Tri-Cities Laboratory future clouded by sale of part owner

New ownership could bring big changes to the Tri-Cities Laboratory, a joint venture between three Tri-City hospitals and a Spokane-based laboratory to provide lab services in the community.

Providence Health & Services and its partner, Catholic Health Initiatives, announced a definitive agreement to sell the Spokane lab to North Carolina-based Laboratory Corporation of America, commonly referred to as LabCorp.

Pathology Associates Medical Lab’s 25 percent stake in Tri-Cities Laboratory is part of the deal, which was announced last Thursday.

Terms were not disclosed. But one analyst anticipates it could result in significant disruptions in Spokane if LabCorp shifts work to its own facilities to maximize profits.

It remains unclear what the deal could mean for the Tri-Cities Laboratory, its 100 Mid-Columbia workers and the doctors and patients who depend on it for swift results to medical and other tests, including pre-employment and court-ordered urinalysis.

Mike Gaulke, TCL general manager, said the lab will operate as usual until the sale closes. Beyond that, he referred questions to PAML.

TCL posted a message to staff and clients about the sale on its website that promises customers and patients will remain its highest priority.

But LabCorp’s deal to acquire PAML could be the first of several that could put TCL under its full control in the future.

TCL formed in 1999 as a joint venture of PAML and three local hospitals, Kadlec Regional Medical Center, Lourdes Health Network and Trios Health to offer local laboratory services. Each owns a 25 percent share in the organization.

PAML’s share is the only one included in the deal. But the other three are in play.

LabCorp indicated TCL’s three hospital partners are evaluating their positions and could sell in the future. All three confirmed that to some degree.

Lisa Teske, spokeswoman for Trios Health, said the organization is willing to sell its share. Kadlec is also a possible seller because of its affiliation with Providence, the same organization selling PAML.

Lourdes is a more delicate matter. It is under a definitive agreement to be purchased by Tennessee-based RCCH HealthCare Partners but the sale is subject to approval by state regulators, a months-long process that has only just begun.

CEO John Serle said Lourdes is agreeable to the arrangement. The decision rests with its current owner, Ascension, and with the buyer.

“It’s really in the hands of those two entities to agree to a sale of our interest,” he said.

If some combination of the three hospitals agree to sell, they will follow a well-beaten path.

PAML’s hospital partners in Renton, as well as Lakewood, Colo. and Lexington, Ken., already have agreed to sell interests in their own medical laboratories to LabCorp.

The company said the change will not affect in-patient hospital laboratory services. Kadlec employs workers in its in-house laboratory, but Lourdes contracts with TCL.

LabCorp called the sale an opportunity to strengthen its relationship with hospitals and to venture into important markets.

“We have always admired the commitment of PAML, its owners and its joint venture partners to providing high-quality, community-based laboratory services. LabCorp shares that same vision and commitment, and is excited to work with these industry-leading health systems and hospitals as partners to continue to provide these services,” said David P. King, chairman and CEO of LabCorp in a news release announcing the deal.

But a well-known health industry publication anticipates LabCorp will “dismantle” PAML’s 500-person Spokane operation.

The Lund Report, citing a confidential source, said LabCorp will move testing work to its existing sites, including Seattle, to optimize profits through higher volumes.

LabCorp (NYSE: LH) provides comprehensive clinical laboratory and drug development services. Last week, it reported a $732 million profit on 2016 revenue of $9.4 billion, up 11 percent from the prior year. It is an S&P 500 company with 50,000 employees in 60 countries.

LabCorp shares closed at $142.81 Monday, $3.77 or up 2.7 percent since the deal was announced.

This story was originally published February 27, 2017 at 5:04 PM with the headline "Tri-Cities Laboratory future clouded by sale of part owner."