“February 22, 1999 Intelligence:  Late Breaking Lab News”

Here’s more validation that laboratories can use information links to doctors’ offices as added value. A recent survey of hospital CIOs was completed by PriceWaterHouseCoopers, Zinn Enterprises and Modern Healthcare Weekly. It revealed that the number one information project was clinical communication infrastructure/ links to clinicians. Over 55% of the hospitals polled were working to achieve this. Laboratories have already mastered the information bridge to physicians’ offices. This positions laboratories to be a platform for the hospitals’ efforts to move clinical data to clinicians.

Financial progress con- tinues at PharChem Laboratories, Inc. in Menlo Park, California. Under the guidance of CEO Joseph Halligan, 1998 revenues at the substance abuse lab climbed 10% over 1997. Net income was $635,000, compared to a net loss in 1997 of $1.27 million. The company’s London subsidiary, Medscreen, was a strong source of growth. It increased sales by 49% during 1998.

CHICAGO AREA GETS NEW LAB PLAYER

Last Monday a brand new 50,000 square foot laboratory was dedicated by Alverno Clinical Laboratories (ACL) in Hammond, Indiana. It’s a consolidated laboratory operated by the Sisters of St. Francis Health Services and several affiliated hospitals in northeast Illinois and northwest Illinois. James C Sparks, Ph.D. is President and CEO of ACL.

There’s a developing story on liquid prep Pap smear technology that bears watching. As more laboratories begin working with liquid prep Pap smears, additional clinical studies are under way. A segment of the cytopathology community believes there is evidence that the performance of liquid prep technology yields mixed results when compared to traditional Pap smear methods. Expect to see some scientific controversy over the effectiveness of liquid prep technology as additional clinical studies are published and debated.

Were you wondering why Quest Diagnostics Incorporated was willing to pay the stiff price of $1.025 billion, in cash, and give up almost a third of its equity (another $245 million), to acquire SmithKline Beecham Clinical Laboratories (SBCL)? The inside story is that there were multiple bidders for SBCL. Apparently the bidders included Dynacare, Inc. of Toronto. Dynacare was able to assemble financing and enter a credible bid for SBCL. It shows both the intent and capability of Dynacare to expand its U.S.-based lab operations. Telephone calls to Dynacare headquarters for confirmation of these facts were not returned as of press time.

Pathologists watching the continuing soap opera known as the physician practice management (PPM) industry will find this to be an interesting postscript. MedPartners, Inc. reported its 1998 earnings. On revenues of $2.6 billion, the one-time PPM giant reported a net loss of $1.26 billion! MedPartners is exiting the PPM business to concentrate on its Caremark subsidiary. The huge losses relate to write-downs of its PPM operations.

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