And in recent years, both companies have made significant gains by partnering with hospitals. But while Quest has concentrated on acquiring health system labs, LabCorp has focused on acquisitions that broaden its offerings and shore up its diagnostic services.
Experts say the two companies are on distinct paths that will shape the future of the health industry giants. Quest's strategy aims to grow its core business, while LabCorp's efforts to steer the Burlington, N.C.-based company toward a future beyond clinical labs.
Over the past two years, Madison, N.J.-based Quest has reached agreements with seven health systems. Some of those deals cover outreach businesses that perform services for customers seeking to fill a lab order from their personal physician or another provider at a different hospital.
“The strategy and future of Quest … is to be a significant partner with the hospital and health system,” said Dr. Jon Cohen, senior vice president and group executive of Quest's diagnostic solutions businesses. “We are trying to move away from a vendor relationship.”
When Quest manages a hospital's lab, it moves 20% to 30% of tests to its own facilities, which can trim as much as 20% of a hospital's lab costs, Cohen said.
Shortly after being appointed Quest's CEO in 2012, Steve Rusckowski said the company needed to refocus on core diagnostic information services.
“At that time, Quest's management had the foresight to recognize that reimbursement pressures on lab testing would soon trickle down to hospital labs,” Cohen said. “They also recognized that Quest's scale and expertise would afford the opportunity to provide comparable services for much less cost under these changing dynamics.”