biospaceJanuary 02, 2018
Over the years, the two largest commercial clinical diagnostic laboratory companies in the U.S., and probably the world, have been Laboratory Corporation of America known as LabCorp,and Quest Diagnostics. For years, Quest was the largest, but LabCorp took over that spot a few years ago. Both companies are noted for growth through acquisition, and 2017 has been a very big year for LabCorp.
Since 2008, LabCorp has acquired 19 companies. In the past five years, it spent $2.5 billion on acquisitions, not including the $6.2 billion it spent to buy contract research organization (CRO) Covance in 2015.
LabCorp now employs 57,000-plus people. The Covance acquisition diversified the company even further into the clinical trial space, as did its acquisition of Chiltern International this year for $1.2 billion. These CROs also increased the company’s presence in Asia.
But other acquisitions have been into diverse areas of healthcare, notably into the retail health arena in June when it partnered with Walgreens to open patient service centers.
Other deals this year included a partnership with Canada-based MedReleaf, which offers genetic diagnostic tests for medical cannabis, and a partnership with Capital Health, which provides lab tests in Central New Jersey and Lower Bucks County, Penn. It also bought a part of Vista Clinical Diagnostics, an independent clinical diagnostic laboratory in Florida.
Jessica Seaman, writing for Triad Business Journal, noted, "LabCorp’s global growth shows no signs of stopping, and it’s expected the company will continue its expansion in the future. The company has been in discussions with ‘a major European lab’ about collaborating, CEO David King told TBJ earlier this year."
It’s not as if LabCorp’s biggest competitor, Quest Diagnostics, has been standing still this year either. On Dec. 12, it completed the acquisition of the Shiel Medical Laboratory business from Fresenius Medical Care. Quest’s laboratory in Teterboro, N.J. will provide the services that Shiel previously did in the New York-New Jersey metropolitan area.
And on Dec. 1, Quest completed its acquisition of Cleveland HeartLab. It plans to establish a national center of excellence focused on diagnostics for heart disease within Cleveland HeartLab’s existing 25,000 square-foot clinical laboratory in Cleveland.
Both companies, as well as the thousands of other clinical laboratories— private, hospital-based or physician office-based—will be facing cuts to Medicare reimbursement rates for laboratory tests that will be implemented in 2018. Laboratories are expecting reductions between 6 and 8 percent, which could be devastating.
Lale White, the chief executive officer of San Diego’s XIFIN, a laboratory revenue cycle and laboratory information system solutions company, wrote on the Healthcare Financial Management Association (HFMA) site, "For hospital and health system labs, (the Protecting Access to Medicare Act) PAMA will substantially reduce Medicare payment for the highest-volume diagnostic laboratory tests—a move that will have a significant impact on laboratory margins. By one industry estimate, a 10 percent cut in the CLFS could result in a 3 to 4 percent drop in laboratory profit margins. PAMA also may cause other rates to change over time because many health plans and state Medicaid programs base their payment levels on Medicare rates."
Contact Us
Tel: (+86) 400 610 1188
WhatsApp/Telegram/Wechat: +86 13621645194
Follow Us: