“May 26, 1998 Intelligence: Late Breaking Lab News”

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Another pathologybased PPM received venture capital funding. Pathology Consultants of America, (PCA) based in Nashville, Tennessee, just closed a $16 million deal with two venture capitalists. ABS Capital Partners of Baltimore invested $15 million. An affiliate of SunTrust/Equitable Securities ponied up the additional $1 million. This gives PCA cash to use in purchasing pathology practices.

Meanwhile, AmeriPath, Inc. continues to expand its reach in the pathology marketplace. This time it acquired a pathology practice in Wisconsin. The five pathologists who own Consultant Physicians in Pathology of Beaver Dam, Wisconsin, signed a long-term management agreement with AmeriPath.

Even as national HMOs push premium increases of 7-10% on employers this year, the monthly Producer Price Index (PPI) for healthcare providers remained stable. For the 12-month period ending in April, the Department of Labor reports that acute care hospital prices increased only 0.8%. The physician PPI was equally modest, with only a 1.8% increase for the same time period.

COLUMBIA SHRINKS AS TENET GROWS

Columbia/HCA Healthcare Corporation entered into an agreement to sell 22 hospitals and other related facilities located in Kentucky, Tennessee, Alabama and North Carolina. Buyers are not-for-profit hospitals or systems located near the hospitals to be sold. The aggregate sales price is expected to be $1.2 billion. This is another major step in dismantling the for-profit hospital empire assembled by former CEO Rick Scott.

Meanwhile, another for-profit hospital operator gains financial strength. To add to its cash flow, Tenet Healthcare Corporation is refinancing $1.35 billion of corporate notes at interest rates averaging 2% below its existing notes. Tenet will be a tough competitor, as it has doubled its EBIDTA (a measure of cash flow) to $1.75 billion in just three years. Expect further hospital acquisitions as Tenet puts its additional cash to work.

ADD TO…TENET
For those clients of THE DARK REPORT following integration attempts by Tenet and Medpartners in Southern California, here’s an interesting development. MedPartners announced a lay off involving as many as 1,000 of its 9,200 employees in that part of the state. At least 48 physicians will be included in the cutbacks. This is the second staff reduction in a year, and demonstrates that managed care trends continue to make radical cost reductions a survival requirement.

For some reason, laboratorians like to office on Maryland Way in the Nashville suburb of Brentwood. Latest to take occupancy on that street is Christine Diehl. Most laboratorians know her as the corporate Director of Laboratory Services for Columbia/HCA. She recently left Columbia and joined MDS Laboratory Services, U.S., where she is Director of Operations and responsible for developing customers for MDS’ automated laboratory products.

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