“July 6, 1998 Intelligence:  Late Breaking Lab News”

Last week THE DARK REPORT toured the Framingham, Massachusetts laboratory of Genzyme Genetics, the diagnostic testing division of Genzyme Corporation. It is probably the largest genetics-based diagnostics laboratory organization in the United States. The company’s roots are in pregnancy testing for early detection of inherited diseases and similar conditions. Thus, a necessary part of the laboratory’s services are counseling services for the ob-gyns and their patients. Genzyme Genetics is also active in cystic fibrosis testing. Developments in this area are so rapid that widespread fetal screening for cystic fibrosis may become clinically viable and desirable within 18 months.

AmeriPath, Inc. announced the acquisition of five pathology practices on June 19. Located in Florida, Texas, and Mississippi, these deals add 14 pathologists and another $10 million to AmeriPath’s annual revenue. To meet declared growth goals and keep stockholders happy, AmeriPath must acquire about $30 million per year of pathology revenues. For that reason, it will aggressively pursue more deals through the remainder of 1998.

LAB MANAGEMENT CHANGES AT SBCL

Significant changes were recently made to the management team at Smith-Kline Beecham Clinical Laboratories (SBCL). John B. Okkerse, Jr., Ph.D., currently President, has also been named Senior Vice President and Director of Operations for SB’s Healthcare Services division. He will be responsible for operations at both divisions and continues as President of SBCL (which is a division of Healthcare Services).

MORE ON…SMITHKLINE:
Another SBCL executive gained new responsibilities. Vijay Aggarwal, Ph.D. is now Vice President and Director of U.S. Reference Laboratories. In recent years he has been involved in SBCL’s national managed care efforts for provider relations and managed care contracting. In his new position, Aggarwal oversees the performance of SBCL’s regional laboratories.

Here’s up-to-the minute data on physician practice acquisitions. During 1997, physicians whose practices, IPAs, or MSOs changed hands totaled 27,862. That is an increase of 37.3% over 1996 and involves about 5% of all the doctors in the United States. The data, assembled by Irving Levin Associates of New Canaan, Connecticut, indicates that 24.1% of the purchasers were physician practice management (PPM) companies. Hospitals, as a segment, were the second leading source of buyers, followed by independent practice associations (IPA), medical groups and others. Clinical laboratories are affected by this continuing acquisition of physician practices because buyers frequently switch to their preferred laboratory provider.

Laboratory executives and pathologists are getting savvier about working the political system. Last month, Representative Neil Abercrombie of Hawaii introduced House Bill HR 4092 in the House of Representatives. The bill would raise the Medicare reimbursement for Pap smears from $7.15 to $14.60. Cytopathologists James Navin, M.D. and Jeff Killeen, M.D. of Clinical Labs of Hawaii played a role in this effort.

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