"The Dark Index"

Bankruptcy at Universal Standard Brings End to Detroit Laboratory

Company tried to blend clinical lab tests with managed care management services

ANOTHER OF THE EARLY 1990’S wunderkind laboratory companies is now defunct. On August 13, Universal Standard Healthcare, Inc. (UHCI) filed a Chapter 7 Bankruptcy action in federal court and ceased business operations.

Headquartered in Southfield, Michigan, Universal Standard was one of a handful of clinical laboratories that went public in the early 1990s. It used acquisitions to rapidly increase revenues.

What made Universal Standard unique in the lab industry was its effort to build a TPA (third party administrator) business to serve insurance companies and managed care plans. As a TPA, the company offered clinical laboratory testing, outpatient diagnostic imaging, and home medical devices. This TPA business was worth about $18 million per year and was primarily from contracts with the three Detroit auto manufacturers and unions representing auto workers.

Forced To Sell Lab Business

In recent years, Universal Standard struggled to maintain financial solvency. Just last year it was forced to sell its clinical laboratory testing business (with revenues of approximately $37 million per year) to Laboratory Corporation of America.  This was a strategic decision to stop performing laboratory testing and emphasize its TPA activities.

However, the sale of its laboratory testing business only brought temporary relief. In October 1998, its contract with General Motors Corporation was terminated. Company officers state this contract was a money-loser and represented about 28% of the company’s revenues from TPA activities.

Ended With Bankruptcy

During 1999, Universal Standard fought to hold its TPA business together. The continuous struggle ended with the company’s Chapter 7 bankruptcy filing on August 13, 1999.

Chairman, President, and CEO of UHCI was Eugene E. Jennings, who was not originally from the clinical laboratory industry. But many in the lab industry are unaware of two respected lab executives who served on Universal Standard’s Board of Directors.

Robert P. DeCrease, M.D. had served as a UHCI director since 1992. He is currently Director of Clinical Laboratories for Rush-Presbyterian/St. Luke’s Medical Center in Chicago. P. Thomas Hirsch, President and CEO of Path Lab, Inc. in New Hampshire, had served as a UHCI director since 1994.

With its demise, Universal Standard Healthcare joins a growing list of lab industry leaders from the early 1990s who did not survive the arrival of managed healthcare.

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