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Spokane, Washington  Est. May 19, 1883

LabCorp buying Spokane-based PAML

The PAML building at 629 N. Iron Court in Spokane, Wash. (Dan Pelle / The Spokesman-Review)

The widely anticipated sale of Spokane-based PAML to industry giant LabCorp was made official Thursday when the companies announced the deal in a news release. Terms of the sale were not disclosed.

LabCorp is buying the 60-year-old medical-testing laboratory from Providence Health & Services and Catholic Health Initiatives, two of the nation’s largest health care systems. Pathology Associates Medical Laboratories employs over 1,600 people, tests samples collected in eight states and generates about $300 million a year in revenue.

Sale transactions are expected to begin this year, but aren’t expected to be final until 2018. The purchase requires approval from the Federal Trade Commission.

PAML employees were called into a meeting Thursday afternoon to be informed of the sale. The meeting was led by Dr. Francisco Velazquez, PAML’s president and CEO; Lisa Vance, senior vice president of clinical program services for Providence; and Traci Butler, senior vice president of LabCorp.

The three took questions from employees, but most questions were met with, “We can’t answer that until the sale has been approved,” according to a PAML employee in the room.

“When asked how long the regulatory review process takes, once again we were told that nobody knows,” the employee told The Spokesman-Review. “When asked if PAML will continue to have a Spokane presence, Traci Butler said that they will decide that after the sale goes through.”

The employee, who asked not to be named, said the mood of the room was “anger, resentment and sadness.”

“Sadness of the fact that after 60 years, there will be no more PAML,” the employee added. “Several people have worked here over many years … and had planned on retiring from here. We are proud to work for this homegrown business and will be forced to start the mourning process.”

Officials with the companies involved in the deal said they weren’t commenting further at this time.

Velazquez, PAML’s president and CEO, released a statement: “We will work closely with Providence, CHI and LabCorp so that employees experience a smooth, thoughtful transition of ownership, and our clients and communities continue to receive the high-quality service we are known for.”

PAML employs about 500 people in the Spokane area. Its corporate headquarters are in the University District and its lab is near Providence Sacred Heart Hospital. It also operates patient service centers around the Spokane area. LabCorp has not indicated if it will keep the Spokane lab operating or shift those services to one of its other facilities in the West.

LabCorp also is buying PAML’s interest in PACLAB Network Laboratories in Western Washington and Tri-Cities Laboratory, as well as three other joint ventures: Colorado Laboratory Services, Kentucky Laboratory Services and MountainStar Clinical Laboratories.

Kootenai Health, the co-owner of the PAML-affiliated joint venture Alpha Medical Laboratory in Coeur d’Alene, will buy PAML’s interest in Alpha, then sell the assets to LabCorp upon final board approval, according to Thursday’s news release.

Hospital partners in two other joint ventures, based in Salt Lake City, Utah, and Kennewick continue to evaluate whether to sell their interests to LabCorp, the release said.

PAML and its joint ventures provide laboratory services in Washington, Idaho, Montana, Oregon, Utah, California, Colorado and Kentucky. LabCorp currently provides services to several Swedish Medical Center facilities in Seattle, a partner within the Providence system. The sale expands LabCorp’s geographic scope in the Pacific Northwest, Midwest and South.

“We are proud of the high-quality service PAML and its joint ventures have provided,” said Mike Butler, president of operations and CEO of Providence Health & Services. “We routinely evaluate how to best deliver health care services to the communities we serve, and LabCorp will continue to meet the rapidly changing needs of patients and providers.”

Based in Burlington, North Carolina, Laboratory Corp. of America Holdings has been on a buying spree. The company paid $371 million for genetic testing lab Sequenom last fall, and in January it reached a deal to buy several clinical laboratories from Mount Sinai, a major health system in New York City. In 2015, LabCorp acquired New Jersey-based drug development firm Covance for about $5.7 billion.

Earlier this month, Reuters reported that LabCorp is in talks to acquire contract researcher Pharmaceutical Product Development LLC for more than $8 billion. That would be LabCorp’s largest acquisition ever.

PAML in 1986 was on the verge of being sold by its then-owner, Nashville-based International Clinical Laboratories Inc. Then Sisters of Providence, which owned Sacred Heart Medical Center, intervened to buy PAML through a for-profit subsidiary called Bourget Health Services Inc. Sacred Heart is now part of Providence Health & Services, which offers health care services in Oregon, Washington, Alaska, Montana and California.

Denver-based Catholic Health Initiatives paid $37 million for a 25 percent stake in PAML in 2009.

Considered one of the top reference laboratories in the country, PAML has been an industry leader in joint venture partnerships with community-based hospitals. It also provides blood and diagnostic tests for clinics and employers across the West.