News From Terre Haute, Indiana

Local & Bistate

February 22, 2014

Terre Haute medical labs sold

Sale part of parent company bankruptcy

TERRE HAUTE — A pair of widely used Terre Haute clinical diagnostic medical laboratories have been sold to help their former parent company pay millions in debt.

Terre Haute Medical Laboratory Inc. and Pathology Associates of Terre Haute — part of MedLab — have been sold to Laboratory Corp. of America Holdings, commonly known as LabCorp., one of the world’s largest providers of clinical diagnostic laboratory services.

The two Terre Haute labs provide testing services for numerous hospitals, clinics, doctors offices and nursing homes throughout the Wabash Valley.

MedLab, which is based in Cincinnati, is going through a Chapter 11 bankruptcy restructuring. A federal bankruptcy judge in Delaware approved the sale to LabCorp on Tuesday.

LabCorp pledged $10.5 million to purchase MedLab’s Terre Haute operations. The sale will help MedLab pay off approximately $42 million in debt, according to a Feb. 5 report from the Dow Jones Bankruptcy Review.

According to that report, MedLab filed for Chapter 11 protection on Oct. 25, 2013, after health insurance providers cut reimbursement payments for some of the six million tests MedLab workers conduct annually. The filing also halted a federal lawsuit filed by investors suing the company over a payment dispute, the bankruptcy review reported.

MedLab has seven patient service centers in Terre Haute, two with testing labs. Yet another facility, the company’s business office, is near Union Hospital on Beech Street. Drivers of company delivery vehicles, mostly small, fuel-efficient cars, such as Toyota Matrixes, pick up and deliver blood, urine and biopsy specimens across the Wabash Valley on a daily basis.

Union Hospital is one of many local health care organizations with a contractual relationship with MedLab.

“MedLab has been a great partner and has provided exemplary service,” said Kym Pfrank, senior vice president and COO of Union Hospital. “This situation is unfortunate and is a sign of the times for health care and the impact of health care reform. We do look forward to working with LabCorp for continuing services.”

According to court documents, dozens of Wabash Valley health care providers have contracts with MedLab. Those contracts were part of the sale to LabCorp, according to the documents. Lab equipment, property leases and motor vehicles also were included in the sale.

It was not immediately known how many people worked for MedLab in Terre Haute. The company employs more than 1,200 people at locations in seven states plus the District of Columbia.

Clinical diagnostic lab test results influence 70 percent of clinical medical decisions, said Tom Sparkman, Vice President of Government Relations for the American Clinical Laboratory Association in Washington, D.C., a trade association that represents about 40 clinical labs in the U.S.

Clinical diagnostic laboratories in the U.S. are facing financial pressure because of cuts of more than 11 percent in Medicare reimbursement since 2010, ACLA’s Sparkman said in a telephone interview Friday. Further, they are facing the possibility of more cuts as the Centers for Medicare and Medicaid Services begins a major review of the laboratory reimbursement schedule, he said.

“Labs play a critical and growing role in a patient’s health care, but the reimbursement environment has created a great deal of uncertainty,” Sparkman said.

LabCorp, a Burlington, NC-based company, is listed on the New York Stock Exchange under the symbol LH. It is also listed among the S&P 500 companies and had annual revenue of $5.7 billion in 2012.

Attempts to contact MedLab last week by telephone, in person and by email were unsuccessful. On Friday, a call to the company’s office in Terre Haute was transferred to an official with LabCorp. Telephone and email messages to LabCorp were unanswered as of Friday evening.

BMC Group, a financial services company assisting MedLab with its bankruptcy proceedings, did not return calls or email messages left by the Tribune-Star seeking comment last week.

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@trib star.com

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