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PAML announces expansion

Test lab move pushed by $37 million investment

Spokane-based Pathology Associates Medical Laboratories is making its move from being a regional medical test lab company to a nationwide provider.

Pushing the move is a $37.1 million investment in privately held PAML by Catholic Health Initiatives, a Denver-based health care medical system. The investment, announced last week, will be paid over two years to Providence Health & Services, which acquired PAML in 1986.

Since that takeover by Providence, PAML has become a successful test lab and billing manager for 22 hospitals in five hospital-based laboratory joint ventures in the Northwest, Utah and California. It also provides blood and diagnostic tests for clinics and employers across the West.

The investment means Catholic Health Initiatives gains a 25 percent stake in PAML, said Thomas Tiffany, CEO of PAML.

The deal will provide mutual benefits to both partners, he added.

PAML’s extensive network of services, based on a sophisticated technology system, appealed to CHI as something it hoped to emulate in its own expansion, Tiffany said.

“They didn’t have that organized lab that we have. That’s what they wanted to move forward on,” Tiffany said.

Catholic Health Initiatives is the second largest Catholic health system in the U.S. and the fifth largest overall. It oversees 78 hospitals in 20 states. The system also operates long-term and home health care services.

In terms of timing and opportunity, the investment allows PAML to grow beyond its market when most hospitals are financially challenged, including Providence-owned Sacred Heart Medical Center, Tiffany said.

Without the $37 million, the expansion would not move forward as quickly, he added.

“But they (CHI) were looking to invest and they had capital to invest. And they wanted to expand to non-hospital health care and particularly into labs,” Tiffany said.

As a first step, he said, the deal will allow PAML to form regional test laboratories with hospitals operated by Catholic Health Initiatives in Denver and possibly in the Midwest.