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They expanded it to a clinical and anatomic pathology laboratory and simultaneously founded a pathology group that grew from two to 35 pathologists covering 18 California hospitals, then sold the clinical lab business to Lab Corp in 2000.
After the non-compete clauses in that deal expired, Dr.
Lui built an anatomic pathology only company that, after recapitalization by a private equity firm, focused on women’s health, and restarted a routine clinical lab business that became a head-to-head competitor of Lab Corp. began to change, making the ongoing sustainability of the laboratory very difficult, Dr. “In our area, there are several large systems, including UCLA Health, Cedars-Sinai Medical Center, and USC Health, buying physician practices, and once they do that, the practice is no longer controlled by individual doctors.
Then there were incredible cuts to payment rates, particularly by the Blue Cross affiliate in Southern California.
Where enforcement is lax—as it can be when smaller operations are involved—it becomes a major source of pressure on independent labs trying to survive. Lui and partners sold the entire independent lab portions of the business to Lab Corp. In terms of the pathologist-built, pathologist-owned, and pathologist-operated labs, we were virtually the last one.
June 2016—Consolidation among hospitals and laboratories can sometimes seem like too massive a tide for independent and hospital-based laboratories to effectively resist.
What are the advantages that large size provides to a hospital system or national lab in a competitive marketplace?