hold up better to constant cleaning, and is also concerned about whether the eyepieces of microscopes might be a source of cross-contamination. The need to sanitize between users will also slow the throughput down, he noted.

Genomics cores, meanwhile, don't typically allow users to use the machines on their own. Still, as Chittur noted, they'll likely have to keep a form of social distance in place. "Until we become comfortable," he added, "it's going to be on a limited schedule that people will be limping back to the new normal."

Projects will also slowly ramp up, he said, as they won't be able to hit the ground running at the same speed as before the shutdowns. He is also concerned that with labs trying to get back up and running around the same time, that might lead to reagent shortages and backorders as companies try to fulfill that influx of orders. Any expired reagents will be a hit to the budget, as well, he noted. 

There will be differences outside of the lab, too. Cole noted that two ABRF chapters were supposed to have meetings in June and had to be postponed. (ABRF's annual meeting took place just before closures began, in late February.)

But with losses in revenue coming in, core labs might not have the funds to send staff to meetings, people might not feel comfortable traveling for quite some time, and legal restrictions may even remain in effect for a while. Cole said ABRF is exploring ways to make these meetings work virtually.

Lessons learned 

It's also a time from which lessons may be drawn. 

"There's a phrase — not to make light of it at all — but I've used it before: Don't waste a good crisis," Gregory said.

By that, he said he means there is much to learn from having to shut down cores labs for an extended period of time. While they might have previously prepared for being closed for a few days, following a hurricane, for instance, this situation was different, and it is longer. Cores could take a look at their procedures and communication approaches and assess whether they were robust to this crisis and see what needs to be tweaked.

"I think we've learned in some corners they have not been [robust], we weren't prepared for that," Gregory added. "And there were some really great examples of things that worked well, but what were the gaps?"

That way, cores may be better prepared for the next disruption, whatever the form it appears in.

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