HBOC,, Quest, Unilab, LabOne, Epitope


IT WAS VALIDATION OF A PREDICTION made just weeks ago in THE DARK REPORT that web-based information management systems is the next major battleground in both healthcare and the clinical lab industry.

McKesson HBOC announced its purchase of, Inc. of Minneapolis, Minnesota last Tuesday. offers products for managing clinical data, particularly lab test results and prescriptions. is an early entrant in the race to move lab test ordering/results reporting onto the Internet.

McKesson HBOC also announced a three-year deal with, Inc. of Dallas. This company has prod- ucts to allow small physician groups to transmit insurance claims to payers via the Internet.

These agreements show that major healthcare IS vendors are making serious moves to add Internet tools to their existing proprietary software products. McKesson HBOC did not disclose when its Internet products and solutions would be ready to market.


AS EXPECTED, Quest Diagnostics Incorporated is moving swiftly to rationalize laboratory operations after its acquisition of SmithKline Beecham Clinical Laboratories (SBCL) in August.

Last week, the company announced seven specific laboratory sites where a laboratory would either close or under-go a major downsizing. It expects that 18 months will be required to implement these changes.

Without giving a specific number, Quest acknowledged that these changes would reduce employment by between 1,250 and 2,500 people.

On the West Coast, all the reference and esoteric testing now done at the former SBCL laboratory in Van Nuys, California will be moved to Quest Diagnostic’s Nichols Institute facility in San Juan Capistrano.

As a result of this consolidation activity, Quest Diagnostics estimates it will take a pre-tax charge of $160 million during the fourth quarter, meaning that it will report a loss for this financial period.


NOVEMBER 23, 1999 IS THE DAY that Unilab, Inc. shareholders will vote on whether to approve the proposal to sell the company to Kelso & Company.

Kelso is a respected LBO (leverage buy-out) company. It is prepared to pay approximately $420 to acquire substantially all the shares of Unilab. Kelso’s goal is to take the company private, boost revenue and income, and look for an opportunity to sell the laboratory at some future date.

Earlier this month, Unilab released its third quarter financial report. Revenue jumped 43.3%, from $53.2 million in third quarter 1998 to $76.2 million this year. Net income growth for third quarter was substantial, moving from $3.1 million in 1998 to $17.9 million in 1999.

Much of the growth in revenues and net income is attributable to acquisitions made during the past 12 months. Unilab purchased Meris Laboratories and Bio-Cypher Laboratories in separate transactions. These two acquisitions added about $80 million in revenue to Unilab.

However, increased pricing also played a part in Unilab’s growth. The lab realized a price increase of approximately 8.7% for the quarter over third quarter 1999. That is a significant accomplishment, given California’s tough managed care marketplace.


IT’S AN EXPANSION in the national marketplace. LabOne, Inc. of Lenaxa, Kansas will acquire World Wide Health Services, Inc. of Voorhees, New Jersey.

World Wide provides examination and information services to life and health insurers throughout the United States. It has annual revenues of $9 million. LabOne is a major provider of medical tests and other services to life insurers. LabOne intends to operate its acquisition as a wholly-owned subsidiary, to be called ExamOne World Wide.

LabOne continues to build a diversified business built around laboratory testing. Along with its life insurance testing, it offers clinical testing in the Kansas City area, national drugs of abuse testing, and a laboratory test benefit program called LabCard. (See TDR, April 29, 1996.)


HERE’S ANOTHER EXAMPLE of a technology change in diagnostic testing. Epitope, Inc. of Beaverton, Oregon is working to adopt its OraSure saliva testing technology to drugs-of-abuse testing. The company expects to have the product ready to market early next year.

Epitope believes an OraSure drugs-of-abuse test will be readily accepted in the $350 million per year market for such testing. It offers ease of use, eliminates the chain-of-custody issues associated with urine testing, and allows for a confirmatory test to be performed on the original OraSure sample.

STC Technologies and LabOne will partner with Epitope in this effort. LabOne pioneered using the OraSure test for HIV in its life insurance testing business. LabOne and Epitope have a close business relationship. Epitope is boosting its sales force in preparation for the product launch into the drugs- of-abuse marketplace.


EARLY THIS SUMMER, A NEW GROUP was formed. Called the Disease Management Association of America (DMAA), it hopes to advance the practice of disease management.

Based in Wellesley Hills, Massachusetts, the new association hopes to accomplish this through standardizing definitions, program components, and outcomes measures.

Given the importance of laboratory testing for diagnosis, prognosis, and patient monitoring, it would seem that the DMAA would be a perfect place for clinical laboratories to make a contribution in developing disease management protocols, but THE DARK REPORT is unaware of any involvement by laboratories or laboratory trade associations.

Participating on DMAA’s board are Accordant Health Services, Blue Cross Blue Shield Association, Humana, Inc., Pfizer Health Solutions, and SmithKline Beecham Healthcare Solutions.


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