CEO SUMMARY: Fast-growing ProMedica Health System of Toledo, Ohio, agreed to a laboratory joint venture with Sonic Healthcare USA. As lab budgets and prices for lab tests are squeezed downward, ProMedica sees opportunity to add volume to this new core lab facility to improve efficiency and reduce costs per test. At the same time, it aims to increase its lab outreach business with its joint venture partner to improve laboratory testing services for office-based physicians in a multi-state area.
EARLY THIS MONTH, ProMedica Health System in Toledo, Ohio, and Sonic Healthcare USA of Austin, Texas, formed a joint venture to provide clinical laboratory services to patients and providers throughout Ohio, Michigan, and into Indiana.
The new venture will be called ProMedica Pathology Laboratories (PPL). “Each partner brings an existing book of lab business to the new company,” stated Noel Maring, Sonic’s Vice President of Hospital Affiliations. “ProMedica will include its already substantial volume of inpatient and outreach lab testing. Sonic will contribute its lab outreach business in the Toledo region.
“In the joint venture, ProMedica and Sonic will provide inpatient reference testing services for ProMedica’s hospital laboratories and a comprehensive menu of outreach testing,” said Maring. “This includes hospitals in Ohio and Michigan and physician clients in Ohio, Michigan, and parts of northern Indiana. More than 90% of the testing is expected to be done in the core laboratory owned by the JV.”
Why is ProMedica developing a bigger laboratory outreach business now? “The most significant benefit expected from this new joint venture with Sonic Healthcare USA is increased efficiency in our laboratory operations,” said Gary Akenberger, ProMedica’s Senior Vice President, Operations.
Seeking Sustained Quality
“Our goal is to sustain a high-quality laboratory going forward because we recognize that reimbursement will continue to be a challenge and new diagnostic technologies will require substantial capital,” he explained.
“In addition to improved sustainability, the other benefits will be improved lab reporting, and increased productivity,” he said in an interview with THE DARKREPORT. “From a financial perspective, we look at this joint venture as something that will help us create a strong long-term laboratory testing operation for years to come.
“We want improved sustainability from an economic standpoint,” continued Akenberger. “This deal provides us with an opportunity to lower our overall cost structure and increase our volume while also adding more geographic coverage.
Higher Volume, Lower Costs
“Increased test volume lowers our cost per test,” he added. “This makes our lab more efficient, allowing us to enjoy greater economies of scale.
“Together, under this new laboratory joint venture, we will improve lab services in Northwest Ohio and farther south in the state,” Akenberger said.
“Also, we will serve the entire state of Michigan and the northern part of Indiana,” he added. “Of course, Michigan is a big state, and we intend to serve the entire state, but that will depend on how far we can transport lab specimens.
“In addition to better geographic reach, we expect our work with Sonic will help us with our financial reporting,” he said. “Sonic can help us with our managed care contracts by analyzing our lab costs on a per-test basis to give us much greater detail than we have today with our internal systems.
“As a result of being in the lab business for many years, Sonic’s systems are specific to the laboratory business line,” he explained. “The systems we have as part of a hospital are much broader in nature and provide information not only for our laboratory but also for radiology, respiratory therapy, and all the other ancillary services that we provide.
“The systems that Sonic brings to the table will have much more specific laboratory data available to provide data analytics, from an economic or financial perspective, as well as the ability to improve patient collections, in terms of services that we provide,” Akenberger said.
Improved financial data on patients should help ProMedica collect lab test fees from patients, he added. Having patients pay at the point of care is particularly important when so many are enrolled in high-deductible health plans, he said.
Better Financial Data
“We want to make sure that we are paid appropriately for our lab testing services and that our patients know how much they owe in terms of co-payments and deductibles,” he added. “Our systems have those capabilities, but Sonic’s systems are specifically related to the laboratory business, which are typically high-volume, low-cost test procedures. ”
Fast-Growing ProMedica Is Now a Major Health System
RECENT ACQUISITIONS AND ONGOING GROWTH at Toledo, Ohio-based ProMedica Health now put the integrated health system on the list of the 25 largest health systems in the United States.
ProMedica offers acute, post-acute, and ambulatory care services. It owns a health insurance company with a dental plan. The company has more than 70,000 employees, including 2,700 physicians and advanced practice providers. Its ProMedica Physicians division employs more than 900 physicians and other providers.
A nonprofit organization, ProMedica has 13 hospitals in Ohio and Michigan. With its recent acquisition of HCR ManorCare, it now operates 450 assisted living facilities, skilled nursing and rehabilitation centers, outpatient rehabilitation clinics, and hospice and home health agencies. Including HCR ManorCare’s numbers, ProMedica’s revenue is approximately $7 billion annually.
ProMedica’s central laboratory facility in Toledo is accredited to CAP 15189.
Contact Gary Akenberger at email@example.com; Noel Maring at firstname.lastname@example.org or 509-220-9872.