Providence Health, Catholic Health Initiatives Form Medical Reference Lab Partnership

John Commins, for HealthLeaders Media , October 28, 2009

Catholic Health Initiatives has signed a deal that will give it a 25% equity stake in Pathology Associates Medical Laboratories, a medical reference laboratory owned by Providence Health & Services, the three companies announced Tuesday.

Through PAML, CHI and Providence will develop a national network of regional laboratories at select CHI hospitals, using PAML's hospital-based laboratory outreach program, the two health systems announced. The partnership creates one of the nation's largest medical reference laboratories, using economies of scale to build efficiencies, cut costs, and improve services.

Financial terms of the deal were not disclosed.

"This is a partnership that will provide for the current and future laboratory needs of our medical facilities, affiliated physicians, and, most important, our patients," said CHI CEO Kevin Lofton. "The partnership affords both CHI and PAML the opportunity to leverage laboratory expertise and best practices to gain significant economies of scale and new efficiencies across the business line."

Seattle-based Providence, a nonprofit health system with 27 hospitals and more than 35 non-acute care facilities in the western United States, is the largest healthcare provider in the Northwest. Denver-based CHI, the second-largest Catholic healthcare system in the nation, includes 78 hospitals in 20 states. PAML is ranked among the top reference laboratories in the United States and is considered an industry leader in joint venture partnerships with community-based hospitals, according to the companies.

"This partnership with CHI is an important milestone for PAML as we continue to expand our laboratory joint ventures with leading hospital systems across the country," said Thomas Tiffany, PAML's CEO and president. "We are confident our partner health systems will realize the benefits of working in collaboration to expand the outreach lab business and provide an opportunity for CHI and Providence to grow the esoteric reference laboratory to better support the hospital systems' service lines."

PAML, headquartered in Spokane, WA, now partners with 22 hospitals in five hospital-based laboratory joint ventures throughout the northwest.

John Commins is a senior editor with HealthLeaders Media.

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