“October 6, 1997 Intelligence:  Late Breaking Lab News”

Michael J. Bechich, M.D., Ph.D. at the University of Pittsburgh School of Medicine, is hosting his second annual conference in Pittsburgh next week. Anatomic Pathology Informatics, Imaging and the Internet is scheduled for October 16-18 at the Pittsburgh Marriott City Center. Dr. Bechich is actively developing the capability of a virtual pathology practice using advanced imaging technology and the Internet. Expect to see some fascinating applications of cutting-edge technology at Dr. Bechich’s program.

HEARD ON THE STREET:
In recent months one national laboratory made a major purchase of multiple automated sample-handling systems from a national diagnostics vendor. The system’s performance was so disappointing that the laboratory has yet to pay the vendor for the equipment. This may be further evidence that the current state of laboratory automation technology is still too immature for commercial operation.

PRUDENTIAL’S NAT’L LAB CONTRACT

Prudential Insurance Company of America’s healthcare unit has yet to award a national contract for laboratory services to any of the national labs. The RFP process extends back almost three years. Knowledgeable sources tell THE DARK REPORT that SmithKline Beecham Clinical Laboratories is pitching hard to convince Prudential to award them a sole-source contract to be the national provider of laboratory services. This would be similar to its national exclusive provider contract with Cigna Healthcare. Prudential has 4.7 million HMO enrollees, plus another 2 million in indemnity plans, so a huge chunk of laboratory business is on the negotiating table.

ADD TO:… PRUDENTIAL
Financial performance of Prudential’s healthcare division is so bad that the parent company has authorized investment bankers to explore options for selling or divesting the business unit. With operations in 40 markets, it would be an
attractive plum for major players such as Aetna, Inc., Cigna Corp., United Healthcare Corp., Humana Inc. and Pacificare Health Systems, Inc. Don’t be surprised to see a sale announced in the near future.

AmeriPath, Inc. continues pushing to become the first public pathology-based physicians practice management company (PPM). AmeriPath’s executives are preparing to launch the road show for securities analysts to drum up support for its initial public offering. (See TDR, September 15, 1997.) Pathologists interested in seeing AmeriPath’s business plan should get a copy of the offering prospectus. It can be obtained by calling Donaldson, Lufkin & Jenerette’s prospectus department at 212-892-4542.

MORE ON:… PPMS
Speaking of pathology PPMs, two more such firms are sprouting in Nashville. It seems this Tennessee town is to healthcare start-ups what the silicon valley is to computer start-ups.

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