LabCorp Purchases Outreach Business of Los Angeles-Area Hospital

By Ron Shinkman, Editor, Laboratory Industry Report

LabCorp has purchased the outreach laboratory business of a Los Angeles-area community hospital.

Henry Mayo Newhall Hospital announced the sale last week. The 238-bed facility is located in Santa Clarita, a city of about 215,000 located 30 miles north of Los Angeles.

Henry Mayo is the only acute care hospital in Santa Clarita. It operates six outpatient laboratory service centers in the city, which are managed by United West Labs, based in Santa Ana, Calif. The two entities began offering outreach services in Santa Clarita in 2006.

"The market has changed considerably since ... Henry Mayo and United West Labs began providing outreach laboratory services for Santa Clarita Valley physicians," said Henry Mayo Chief Financial Officer Bob Hudson in a statement. "Our primary mission is to serve inpatients. Selling our outreach laboratory business will help ensure we can carry out our primary mission."

Many hospitals, under reimbursement and other financial pressures, have been looking to shed their outreach operations to focus on their core services. Both LabCorp, the nation's largest laboratory company and Quest Diagnostics, the nation's second-largest firm, have been vying to acquire those businesses. Many of the deals have been on the West Coast, particularly in California, and the East Coast.

The Henry Mayo acquisition is the second significant purchase of a hospital outreach operation by LabCorp in California in less than three years. It purchased the outreach business of the two-hospital John Muir Health in the East Bay area of Northern California in the second half of 2013.

Terms of the Henry Mayo deal were not disclosed.