Baylor Pathologists Form Lab with US Oncology

Four partners prepare to open two sizable new laboratory businesses to be based in Dallas

CEO SUMMARY: In Dallas, Pathologists Bio-Medical Laboratories is part of a new laboratory partnership that includes Baylor Health Care System, Texas Oncology, and US Oncology. The four partners ponied up a total of $40 million in cash and debt to build a state-of-the art laboratory in a 172,000 square foot building. To be called “MedFusion,” the laboratory partnership expects to provide reference and esoteric testing to Baylor Health, hospitals, other clients, and to clinical trial service organizations.

IN RECENT WEEKS, organizers of a comprehensive new clinical laboratory enterprise based in Dallas, Texas, took the wraps off their business plans.

Four partners, including a large pathology group, are preparing to open a $40 million clinical laboratory complex by May 2010. This new laboratory venture will be a major presence in the Dallas market and has ambitions to deliver a unique mix of laboratory testing services.

MedFusion is the name of the new laboratory company. MedFusion is a four-way partnership between Pathologists Bio- Medical Laboratories of Dallas; Baylor Health Care System; Texas Oncology; and US Oncology. The four groups are equal partners in MedFusion. Each partner is providing roughly one quarter of the $40 million the capital required to finance the construction and initial operations of MedFusion.

The new company leased 172,000 square feet of space in the Dallas suburb of Lewisville. Construction of the new laboratory facility began in October, 2009. The laboratory facility will become operational as early as this May.

MedFusion’s CEO, Keith Laughman, says that reference and esoteric testing will be the main emphasis. “The day we open our doors we’ll have a robust test menu of about 1,200 orderables,” noted Laughman. “We will have a broad range of tests. MedFusion’s menu will include many tests that Baylor Health Care and other Dallas hospitals currently send out of state.”

A second laboratory will be opened within the same building as MedFusion’s laboratory. This second laboratory will be owned by US Oncology. It will provide histology, technical component, and other laboratory services in support of cancer testing for cases referred by the physicians at US Oncology, Texas Oncology, and other oncology clients.

“MedFusion’s laboratory will focus on clinical pathology and clinical trials,” stated Laughman. “The US Oncology laboratory—in conjunction with Pathologists Bio-Medical—will focus on anatomic pathology (AP). It will offer a wide range of tests that are part of AP services to create a deep and robust service offering.

“This cancer testing laboratory will draw upon the consortium,” he continued. “MedFusion’s laboratory will work with US Oncology as they serve their target markets in oncology. With the US Oncology laboratory located in the same facility as the MedFusion lab, it allows us to support their testing needs with the range of clinical pathology tests that complement histology-based testing for cancer.”

Integration of CP and AP

“As we move forward, there will be more integration of clinical pathology into an anatomic pathology report,” commented Laughman. “MedFusion will be there with the sophisticated information technology needed to support this integration.

“Further, as MedFusion’s clients are interested in getting anatomic pathology second opinions, the US Oncology and Pathologists Bio-Medical consortium will be there for us. Operationally, we expect the two laboratories will be very tightly integrated,” he predicted.

“Although the two laboratories will have separate ownership and different CLIA licenses,” explained Laughman, “there are pre-analytical processes that we can share, and we’ll have an integrated information system so that we can generate extremely sophisticated reports.”

The creation of two separate laboratory facilities within the same building is intentional and recognizes several important trends now unfolding in healthcare. “The significant focus on oncology is because this medical field is experiencing a rapid transformation,” said Laughman. “New technologies for diagnosis and treatment of cancer mean that the standard of care is advancing rapidly. In turn, these advances promise better outcomes for cancer patients because of faster, more exact diagnostics and more precise information about which treatments would most benefit the patient.”

Two Markets For Lab Testing

For its part, MedFusion has its eye on serving two market segments. One is the hospital/health system market. The other is the clinical trials market. MedFusion’s immediate geographical focus will be the Dallas–Fort Worth metropolitan area. As service levels allow, it intends to expand outward to other Texas cities.

“As a source of reference and esoteric testing for hospitals and health systems, we will perform at least 95% of the laboratory testing that is typically sent out by a hospital,” he explained. “We will also provide other low volume tests that hospitals must generally perform internally in order to meet clinical service requirements.

“We expect that, as a local provider of reference and esoteric testing, MedFusion’s turnaround time will allow these hospitals to preserve service levels even as they refer out those tests at a lower unit cost than their current production costs,” added Laughman.

Rapid Growth Expected

The four partners are planning for MedFusion to become a sizeable enterprise. “When the laboratory opens in May, it will employ about 150 people,” noted Laughman. “As the business grows, there may be as many as 900 employees within the next five years.

“In that group of 900 will be employees to provide a variety of services beyond the lab testing services,” he said. “For example, on the clinical trials side, we’ll have site management organization support and eventually CRO [contract research organization] types of specialty services. These will be in addition to the clinical pathology services.”

MedFusion’s four partners believe that opportunities in the clinical trials sector will be substantial, for an interesting reason. “In response to advances in molecular diagnostics, clinical trials and clinical practice will merge,” predicted Laughman. “That is not true today. They are very separate clinical activities.

“However, as molecular diagnostics help identify patient populations in a more exact way, this will trigger closer interaction with clinical trials activity,” he explained. “This will happen because of several developments.

Large Amounts Of Lab Data

“First, the immense amount of data generated by the multi-variant assessments used by next-generation diagnostics will be very similar to the data handling capabilities associated with clinical trials,” he explained. “In support of clinical trial researchers, these enriched and fuller sets of lab data will represent key patient inclusion criteria for studies. These data will span the clinically relevant period of time, further adding to their value.

“We anticipate that, moving into the future, clinical studies will involve smaller populations,” he said. “We can already see examples of how the use of molecular diagnostics moves treatment away from the pharmaceutical blockbuster model and toward more targeted therapies. These examples point the way toward wider use of personalized medicine and companion diagnostics.

Clinical Trials Integration

“This integration of clinical practice and clinical trials will become broader and more pervasive,” observed Laughman. “Today, pharma companies conduct large- scale trials and studies to support a particular blockbuster drug. In the future, pharmaceutical companies will likely con- duct a larger number of trials to appropriately categorize the different cohorts of patients. This knowledge will be used to develop more targeted therapies appropriate for each patient cohort.”

Because MedFusion is starting with a brand new facility and no legacy systems, says Laughman, they are able to build with this future in mind. “Our infrastructure is designed to deliver on this integration of care,” he noted. “Our laboratory does not have to break down legacy systems and transition old ways of doing things into new systems. We’re able, in a green field sort of mind set, to build it the way we want it to be. We expect that to be an advantage.

Patient Data And Information

“MedFusion is establishing systems that will offer a more holistic view of the patient’s data and information,” explained Laughman. “All laboratories are in the information business. MedFusion will provide that information as efficiently and rapidly as possible. Electronic connectivity is key and we are designing a robust IT system.”

“This will take some re-invention,” he added. “There are excellent LIS systems and CRM (customer relationship management) systems available today. But too often, these and other IT systems are fragmented in a laboratory.

“MedFusion is integrating and operationalizing those systems at a higher level in its IT architecture,” said Laughman. “Similarly, our goal is to integrate lab test results and clinical data to help clinicians get a more complete picture of the results for a particular patient.

“As a laboratory service provider, MedFusion will benefit from its relationships with Baylor Health Care—which is building a new cancer center; Texas Oncology; and US Oncology,” he stated. “That will be true for two reasons. First, the needs of these physicians and MedFusion’s access to them will drive the introduction of new tests. Second, physicians affiliated with MedFusion’s partners represent an extremely committed focus group helping to ensure that the services offered will provide outstanding clinical utility.”

Unique Combination

MedFusion represents a unique combination of partners for a lab testing business. There is no obvious precedent where a major healthcare system and its pathology group have formed a large laboratory company in partnership with a major specialty physician company such as US Oncology and its Texas Oncology business. These two medical groups combined represent about 1,300 doctors.

However, with the four partners contributing about $40 million to launch the new laboratory, MedFusion certainly has adequate funding to build a state-of-the-art facility. This lab facility, designed from the ground up, will incorporate the latest generation lab testing technology. It is also designed to accommodate next-generation diagnostic technologies, thus giving it the potential to become a unique provider of patient-oriented laboratory testing services in Dallas and North Texas.

03-08-10 image 1

 

 

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Enter Your Login Credentials
This setting should only be used on your home or work computer.

×

Send this to a friend