Laboratory Corporation of America Holdings just inked a major deal with two west coast providers. The lab giant is in a deals race with rival Quest Diagnostics.
Burlington, N.C.-based LabCorp announced Thursday that it will acquire Pathology Associates Medical Laboratories, or PAML, a Spokane, Wash.-based laboratory firm jointly owned by Providence Health & Services and Catholic Health Initiatives. LabCorp also made deals to co-own or fully take over five laboratory joint ventures that PAML is involved in.
PAML and its joint subsidiaries provide lab services in California, Colorado, Idaho, Kentucky, Montana, Oregon, Utah and Washington. The terms of the deal weren't disclosed, and it's still subject to customary closing conditions. The deal does not include any joint ventures in California.
The deal is one of a few that LabCorp has struck to acquire an outreach laboratory operation. That strategy has been more common for Quest, which has engaged in more acquisition deals with health systems than LabCorp.
LabCorp reached agreements to fully acquire lab ventures co-owned by hospitals in Lakewood, Colo., Lexington, Ky., and Renton, Wash. Discussions are still underway with hospitals for ventures based in Salt Lake City and Kennewick, Wash. Another joint venture owner plans to sell all of the assets to LabCorp in a separate deal. LabCorp did not disclose the names of those hospital co-owners.
LabCorp, Providence and CHI did not return a request for comment. Kevin Lofton, CHI's CEO, said in a statement that the health system is confident that LabCorp's ownership in PAML will “serve the best interests” of patients needing comprehensive lab services.
Following the acquisition, Renton, Wash.-based Providence, Englewood, Colo.-based CHI and the joint venture owner hospitals will continue to provide their own inpatient hospital laboratory services. LabCorp will provide outreach testing services and reference laboratory services provided by PAML and its joint ventures, which generally refers to any labs that are sent from the hospital or from a physician's offices.
Quest and LabCorp, the nation's largest medical laboratories companies, have been engaged in an M&A race in recent years. During that time, Quest has mostly acquired health system outreach laboratories that do tests for physicians and other providers, while LabCorp has mostly acquired competitors and specialty labs to shore up its technology and the sophistication of its diagnostic services.
Last week, Quest struck a deal to acquire Peace Health's outreach lab services and manage the 11 labs located within PeaceHealth's hospitals and ambulatory sites. CEO Steve Rusckowski has said that hospital deals are a major part of Quest's strategy for growth.