PeaceHealth has agreed to sell its laboratory services business to Quest Diagnostics and hire Quest to manage the 11 labs that it operates at its hospitals and ambulatory centers, the companies announced Wednesday.
Terms of the deals were not disclosed.
PeaceHealth CEO Liz Dunne said in a statement that Quest has the size and experience to improve lab operations and grow the business that PeaceHealth is divesting.
Based in Vancouver, Wash., PeaceHealth has 10 medical centers and about 900 physicians in Washington, Oregon and Alaska.
“PeaceHealth is committed to delivering quality, community-focused care that is both accessible and sustainable,” Dunne said. “In our current healthcare landscape, that sometimes means collaborating with organizations that offer the data, tools and resources necessary to stay ahead of the curve in specialized services.”
The deal continues a trend of large hospital systems either outsourcing lab work as a noncore business or centralizing it all in-house to take advantage of scale.
In an interview this week, Quest CEO Steve Rusckowski said his company has saved healthcare systems between 10% and 20% of their lab costs by bringing its national scale to product buying and business practices. PeaceHealth will continue to own its in-house labs, he said.
The lab services that PeaceHealth contracted for with other providers would be combined with Quest's existing blood-draw and testing centers across the states where PeaceHealth operates, Rusckowski said. That would be about 125 locations, he said.
Along with Laboratory Corporation of America, Quest is one of the largest providers of lab services. It posted revenue in 2016 of $7.5 billion.
In the past 18 months, Quest has inked a partnership with New Jersey hospital giant Barnabas Health, bought Hartford Healthcare's lab outreach business and agreed to manage labs at HCA's Denver hospitals.
Conversely, some large hospital systems, notably Ascension and Northwell Health, plan to bring all of their lab work in-house and expand what they do for outside providers.