LabCorp Announces Plan to Acquire PAML

Late last week, LabCorp and the owners of Pathology Associates Medical Laboratories (known as PAML) announced that LabCorp would acquire ownership of PAML and PAML’s interests in several joint ventures. “This signature transaction strengthens LabCorp’s relationships with anchor health systems and expands LabCorp’s geographic presence into important markets,” said LabCorp Chairman and CEO David. P. King, in a statement issued Feb. 23.

That geographic expansion reaches not only PAML’s home state of Washington (its headquarters are in Spokane), but also the areas served by the multiple joint ventures in which PAML was involved, including Colorado, Idaho, Kentucky, Montana, Oregon and Utah. PAML’s California joint ventures are not included in the deal. Some of the other joint venture owners will also sell their interests to LabCorp.

While the details of the acquisition have yet to be finalized and the deal must first get clearance from the Federal Trade Commission, the various transactions needed to close the deal are expected to “begin in 2017 and continue into 2018” according to LabCorp. In the meantime, both LabCorp and PAML’s President and CEO Francisco R. Velazquez promised that operations at PAML and its joint ventures will remain unchanged. Both parties expressed a commitment to “work together to plan and implement a smooth, thoughtful transition that maintains continuity of services for patients, hospitals, clients and clinicians while providing direct access to the additional capabilities of LabCorp.” Velazquez released a letter to PAML clients the day of the announcement assuring them there would be no changes to services before the transaction was complete, “[a]ny future changes will be thoughtfully planned and implemented” and that LabCorp was “committed to continuing our level of quality and service.”

PAML is currently jointly owned by Providence Health & Services (Providence) and Catholic Health Initiatives (CHI). Providence is part of a health system (Providence St. Joseph Health) that includes 50 hospitals, 829 physician clinics and other services. CHI is the third-largest nonprofit health system, based in Colorado, and includes 103 hospitals and numerous other facilities across 18 states. After the deal is final, LabCorp will assume PAML’s outreach testing and reference laboratory services while Providence and CHI and hospital joint venture owners will provide inpatient laboratory services.