"Lab Industry Briefs"

AmeriPath, Cytyc, Unilab, Naiad

AMERIPATH INKS PACT WITH MEDAPHIS, BUYS FLORIDA PATH PRACTICE

Things are busy at AmeriPath, Inc. of Riviera Beach, Florida. The pathology practice management company announced a number of accomplishments.

First, it signed an agreement with Medaphis Corporation of Atlanta. Medaphis will provide “comprehensive reimbursement services” for 20 AmeriPath practice locations. These will include billing, AR, and enhanced reporting.

Second, AmeriPath announced the recent acquisition of Hialeah and South Florida Pathology. One interesting aspect of the transaction is that this pathology practice pro- vides AP services to SmithKline Beecham Clinical Laboratories (SBCL) under their managed care contracts. AmeriPath is also an AP provider to SBCL in Florida.

With the acquisition of this $3.5 million pathology practice, AmeriPath now operates 12 pathology practices in Florida and has 80 pathologists in the state. The total number of pathologists under the AmeriPath umbrella now numbers 231, working in ten states.

Finally, AmeriPath released first quarter earnings. Net revenue was $52.3 million, up 38% over first quarter 1998’s $38.0 million. AmeriPath says that “same practice” revenue jumped by 5% during the year. Net income increased by a comparable amount, from $3.8 million last year to $5.3 million this year, a gain of 48%.

AmeriPath also stated that it has signed letters of intent with four
other pathology practices. These deals are expected to close during the second quarter. It projects a mini- mum of ten additional acquisitions will be closed by the end of 1999.

AmeriPath disclosed that it plans to open an outpatient pathology laboratory in the New York City area by the end of September. It described this initiative as “a catalyst for the Company’s expansion into the northeast region of the United States.”

CYTYC’S LIQUID PREP GETS A BOOST

ONE CRITIQUE of the liquid preparation method for Pap smears is that it adds cost without providing a compelling clinical benefit.

As THE DARK REPORT has written, the challenge for new diagnostic technology in the managed care market- place is to demonstrate, in a convincing way, that benefits of a new technology are appropriate to its cost.

Cytyc Corporation has worked closely with Digene Corporation to demonstrate that its ThinPrep® liquid preparation system has distinct benefits over traditional Pap smear preparations. Digene markets a Hybrid Capture II ® HPV (human papillomarvirus) test.

The companies recently released news of a clinical study led by Michele Manos, Ph.D. M.P.H. of the Northern California Kaiser Permanente Medical Group. The study selected 995 women with borderline abnormal Pap smears from a group of 46,009 women undergoing routine Pap smear screening.

The study was published in the May 5 issue of the Journal of the American Medical Association and used Digene’s Hybrid Capture II PHV test and compared it to the current method of doing repeat Pap smears and colposcopy exams to detect high grade cervical lesions.

The study determined that “patient management incorporating the Digene HC II HPV test detected 96.9% of women with high grade cervical disease compared with 75.8% using the traditional method of repeat Pap testing alone. The negative predictive value of the Digene HC II HPV test was 98.8%.”

Should further studies validate this conclusion, it strengthens Cytyc’s claims that a liquid preparation Pap smear, accompanied by Digene’s HPV test in certain cases, improves healthcare outcomes at a reasonable cost.

This demonstrates how the added value of a new technology can change over time. Refinements to the technology and new discoveries can make subsequent generations of technology increasingly cost-effective. Expect Cytyc to diligently identify enhancements which can justify the cost and use of its liquid prep system.

UNILAB OFFICIALLY BUYS BIO-CYPHER LABORATORIES

ON MAY 10, Unilab Corporation confirmed that its purchase of Bio-Cypher Laboratories was complete.

With the acquisition of Sacramento-based Bio-Cypher, Unilab becomes the big dog in California, with consolidated revenues approaching $300 million per year.

Once Unilab completes its integra- tion of Bio-Cypher’s laboratory opera- tions, another $60 million of annual lab capacity will have disappeared from the California market. Bio-Cypher was formerly known as Physicians Clinical Laboratories.

Unilab also released earnings for first quarter 1999. Revenues were $63.6 million, up 16.6% from the $54.5 million of first quarter 1998. Much of the gain was attributable to Unilab’s purchase of Meris Laboratories last fall. Prices jumped 4% over the same quarter of 1998.

NAIAD TECHNOLOGIES OFFERS LABS A SOLUTION FOR HAZARDOUS WASTE

LABORATORIANS OUGHT to check out some intriguing technology offered by Naiad Technologies, Inc. of Portland, Oregon.

This is an unabashed plug for one of THE DARK REPORT’S neighbors here in the Northwest. Naiad has several proprietary technologies for dealing with hazardous waste in the clinical laboratory.

Its newest product extracts DAB (diaminobenzidine) from aqueous waste solutions generated by automated immunohistochemistry staining machines.

The company’s products segregate, reduce, and solidify hazardous substances found in liquid waste streams. In many cases, the laboratory can recycle the carrier solution, further reducing costs.

Naiad has exhibited at various lab industry trade shows in recent years. It is a start-up company utilizing technology developed by a research lab at an Oregon university. THE DARK REPORT has toured Naiad’s corporate facilities and seen some of the technology in action.

Although Naiad’s hazardous waste technology is new, early adapters among clinical laboratories have been enthusiastic about its effectiveness in
actual use.

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