Global Drug Testing Labs Inc. is growing quickly, increasing its sales dramatically over the last four years in what it says is a "recession-proof" niche.

Drug use bucks economic trends, increasing in both good times and bad, says Ken Smith, the Coeur d'Alene-based company's owner. Also, the expansion of drug courts, which employ stringent requirements to help people convicted of drug-related crimes stay out of jail, has driven growth in the drug-testing industry, he says.

At some of its locations, the contract drug-testing company now collects and processes about 800 urine samples a day.

Global Drug Testing Labs had about 40 employees and nearly $2 million in sales in 2008, compared with the six employees and about $160,000 a year in sales of its predecessor, Global Drug Testing Services, when Smith bought that company and reincorporated it in 2005, he says.

This year, Global Drug Testing Labs hopes to reach sales of about $6 million, Smith says. It currently has three laboratories—one in Coeur d'Alene; one in Salt Lake City, Utah; and one it opened recently in San Jose, Calif.—where it both collects and performs drug tests on urine and hair samples for courts, social service agencies, and private employers. It also has five other sites at which it collects samples and sends them back to one of its main labs for processing.

Global expects to open four or five more labs and several collection facilities over the next year, including possibly one in Spokane about mid-year, and to add about 10 to 12 employees at each lab, Smith says. He says it costs about $100,000 to get a laboratory up and running in a leased space.

The company's bread-and-butter clients are government-operated drug courts, felony courts, mental health courts, parole programs, and child protective service agencies. It also does drug testing, though, for private employers such as airlines, trucking companies, retail stores, and hotels; individuals who want to test their teenage children; and parties involved in civil disputes, such as contested divorce cases.

Drug-court clients cost the judicial system about $3,500 a year, as opposed to more than $30,000 to jail a defendant for a year, Smith says. He says clients from drug court test positive for drug use about 3 percent of the time and fail to show up for testing 7 percent of the time, while people on probation test positive about 20 percent of the time and have about a 50 percent no-show rate. Smith says there now are more than 2,000 drug courts around the U.S.

He attributes much of Global's success to a Web-based software program it has developedcalled Globaltech, that has eliminated a lot of the manual aspects of the business's processes. When Smith first bought the company, the waiting line at the small Coeur d'Alene lab would snake outside and around the building. Now, there's no more than a five-minute wait for testing at any time, he says.

With the Globaltech software, the company can process up to 800 tests in a day about as easily as it can handle 200 tests a day, Smith says. Global Drug Testing reports positive results to its clients within a day, he says. Before the software's implementation, it would take between three and seven days to report results, making it more difficult for drug courts to respond quickly to offenders' behavior, he says.

Global Drug Testing monitors government requests for qualifications, then bids for contracts. Last year, it bought a defunct lab in Salt Lake City that had had its contract canceled. It got back the drug-court contract that the former lab had lost, and has seen its business there grow quickly, Smith says.

A lot of companies and other agencies in a metropolitan area check to see what provider a municipality's drug court uses for drug testing and seek services from the same provider, enabling drug-testing companies to increase sales at times with little additional effort, he says.

Smith says that once Global Drug Testing wins a bid for a contract, it analyzes the way the client organization is handling its drug-testing program and suggests ways to improve it.

"When we first took over in Salt Lake, a big complaint was that it took over three hours to process a donor. Now it's down to five minutes," Smith says.

The company tests urine and hair samples for substances including methamphetamine, cocaine, PCP, marijuana, and opiates such as Hydrocodone and heroin. Last year, a more reliable urine test for alcohol was introduced, making it easier to order frequent random testing for people who are not supposed to be drinking, Smith says.

When an offender is registered for the random drug testing program, the parameters required by the ordering agency are entered in the program, including how often the random tests are to be administered, along with a list of recipients of the results, how much the subject needs to pay for each test, and their photograph. Each donor is assigned a group number, and must call a toll-free telephone number each day to find out if his or her group is required to come in for testing that day. People sometimes are tested up to 13 times a month at the beginning of their program, and less often as time goes by as long as they have negative results, Smith says.

When a test subject comes to the lab or collection site, a Global Testing employee can look up the subject's record quickly, confirm by photo that it's the correct person, and see the payment amount that's required. The program then prints a receipt and a label for the collection cup.

The donor is escorted into the facility's restroom by a same-gender staff member, and follows strict collection procedures to prevent a person from trying to submit someone else's urine. Without going into graphic detail, Smith says he's seen people use just about every trick imaginable to try to beat the tests.

Once the collection is done, the samples are tested for the substances requested by the client organization. Any samples with a positive result are retested, and placed in cold storage onsite for three months in case of a legal dispute about the results. A report is sent by the computer program to all of the people the client organization has noted should receive it, and the organization can access the results via a secure Web site, Smith says.

"We've made it as bulletproof as possible," he says.

A rough start

Though Global is growing explosively now, running the business hasn't always been easy, Smith says. The company's first two years were marked by a rash of employee theft and the loss of its Spokane lab to an arson fire that Smith says was lit with a blowtorch left on the front porch.

"The building was blown up, literally," but he was determined to make it work, he says.

"I don't give up," he says. "I've never missed a payroll, but I've cried."

Once the company overcame its early financial struggles and worked out the kinks in its Globaltech software program, the business blossomed, he says. Now, Smith is considering marketing the software to other companies in similar fields.

In 1996, Smith retired from Ontrak Systems, a semiconductor equipment company he founded in Silicon Valley. He says he stayed retired for nearly a decade, but wanted something to do. Smith's sister worked for Global Drug Testing Services, in Coeur d'Alene, and when she mentioned that the owner of that company was considering selling the business, Smith bought it and reincorporated it.

At that time, the company had offices in Coeur d'Alene and Spokane. After the fire at the Spokane location, Global Drug Testing tried to establish another site in the Spokane area, first in Airway Heights and then in Spokane Valley, but couldn't solidify the accounts that its predecessor had held, so it decided to focus on North Idaho first and worked to develop the software that now serves as the backbone for its organization.

Global Drug Testing has had good results in areas where it's gotten contracts, Smith says. He says the growth of such companies is evidence of the success of drug courts. Being able to supply the test results to case managers ensures that the court system can quickly reward or punish people for their behavior, improving compliance, Smith says.

He says as long as drug-court programs continue to be an effective model for courts, he expects his business to continue to thrive.

"When people come out they look better, and they feel better," he says. "The programs are getting larger, because they're effective."