Dynacare Inks New Pact With Milwaukee Hospital

Canadian laboratory continues U.S. invasion, other partnerships may soon be announced

CEO SUMMARY: Dynacare is on the move again. Its latest partnership is with a leading Milwaukee hospital. Dynacare’s aggressive marketing effort to develop joint ventures with hospital laboratories will continue. It may announce more new contracts by year’s end.

DEALMAKERS FROM Dynacare’s U.S. operations continue to press hospitals from coast to coast. Last Wednesday Froedtert Memorial Lutheran Hospital in Milwaukee confirmed a partnership agreement with the Canadian-based laboratory.

Froedtert had earlier formed United Regional Medical Services (URMS) to develop a regional laboratory outreach program in the greater Milwaukee area. Dynacare will partner with Froedtert’s URMS division in the joint effort to capture outreach testing.

Tom Mattison, President of URMS, stated that the partnership seeks to double its business during the next three years. Dynacare and URMS will each contribute $1 million to capitalize the partnership. The partnership agreement becomes effective on August 1, 1997.

Another Opportunity

For Dynacare, it is another opportunity to repeat the same strategic plan it followed with partnerships in Houston and Schenectady. Dynacare wants to find a hospital partner with significant volumes of in- and out-patient testing, but little outreach business. Dynacare contributes capital, management expertise and professional sales/marketing skills to the partnership. The hospital provides existing laboratory resources plus access to physicians in the neighboring medical office buildings.

Partnership’s Potential

The potential of the partnership to capture significant business makes Tom Mattison excited about the new venture. “We feel there is an opportunity to compete with national commercial laboratories doing work in Milwaukee and southeastern Wisconsin,” he said. “This is a real growth story. We feel we can become very competitive.”

Mattison’s laboratory operation currently employs 228 people. It provides testing to Wauwatosa Hospital and the related Medical College of Wisconsin Clinics.

“From Dynacare’s perspective, Froedtert provides ideal resources from which to develop a healthy outreach business,” stated Miles Standish, Dynacare’s Marketing Specialist. “Froedtert is the only class-one trauma center in Wisconsin. It operates a sizeable heart institute and an organ trans-plant center. To support these services, the laboratory provides an expanded range of testing.”

Dynacare executives hint that other partnership announcements may be forthcoming. One confirmation of this possibility is the reshuffling and expansion of Dynacare’s executive team in the United States.

Overview Of Dynacare’s U.S. Operations

Dynacare’s presence in the United States has grown steadily since it first acquired laboratories in the United States in 1994.

Based in Toronto, Canada, Dynacare is one of Canada’s largest laboratory companies. It was publicly traded until earlier this year. With the help of a Chicago investment banker, Dynacare repurchased its shares and went private.

Dynacare Cheyenne Laboratories; Cheyenne, WY: Acquired in 1994. Owned and operated by Dynacare.
Dynacare Skagit Valley Laboratories; Mt. Vernon, WA: Acquired in 1994. Owned and operated by Dynacare.
Dynacare Laboratories; Seattle, WA: Acquired in 1995. Owned and operated by Dynacare. Serves Swedish Hospital under a long-term contract.
Dynacare Hermann Laboratory Services; Houston, TX: Partnership with Hermann Hospital. Launched in September 1995.
Dynacare Ellis Laboratory Services; Schenectady, NY: Partnership with Ellis Hospital. Launched in June 1996.
United/Dynacare; Milwaukee, WI: Partnership with Froedtert Memorial Lutheran Hospital’s United Regional Medical Services Division. Agreement effective August 1, 1997.

New Executive

The new executive is Bert Koch, who will be Vice President of U.S. Operations for Dynacare. Koch comes to Dynacare from Laboratory Corporation of America, where he was Vice President, Alliances and Acquisitions. Prior to LabCorp, Koch served with National Health Laboratories. Longtime industry observers were surprised at Koch’s departure from LabCorp to Dynacare.

Osama Sherif, Executive Vice President of Dynacare U.S., has moved from Seattle back to Toronto headquarters. He will continue to oversee new business development in the United States, including partnerships and acquisitions.

Dynacare brings a unique partnership model to the laboratory marketplace. Although its first joint venture, with Cedars Sinai in Los Angeles, is winding down after three years, the Dynacare Hermann Hospital partnership in Houston has performed well during its second year of operation.

The Dynacare partnership model incorporates three themes which THE DARK REPORT consistently finds in successful hospital laboratory outreach programs. One, a professional sales program is launched and maintained. Two, laboratory services are delivered which equal or exceed those of competing commercial laboratories. Three, the parent hospital has given the laboratory independent resources in executive leadership, billing, human resources and accounting.

As with the Sonora-Quest joint venture profiled on pages 2-9, the United/Dynacare partnership is another example of how hospital laboratories are seeking to expand outreach testing.

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