“June 28, 1999 Intelligence: Late Breaking Lab News”

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South America continues to catch the eye of many North American health insurers. Aetna International, Inc., the international operating subsidiary for Aetna Inc., disclosed its purchase of a 50% interest in Cruz Blanca Columbia. This is a clinic-based healthcare insurance organization with 190,000 members in Columbia. Aetna’s acquisition was done through its Chilean subsidiary. “We now serve customers in every large-scale Latin American market,” boasted Frederick C. Copeland, Jr., President and CEO of Aetna, International.

ADD TO…OVERSEAS HEALTHCARE INVESTING

THE DARK REPORT sees increasing activity by a number of leading American healthcare firms, including hospitals, to establish operations in a variety of countries around the world. However, clinical laboratories offering routine testing are not among them. An international specialist for one of the nation’s leading reference and esoteric laboratories recently told THE DARK REPORT that “most overseas countries have the same problems with laboratory overcapacity and inadequate reimbursement as the United States.” For that reason, he says that international expansion for clinical laboratories offering routine testing is not likely to occur in the near future.

LAB VENDORS RECOGNIZED FOR OUTSTANDING SALES FORCES

Recently H.R. Chally Group, an Ohio-based firm specializing in sales force strategies, polled 7,300 companies as to their evaluation of sales forces. In the industry segment for medical devices, two diagnostics companies made it into the Top 12. Johnson & Johnson and Baxter International, Inc. ranked number nine and ten on the list, respectively. According to Chally, “the overall competence of the sales rep was the most important factor in determining a customer’s satisfaction with a product company.” Hillenbrand Industries and Zimmer Inc. were numbers one and two in Chally’s sales force ranking.

THE DARK REPORT will go out on a limb with some predictions on the upcoming merger between Quest Diagnostics Incorporated and SmithKline Beecham Clinical Laboratories (SBCL).

PREDICTION ONE: After the merger, it will be announced that the Corporate Medical Director will be SBCL’s Edward A. Kaufman, M.D., who has always been a leader within the SBCL organization. He fits the pro-active, involved management style Quest wants to develop.

PREDICTION TWO: No major role post-merger for John B. Okkerse, Jr., Ph.D., SBCL’s current President. Our reasoning? Despite his reputation as a tough competitor, during the last two years he was involved in SBCL’s decision to sustain marginal cost bidding for incremental work wherever it might weaken Quest Diagnostics and Laboratory Corporation of America. Financial pain caused by that particular pricing strategy is probably not quickly forgotten by SBCL’s new owners.

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