Market Update

Mayo Medical Laboratories Will Close Massachusetts Lab

Decision to close this lab facility after 20 years is a response to ongoing changes in healthcare

IN AN ANNOUNCEMENT MADE LAST MONTH, Mayo Medical Laboratories said that it would close the lab facility it operates in Andover, Massachusetts, by the end of the year.

As a result of this move, Mayo will eliminate 105 jobs in this leafy suburb north of Boston. For 20 years, MML has operated the lab in Andover, its only facility in New England.

News outlets reported that the lease on the property was soon to end. The leaseholder of the property asked Mayo to make a long-term commitment to the facility and Mayo declined.

No Physicians to Serve

The fact that no Mayo physicians were in the region was a another factor in the decision. “This [laboratory] testing facility is a highly successful operation in terms of quality, safety, productivity, and cost efficiency,” stated William Morice, II, MD, PhD, Chair of Mayo Clinic’s Department of Laboratory Medicine and Pathology in Rochester, Minn. “However, the facility is not near a Mayo Clinic medical practice. Our decision is based upon the long-term future for this facility, not the great work that is performed there every day.

“This was not an easy decision—in fact, it was an incredibly difficult decision,” added Morice, who is also CEO of Mayo Medical Laboratories. “Our primary concern is helping the affected staff at this location in every way possible.

“As we transition the testing from New England to Mayo Clinic in Rochester throughout 2016, it is my hope that some of the staff in Andover will be interested in open positions at other Mayo locations,” emphasized Morice.

MML runs approximately 23 million tests each year in support of the clinic’s 4.5 million patients worldwide. In its clinical laboratory in Rochester, it has 165 physicians and clinical laboratory scientists working in more than 90 subspecialty areas of pathology.

Mayo Medical Laboratory entered this region in the mid-1990s by acquiring a medical laboratory company in the Boston area. This was a time when competition for hospital reference laboratory testing was increasing. For instance, at this same time, Specialty Laboratories, Inc., was establishing a processing center in Worcester and making a big sales push to win more hospital reference testing business from hospitals in the area.

However, the competitive dynamics in the hospital reference and esoteric testing sector are much different today. Hospital ownership is being concentrated by integrated health systems as they acquire community hospitals or enter into joint ventures with independent hospitals. ACOs are another way that providers are coming together in a business model that allows them to bundle their lab test volume in order to negotiate more favorable prices for reference and esoteric testing.

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