CEO SUMMARY: Two different business models of clinical laboratory consulting have now been brought together. Chi consultants have long focused on analytics and improving outreach performance, among other areas of lab performance. By contrast, Accumen’s business model is nontraditional and centers upon a shared-savings partnership with a hospital or health system. Executives at Accumen are betting that a combination of both types of lab performance solutions will be of interest to hospitals.
LAST WEEK, IT WAS ANNOUNCED THAT Chi Solutions, Inc., of Ann Arbor, Michigan, had been acquired by Accumen, Inc., of San Diego, California. The combination creates a company that has a unique mix of clinical laboratory services.
While Chi Solutions has built a reputation over 33 years as one of the best-recognized lab consulting companies, Accumen is less well known, having been in the clinical laboratory performance improvement business for the last five years. Because both companies are private, terms of this acquisition were not announced.
Accumen is the current name of the company that was launched in 2010 by Accretive LLC, and, under the name aLabs, entered into laboratory partnerships with two major health systems the following year. These partnerships are with ACL (the combined lab business of Aurora Health Care, in Milwaukee, Wisconsin, and Advocate Health Care in Chicago) and Sharp HealthCare in San Diego.
Accumen President and CEO Jeff Osborne viewed the purchase of Chi Solutions as a perfect complement to Accumen. In an interview with THE DARK REPORT, Osborne explained that the consulting work Chi Solutions does for hospitals and health systems across the country could be the first step in a multi-step process that begins with lab consulting and proceeds to a risk-share/gain-share partnership with hospitals and health systems designed to transform their labs’ performance.
“We view the work that Chi Solutions does as the beginning of a partnership that is likely to evolve over a number of years,” explained Osborne. “Some hospitals that Accumen believes may be potential partners for a lab transformation opportunity are not always ready for the full commitment required to enter into a risk-gain share model.”
Obsorne stated that an Accumen partnership designed to transform and improve all dimensions of the hospital lab or health system client is a shared-risk-and-reward arrangement. This typically involves the ‘cohabitation’ of Accumen performance team members within the hospital lab environment, he said.
As it approaches hospitals and health systems to initiate discussions about a lab partnership that involves the shared-risk-and-reward arrangement, Accumen now has an additional service to offer. “Having Chi Solutions available to consult with any potential Accumen client provides an excellent entry point to accommodate those hospitals with targeted needs or opportunities that will eventually lead to a longer term transformation partnership,” observed Osborne.
Kathleen A. Murphy, PhD, CEO of Chi Solutions, agreed. “Accumen’s acquisition of Chi represents the classic story of ‘the whole is greater than the sum of its parts,’ ” she said. “Over my 22 years with Chi, the company has transformed through several iterations. At no time in our history has a partnership been as complementary or as potentially transformative, as the combination of Accumen and Chi.”
For Osborne, the acquisition is an opportunity to offer a wider array of services to its hospital clients. “We realized that, as we approached some potential clients to discuss what we call lab transformation, they were not always ready for the full execution commitment of our transformation strategy,” he explained.
“This is why it makes sense to create a lab consultancy within Accumen,” continued Osborne. “This is particularly true because many of us come from a consulting background. We are familiar with how consultants work. The Chairman of our Board of Directors, Bill Green, was the CEO of Accenture, one of the nation’s largest consulting firms. What we love about the consultancy model is how it can help clients at their point of need and build the trust required to create opportunities for future business.
“Thus, when pursuing clinical lab consulting opportunities, who better to partner with than a consulting firm like Chi Solutions?” he asked. “We see them as equally passionate about the opportunities in the lab industry and Chi brings talented expertise that complements the Accumen team and their mission to profoundly impact healthcare.
“We start by finding out what potential clients want to do with their labs. What do they need to achieve excellence in their labs? Should they sell their lab or retain it, optimize it, and grow it?” he asked. “As the potential client answers these questions, it gives us the opportunity to customize our offering to meet these hospitals at their point of need and help them clarify their aspirations for their lab.
“This approach allows us to address a large variety of lab needs and offer hospital administrators solutions to fit the needs of many different labs, whether they are small, mid-sized, or located anywhere across the country,” stated Osborne.
“In addition, Chi Solutions has a number of capabilities that allow us to compare the results of our client labs with other labs around the nation,” he noted. “For example, along with its consulting and outreach businesses, Chi Solutions has its Chi IQ, a web-based benchmarking solution. This service allows one lab to compare its results with those of peer labs based on key indices, including volume and test complexity.
“The Chi IQ Benchmark Database is comprised of the data from nearly 1,000 labs,” added Osborne. “In many ways, that is a standard for comparison because it provides the supporting data that allows labs to understand how close or how far from excellence they might be. Without comprehensive tools, it’s difficult for labs to benchmark themselves against the best labs because performance information on the lab industry is kept close to the vest.
“We’ve been looking at our capability to bring an end-to-end solution that is ‘all things lab’,” he said. “We envision that what we will offer is a one-stop shop for clinical labs.
“Before we acquired Chi Solutions, there were several areas in which we were interested in adding to our portfolio,” continued Osborne. “Those areas included consulting, data analytics and personalized medicine. The addition of Chi helps fill some of these capabilities and we will continue to look for opportunities to work with other strategic partners to continue to add additional value to the clinical laboratory industry.”
In addition to watching for such announcements, lab directors and pathologists will want to keep an eye on any word from Accumen about whether its earliest partnerships will be renewed. Announced in 2011, the initial laboratory partnerships with ACL and Sharp Healthcare have a five-year term that comes due this year.
Contact Cindy Judd at 847-404-9962.
Chi Solutions’ Long History Of Lab Consulting Services
IT IS A LAB CONSULTING COMPANY with roots that stretch back almost four full decades. The company currently known as Chi Solutions (and now a business division of Accumen, Inc.), was originally founded by two individuals.
It was in the late 1980s when James Root, MBA, and Jan W. Steiner, MD, FCAP, FRCP(C), brought their individual lab consulting activities together to form Chi Laboratory Services. At this time, it was a division of Chi Systems, Inc., of Ann Arbor, Michigan.
Chi Systems, itself founded in 1969, had a significant healthcare consulting business and Steiner had joined that company in 1985 as a partner. Previously, he had been the medical director of the U.S lab operations of MDS Healthcare, based in Toronto, Canada.
Root had worked at several lab companies in Portland, Oregon, then, as a result of a lab acquisition, had worked in several executive positions at MetPath, Inc.
Within a few years, Steiner and Root had established Chi Laboratory Services, Inc., as a separate company from Chi Systems. During the 1990s, Chi Laboratory Services grew steadily and established strong relationships throughout the clinical laboratory industry.
In 1999, Park City Solutions acquired Chi Laboratory Services. It would own Chi for just six years. Carilion Clinic purchased the Laboratory Solutions Group of Park City Solutions in 2005. The consultancy was renamed Chi Solutions. At this time, Earl Buck and Kathy Murphy, PhD, were the principal consultants.
Carilion would itself sell Chi Solutions in 2010. This time, it was Murphy and Buck who acquired the company. It continued to operate as Chi Solutions and Buck retired in 2012, leaving Murphy as the principal.
In 5 Years, Accumen Has Gained Partners
SINCE 2011, ACCUMEN has partnered with the following clinical labs to transform their operations and improve results, sometimes including patient blood management, while sharing in any savings that result:
- Sharp HealthCare, San Diego
- ACL Laboratories, Chicago
- Advocate Health Care, Chicago
- Aurora Health Care, Milwaukee
- St. Joseph’s/Candler, Savannah, Ga.
- HonorHealth, Scottsdale, Ariz.