TWO ANATOMIC PATHOLOGY SUPERGROUPS in two different regions joined forces this month. This happened when PathGroup of Nashville, acquired Pathologists Bio-Medical Laboratories (PBM) of Dallas.
Both groups are similar in that they are very large and do a combination of anatomic, clinical, and molecular testing. PathGroup has 75 physicians and PhDs on its staff and PBM has 48 physicians and PhDs listed on staff.
Operations in 33 States
The acquisition means that PathGroup will operate in 33 sites in 10 states across the Midwest and Southeast. In its announcement, PathGroup said that by combining the two companies, the new, larger entity would have more than 1,800 employees who work in more than 75 hospitals.
Terms of the deal were not announced and experts from PathGroup and PBM did not return requests for comment before our deadline.
By adding PBM, PathGroup will have more than 123 pathologists, which PathGroup said would make it “the most comprehensive pathology network in the country.”
The Nashville Post reported that the private investment company Pritzker Group Private Capital of Chicago acquired PathGroup in 2016. Pritzker invests in what it calls “middle-market businesses” in manufacturing, services, and healthcare. When Pritzker bought PathGroup, the group had about 80 pathologists and 1,200 employees, the newspaper reported.
As part of the acquisition, PathGroup announced a recapitalization with Prtizker Group. “Pritzker Group Private Capital and co-investors including Vesey Street Capital Partners invested alongside PathGroup’s management team and pathologists,” Pritzker said, adding that the pathologists would continue to hold a significant ownership stake and would lead the company’s growth.
The last sizeable acquisition of anatomic pathology groups was in December, 2018. That’s when Sonic Healthcare of Sydney, Australia, agreed to buy all of Aurora Diagnostics, of Palm Beach Gardens, Fla., for $540 million.
That deal marked the end of the independent life of Aurora Diagnostics, a company founded in 2006 to acquire and manage anatomic pathology group practices. At the time, Aurora said it had 220 pathologists in 32 practices located nationwide. Since it was founded, Aurora Diagnostics had struggled to find a profitable business model.
Both the PathGroup and Sonic Healthcare acquisitions of large anatomic pathology enterprises are sentinel events for the anatomic pathology profession. At a minimum, it is a market signal that size and scale are necessary to compete as healthcare continues to consolidate and integrate.
At the same time, these transactions may be evidence that the era of small, private practice pathology groups is drawing to a close. Healthcare’s ongoing transformation may favor pathology groups with large regional coverage over pathology groups that serve just a handful of hospitals.