Lakewood Pathology Changes Leadership

Doug Berg assumes CEO duties, Tim Brodnik joins the Board of Directors

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CEO SUMMARY: Following the arrival of a new majority owner and a capital commitment of $50 million last year, Lakewood Pathology Associates has taken additional steps to pursue growth. Lakewood plans to acquire small to mid-sized companies that are complementary to its position in the anatomic pathology markets, particularly in the subspecialties of hematology and oncology.

FOLLOWING A MAJOR CASH INFUSION by its new majority shareholder last year, Lakewood Pathology Associates, Inc. (LPA), of Lakewood, New Jersey, recently announced leadership changes in its executive suite, along with a new member on its board of directors.

The new CEO is Doug Berg, who stepped up from his existing position at Lakewood Pathology as its Chief Development Officer. The new board member is Timothy Brodnik. The CEO change was triggered by the resignation of Lakewood Pathology’s former CEO, Raza Bokhari, M.D., who will continue to serve as a director on the board.

These changes come one year after the company got a new majority owner, Water Street Healthcare Partners of Chicago, Illinois, a private equity firm focused exclusively on healthcare. The signs are clear: new leadership and a private equity partner usually mean a new plan is in place to accelerate growth.

“Our goal is to be a leading player and contributor in anatomic pathology services,” Berg continued. “Lakewood Pathology is ready to pursue its next phase of growth.

“Strategically, we are investing into three business areas,” explained Berg. “First, we will expand the facilities at our laboratory in Lakewood, New Jersey. We have a solid base of urology and gastroenterology clients and we want more capacity to take on additional specimen volume.

“Second, we are recruiting additional experienced professionals and want to be associated with people who have a track record of success in the industry,” Berg commented. “One example is the addition of Tim Brodnik to our board, where he can provide strategic input and guidance.

“Third, we are prepared to acquire other laboratories,” Berg said. “This will help us achieve two primary business objectives. One, we are ready to open up diagnostic services in hematology-oncology. This is one of the fastest-growing sectors in anatomic pathology and we want to take advantage of that.

“We are ready to expand outside our core markets in the Northeast to develop a physical presence in other regions across the United States,” he said.

Acquisitions will be a primary way to accomplish these growth strategies. “Our ideal profile is a small to mid-size anatomic pathology company,” added Berg. “We are interested in subspecialty expertise and an established market presence in specialty pathology services, particularly in hematology and oncology. We are already pursuing several attractive prospects.

Seeking High Performers

“Leadership is one key to help us achieve our ambitious growth goals,” observed Berg. “The addition of Tim Brodnik to our Board of Directors gives us access to his experience and perspective in building a successful lab business.”

Brodnik’s participation in Lakewood Pathology’s board is noteworthy, especially since he has kept a low profile after, as the CEO of American Medical Laboratories, Inc. of Chantilly, Virginia, he led its sale to Quest Diagnostics Incorporated for $500 million in 2002. (See TDR, February 18, 2002.)

Lakewood Pathology Associates has posted rapid growth in specimen volume and revenue in recent years. Berg’s challenge is to sustain that pace. “We’ve learned that a key to success in the lab business is to have the right culture and that requires a focus on people,” he said. “It means adding talented individuals and putting people first, be they customers, employees, suppliers, or health insurers. Such a culture allows your company to provide excellent service and introduce innovations into the marketplace which add value to customers.”

Positioned For Growth

“Given the nature of the anatomic pathology business, we believe we are well positioned for growth,” Berg continued. “Anatomic pathology has some of the most attractive demographic potential of the entire diagnostic testing market. For example, among the segments of clinical, esoteric, and AP, we believe AP is the fastest-growing segment of the three. And within AP, certain segments, such as hematology-oncology, are growing even faster. The changes we are making will position us to take advantage of these opportunities.”

Armed with a capital commitment of $50 million from Water Street Healthcare Partners, Lakewood Pathology Associates certainly has the capital to pursue its growth strategy. At the same time, it will face increased competition from other national anatomic pathology companies targeting these same specialty markets.

Another challenge that confronts LPA and other national AP companies is the interest by urology and gastroenterology groups to establish in-house AP labs. As this happens, it reduces the number of cases referred to national AP labs.

Berg and Brodnik Bring Experience to Lakewood

BEFORE JOINING LAKEWOOD PATHOLOGY

ASSOCIATES, Doug Berg, the new CEO of the anatomic pathology company in Lakewood, New Jersey, held executive positions at leading laboratory companies and in vitro diagnostics firms.

Previously, Berg served as the Corporate Vice President of Sales and Marketing at Quest Diagnostics Incorporated. He also served in senior leadership roles at Dade Behring, Baxter, and American Hospital Supply Corporation.

Incoming director Timothy Brodnick is another lab industry executive with deep experience. He was the Corporate Director of Sales and Marketing at National Health Laboratories and Laboratory Corporation of America. In 1997, he was part of an investor group that acquired American Medical Laboratories, Inc. (AML) of Chantilly, Virginia. He served as AML’s CEO until it was acquired by Quest Diagnostics in 2002.

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