MORE LAB CONSOLIDATION is happening in Connecticut. Last week, Quest Diagnostics Incorporated announced it will purchase the outreach laboratory business of Clinical Laboratory Partners. CLP is a division of Hartford HealthCare, a health system with five hospitals in Connecticut.
After regulatory review, the acquisition is expected to become final early next year. Terms were not disclosed.
CLP is the current outreach laboratory services provider for the health system’s physicians. Its main lab facility is in Newington, Connecticut, a suburb of Hartford. HHC’s hospitals will continue to operate their in-house laboratories serving inpatients and outpatients.
CLP’s outreach services will move to Quest’s three rapid-response labs in Connecticut (in Stratford, Torrington, and Wallingford) and to Quest’s more extensive lab in Marlborough, Massachusetts. Quest Diagnostics also acquired a number of CLP’s patient service centers.
Hartford Healthcare CEO Elliot Joseph said the health system employs 570 workers in its lab outreach business. An undetermined number of those positions will be cut. Quest expects to add about 350 jobs, mainly in Connecticut, and will seek to identify candidates from CLP for these new jobs, added Joseph.
Since its formation in 1998, CLP has used Quest Diagnostics for its reference testing. Now, Quest and CLP will consider collaborating on population health and data analytics strategies. In an interview in 2011, CLP President and CEO James E. Fantus told THE DARK REPORT that CLP devoted significant resources to packaging test data into information-rich services for physicians and patients. (See TDR, November 7, 2011.)
Regional Lab Will Disappear
Quest Diagnostics’ purchase of CLP removes another long-established regional laboratory company from the marketplace. When a hospital or health system decides to sell its lab outreach business, it is often motivated by the need for more working capital.
In the case of Hartford Health, the cash from Quest Diagnostics will bolster the health system’s balance sheet. Its finances are stable, although Moodys downgraded some Hartford bonds in 2014, based on its 2013 financial performance, a need to catch up funding its pension plan, and a tougher operating environment.
With its purchase of CPL, Quest Diagnostics removes another tough competitor from this regional market while gaining additional specimen volume to run through its new lab facility in Marlborough. It built this lab after acquiring the lab outreach business of the University of Massachusetts Worcester in 2013. Quest had earlier purchased the lab outreach business of financially-strapped Caritas Christi Health Care in Boston in 2009.