Madison-based Quest Diagnostics has announced it has entered into a definitive agreement to acquire the outreach laboratory service business of Clinical Laboratory Partners (CLP), a wholly-owned subsidiary of Hartford HealthCare (HHC). HHC is an integrated health care system with five hospitals in Connecticut. The transaction, once completed, is expected to enhance access to quality, affordable and convenient laboratory services for people in Connecticut.
CLP provides clinical lab testing to physicians in Connecticut, acting as the outreach laboratory services provider for HHC. Outreach lab services are provided to local physicians and patients separate from hospital inpatient or outpatient care. Under the agreement, CLP will transition laboratory testing now provided by its lab in Newington, Conn., to Quest’s rapid-response clinical laboratories in Stratford, Torrington and Wallingford, Conn., and full-service, state-of-the-art clinical laboratory in Marlborough, Mass. The acquisition also includes several CLP patient service centers and other select assets.
HHC’s hospital-based laboratories and the inpatient and outpatient services they provide are not included in the transaction, and will remain part of the Hartford HealthCare system.
HHC and CLP have collaborated with Quest since CLP’s formation in 1998, with Quest providing high-end reference testing for CLP and all five of HHC’s affiliated hospitals. Once completed, the acquisition is expected to build on this experience to deliver several distinct benefits to patients and physicians in Connecticut. These include significantly greater patient access and convenience through a combined patient service center network in the state, and thousands of test services, including highly advanced and novel genetic sequencing tests for cancer, neurological disorders and other diseases. The two organizations also intend to explore opportunities to collaborate in population health and data analytics, among other areas, based on Quest’s laboratory data.
The transaction also will leverage Quest’s scale and expertise to produce more cost-effective testing, for more affordable pricing for patients as well as government and commercial health plans. Third-party research shows that Quest Diagnostics often provides lab services that cost significantly less than those provided by hospital-based labs.
“Quest Diagnostics is an industry leader capable of carrying on the excellent work of Clinical Laboratory Partners,” said Elliot Joseph, president and CEO of Hartford HealthCare. “Quest is well positioned to offer consistently excellent lab services to our customers with wider access and greater affordability. We see Quest as a partner in providing high-quality, lower-cost care to our patients and families.”
“Over the past decade, many health systems have expanded their outreach lab businesses to service physicians in their area. Now that pattern is shifting, as these same systems reconsider their outreach lab strategies in light of reimbursement pressures and the growth of high-deductible plans, which place a greater share of cost on patients,” said Steve Rusckowski, president and CEO of Quest Diagnostics. “Top health systems that have developed a commercial outreach business, such as Hartford HealthCare, are increasingly entrusting the vital diagnostic information service to Quest because we have unique assets, such as clinical expertise and scale, which allow us to deliver great value.”
“We look forward to continuing to serve Hartford HealthCare and to inspiring better health through diagnostic insights for individuals and families in Connecticut,” added Mr. Rusckowski.
The organizations expect to complete the transaction in early 2016, subject to customary regulatory closing conditions. Financial terms were not disclosed.
In late 2012, Quest Diagnostics introduced its five-point strategy, which includes restoring growth and driving disciplined capital deployment through strategically-aligned, accretive acquisitions. The company also introduced a professional laboratory services business focused on helping health systems gain greater quality and efficiencies from their laboratories, such as through professional lab management as well as lab outreach acquisition. Since that time, the company has acquired five hospital laboratory outreach service businesses, and announced a number of professional laboratory services agreements with hospital systems.