| R. Lewis Dark:
LabCorp Loses A Hospital Lab Joint Venture
ONE OF THE NATION'S LONGEST-RUNNING LAB OUTREACH JOINT VENTURES involving
a public lab company and a major hospital came to a quiet end on June 30.
That's the day when United/Dynacare Laboratories, LLC, ceased to exist.
This was a joint venture in Milwaukee that was established in 1997 by 550-
bed Froedtert Hospital and Dynacare, Inc., then a public lab company. In
2004, Dynacare was acquired by Laboratory Corporation of America, which
then continued as a partner in the lab outreach joint venture. Neither party
has commented publicly on the termination of the JV. It is not known whether
any money was paid by one party to the other as part of the division of assets,
including the lab facility, equipment, and client book of business.
Froedtert Hospital and a yet-to-be-named partner will continue to operate
the existing laboratory outreach business. Since July 1, it has operated as
Wisconsin Medical Laboratories. It is believed that LabCorp does not have a
non-compete as part of the terms of the JV's dissolution. That could mean a
competitive sales battle may be about to commence in the Milwaukee regional
market between LabCorp and Wisconsin Medical Laboratories.
What is noteworthy about this development is that the two blood brothers
have regularly told Wall Street analysts and investors that hospitals are looking
to outsource their lab services. The termination of this lab joint venture
would be a market example of the opposite happening—where a large regional
hospital wants full control of its outreach lab program and is willing to go it
alone without a public lab company partner.
Moreover, for those lab executives who have tracked the relatively small number
of true lab JVs that came into existence since the mid-1980s, the dissolution of
this JV is consistent with the pattern of the hospital partner eventually ending the
joint venture so as to regain full control of its lab outreach program. Many lab outreach
deals done in recent years have actually involved a public lab purchasing a
health systems’ lab outreach program to then be its sole owner and operator.
One interesting speculation about Froedtert Hospital's willingness to go it
alone with its lab outreach program may be associated with how it is assembling
an integrated healthcare delivery system. Administrators at Froedtert
may recognize the value of having a single, unified lab test record that covers
patient data from inpatient, outpatient, and outreach settings. TDR
Not getting The Dark Report in your mailbox every 3 weeks?
Is New Cycle of Fraud Plaguing Lab Industry?
Sins of a few labs may cause unnecessary
pain for all clinical labs and pathology groups
CEO SUMMARY: Taken collectively, the growing number of
federal investigations of clinical lab companies and health
insurer lawsuits against lab companies alleging fraudulent
business practices signals a disturbing new trend for the lab
industry. Although these allegations are leveled at just a handful
of lab companies, the amount of money these labs took out
of the system exceeds a billion dollars. Some experts expect
payers will enact tough requirements to stop such abuses.
Cigna Audits Tox Test Labs
For Proof that Patients Paid
Health insurer wants proof that patients paid
copayments before it will pay toxicology lab claims
CEO SUMMARY: In an unusually strong move, health
insurer Cigna is auditing laboratories, including some labs that
do toxicology testing. In these audits, the health insurer seeks
documentation that the testing is medically necessary and that
the laboratories are collecting copayments and deductibles
from patients before Cigna pays the labs for the toxicology test
claims. A lawyer working on these cases says that tactic may
violate some state prompt-payment laws.
Lab Briefs: QUEST SETTLES
TEST-PRICING CASE WITH
FOUR CALIFORNIA LABS
Detroit Hospital Lab
Develops 10 Ways
To Add More Value
Lab team innovates to help physicians improve care
CEO SUMMARY: Clinical labs are beginning to make the transition from a volumebased
financial model to a model based on value-based payments. To survive this transition,
labs must find ways to create value. The lab at Henry Ford Health System has
identified 10 ways that it can contribute more value to physicians and its parent health
system. One way is to help eliminate needless tests and processes. Other initiatives
involve improving supplier processes, helping to reduce patient length of stay, creating
a lab test formulary, and demonstrating the financial efficacy of all lab interventions. (Learn more about Value-Based payments from our recent webinar here).
More AP Consolidation:
Aurora Buys Two Groups
Brazos Valley pathologists find a new owner
that will support independent pathology services
CEO SUMMARY: Seeing the changes overtaking pathology
practices, Brazos Valley Pathology decided to sell two of its group
practices to Aurora Diagnostics. Last month's transaction was not
designed to fix financial problems nor was it because of retiring
pathologists. Rather, it was done proactively to ensure that BVP’s
11 pathologists had access to the resources of a larger pathology
organization so that they could expand or add technology as
needed in the future, while practicing independently.
INTELLIGENCE: Late & Latent
Drones to Deliver Blood Specimens?
More on: Drones
Call us today if you have Charter Membership questions at 800-560-6363 or 512-264-7103
The Dark Report intelligence briefing is delivered to your mailbox every 3 weeks!
See Recent Dark Report Stories and Topics That You May Have Missed!
| 
