John Muir Health Sells Clinical Laboratory Outreach Services to LabCorp
Health system also plans to close core MuirLab facility in Concord and will no longer provide clinical lab services to skilled nursing facilities.
Walnut Creek, Calif. (September 4, 2013) – John Muir Health has signed a definitive agreement to sell its clinical laboratory outreach business (provided through MuirLab) to Laboratory Corporation of America® (LabCorp®). The transaction is scheduled to close in the fourth quarter.
Under the terms of the agreement, operation of 26 MuirLab Patient Service Centers (PSCs) or draw stations throughout Contra Costa, Alameda and Solano counties and other parts of Northern California will be transferred to LabCorp, as well as the reference lab services MuirLab provides to other local physicians and hospitals. LabCorp will also serve as the preferred provider of reference lab services for John Muir Health and its affiliates. The transaction with LabCorp does not impact John Muir Health’s two hospital-based labs, which will continue to be owned and operated by the health system.
"With this sale, our patients will gain access to the broader range of services and lower prices offered by LabCorp,” said Cal Knight, president and CEO of John Muir Health. "Physicians and patients have frequently complained about MuirLab's pricing. This agreement will lower patients' out-of-pocket expenses and advance John Muir Health's efforts to deliver high-quality care at an affordable cost." Upon completion of the transaction, John Muir Health will close MuirLab’s 56,000 sq. ft. core lab in Concord at 5003 Commercial Circle. In addition, John Muir Health will no longer provide lab services through MuirLab to skilled nursing facilities.
“These decisions allow us to redirect financial resources that were needed to support MuirLab into other strategic initiatives that position us for future growth and help us meet the short- and long-term needs of our patients and the communities we serve,” said Knight. “It also allows patients to continue to have convenient access to high-quality lab services through LabCorp.”
LabCorp, which has over 1,800 PSCs throughout the country and processes tests on approximately 470,000 patient specimens each day, has the existing infrastructure and capacity locally to absorb the increase in lab work that will result from acquisition of MuirLab’s outreach business. Upon close of the transaction, some MuirLab employees will have an opportunity to work at LabCorp.
John Muir Health will offer severance packages to impacted MuirLab employees whether or not they take a job with LabCorp. The health system’s Human Resources Department has also planned a variety of activities to assist displaced MuirLab employees in locating employment, including continuing education programs, outplacement workshops and job fairs.
“Our MuirLab employees have been valuable members of the John Muir Health family and we will do everything we can to help those not offered a position to find a new job,” said Knight. “Our decisions are not a reflection of their work; rather they are driven by the realities of the lab services market and the broader health care industry.”
John Muir Health started its lab outreach business in 1994 with the MuirLab facility on Commercial Circle opening in 2008. In 2012, MuirLab processed more than 2.7 million lab tests.
Hammond Hanlon Camp LLC (“H2C”) acted as the exclusive financial advisor to John Muir Health on the transaction. H2C is an independent strategic advisory and investment banking firm serving clients across the country, with an exclusive focus on health care services and related organizations.