CEO SUMMARY: Although located in the same region as two of the nation’s largest laboratory companies, newly-created Triune Laboratory, Inc., is reporting steady growth and acceptance by physicians in the community. Founded by two medical technologists and partially funded by a pathologist, this new lab company demonstrates that many physicians are ready to support an entrepreneurial lab company that provides personalized service as a local provider within their community.
CONVENTIONAL WISDOM in the clinical lab industry is that one must enter the business by acquiring an established lab company rather than start a new lab company from scratch.
Start-up labs are considered high risk because of the substantial up-front cost of equipping the lab, tough competition in the marketplace, and declining reimbursements. However, over the past decade, THE DARK REPORT has chronicled the successes of entrepreneurs who did start their lab companies from scratch and succeeded.
In Aberdeen, North Carolina, a new laboratory company is about to reach its first anniversary and its owners are optimistic about their lab’s future. Triune Laboratory, Inc., launched in March, 2012. Sylvia Small, MT (ASCP) and Rhonda Outlaw, MT (ASCP) own and operate the lab.
It is a familiar story. Motivation to launch their own lab company came after Laboratory Corporation of America acquired their employer’s lab company in Aberdeen in 2011. “Having worked together for 20 years, we decided to venture out on our own,” stated Small.
“It took us just a few months to raise most of the capital we needed,” she said. “Our lab facility is 2,200 square feet and is located in an industrial park in Aberdeen.
“Our primary investor is a pathologist from South Carolina, whom we’ve both known for some time,” explained Small.
Start-Up Money
Starting up a medical laboratory costs an estimated $300,000 to $400,000. Laboratory vendors often help start-up labs by offering discounts on equipment, knowing they will make up the loss over time with reagent sales. But this didn’t happen in the case of Triune Laboratory. “While acquiring equipment, we were not offered special discounts or help,” Small noted. “However, we did shop carefully for lab equipment that would meet our needs and was affordable.”
In preparing to organize and operate their laboratory, Small and Outlaw took the time to consult with the experts at the small business and entrepreneur development programs at Fayetteville State University, the University of North Carolina at Pembroke, and Richmond Community College. “We both worked at a small independent lab for almost two years. However, these experts helped us understand that there was much we didn’t know,” recalled Small. “We learned from these experts and they helped us focus on the right issues in developing our business plan.”
Since opening their lab, Small and Outlaw have not looked back nor had any regrets. “We are on track to break even during the first quarter of 2013,” noted Small. “Our partnership works well. I handle daily operations and the business side. Outlaw runs the sales development part of our business and runs the patient samples.”
Their comfort with the decision to become business owners stems from confidence in their own technical skills, understanding of their customers’ needs, and the relationships they’ve built over the years with lab users throughout the region.
Securing credentials “was perhaps the easiest part of our journey,” said Small. “Triune has both CLIA and COLA accreditations. Between the two of us, we have more than 50 years of laboratory experience, with a large portion of it in management.”
Outlaw has a bachelor’s in biology and a master’s in public health administration. She previously served as manager of a small reference laboratory and director of two physician office laboratories. Small has a bachelor’s in business administration and previously owned a business. Additionally, both women have worked in management positions in hospital labs.
Needs of Customers
“We understand that our clients have a choice when choosing a laboratory,” Small continued. “Our focus will always be on creating long-lasting relationships with our customers. Understanding the needs of our clients is the very core of our business.”
Their lab currently services clients in both North and South Carolina. Triune has lots of competition from independent labs, including LabCorp, Solstas Lab Partners and Quest Diagnostics Incorporated. Triune’s owners estimate that these three labs combined have about 40% of market share. The remainder goes to hospitals.
She believes Triune has an advantage in being able to offer clients personalized service. “Our message is that, at the large corporate labs, their customers are just numbers,” observed Small. “But when physician offices call Triune, they are speaking to one of the owners.”
Two Full-Time Sales Reps
Triune currently employs 14 full and part-time laboratory professionals and support staff. “We have two full-time sales reps and our marketing has been low key,” explained Small. “So far, word-of-mouth, face-to-face, local newspaper stories, and participation in community health fairs have generated most of our lab’s business.”
Nursing homes constitute about 20% of Triune’s business. The lab accepts all insurance plans and offers competitive self-pay rates for uninsured patients. However, Small and Outlaw chose to only contract with four of the region’s health insurance providers: Blue Cross Blue Shield, Wellpath/Coventry One, Medicare, and Medicaid.
Triune offers a full range of blood and diagnostic tests, including hematology, blood chemistry, immunology, immunochemistry, serology, coagulation, and microbiology, which are done in-house. The lab also secures specialty-testing services from an anatomic reference laboratory partner. Triune offers clients specimen pick-up service twice daily and provides same-day turnaround for 90% of test results.
Offering advice for others considering taking the leap from lab employee to owner, Outlaw pointed out, “Be sure to estimate correctly how much money you will need to get to the point of breaking even. Also, when you hire sales people, make sure they have experience in sales and a working knowledge of the lab.”
