LabCorp-Westcliff

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The last post is very interesting. One question in the post, says "What the Heck Happened",

If Biolabs started its business life with financial handicaps, then what is the strategy to "fix" the financials, and generate appropriate profits?

It looked like they were trying to grow their way out of the financial mess, but did so with very low priced business (low priced capitated contracts). Those contracts required significant direct expense to support that low priced business (PSCs, Couriers, Stat services, Send Out tests). The expenses came in way before the new business could generate a profit before the next capitated deal came in. The capitated deals were geographically far away from the main lab, and these fragile deals didn't have strong enough sales attention to manage the capitated business or develop enough non-HMO business.

When you bring on a lot of low priced business (1500 - 2000 /day) at an average price of $16 - $20 / requisition, then you don't have enough operating margin (after all direct expenses have been paid), to pay overhead obligations (corporate overhead, Parthenon debt, facility costs, expansion, etc).

The growth in managed care contracts isn't necessarily bad, but it was more likely the wrong contracts and a lack of strong sales execution of the non-HMO business opportunities.

I'm just sayin.
 






Off the FTC website today:

For Your Information: 04/22/2011
FTC Dismisses Complaint in LabCorp

By a vote of 5-0, the Federal Trade Commission has issued an order dismissing its complaint in Laboratory Corporation of America’s acquisition of Westcliff Medical Laboratories, Inc., and closing the Commission’s investigation of the matter. A statement by Commissioners Jon Leibowitz, William Kovacic, and Edith Ramirez concluded, “While we continue to have reason to believe that LabCorp’s acquisition of Westcliff will result in anticompetitive effects, we are convinced that further adjudication of this case will not serve the public interest.”

A separate concurring statement by Commissioner Julie Brill stated, “I concur in the Commission’s decision to dismiss administrative proceedings against LabCorp. In my view, the Commission should have continued with its appeal of the district court’s decision denying a preliminary injunction in related federal courtlitigation. With the appeal now withdrawn, however, I reluctantly agree that given the particular facts and circumstances of this matter, the costs of continuing with administrative litigation outweigh the potential benefits of doing so.”

Docket Number 9345 is available from the FTC’s website and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.
 






With the FTC complaint now removed, it sounds like it is full steam ahead for the integration of LabWest into LabCorp.

I heard that a few of LabWest's sales reps had quit. LabWest didn't have the confidence of the marketplace. Drs didn't want to switch from their current lab to a lab in transition. Reps couldn't sell the LabWest service, so couldn't make new commissions. With their incomes down, and the prospect of being consolidated into the LabCorp organization, with a possible change in territory, a change in their commission plan, some senior reps have moved on.

It looks like LabCorp will do a consolidation of LabWest without key LabWest sales reps.
 






Anonymous said:
With the FTC complaint now removed, it sounds like it is full steam ahead for the integration of LabWest into LabCorp.

I heard that a few of LabWest's sales reps had quit. LabWest didn't have the confidence of the marketplace. Drs didn't want to switch from their current lab to a lab in transition. Reps couldn't sell the LabWest service, so couldn't make new commissions. With their incomes down, and the prospect of being consolidated into the LabCorp organization, with a possible change in territory, a change in their commission plan, some senior reps have moved on.

It looks like LabCorp will do a consolidation of LabWest without key LabWest sales reps.
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"...couldn't make new commissions. With their incomes down..." ??? Well they certainly got a taste of what life is like at LabCorp and decided they were worth more. Either they hung around and took a year's vacation on the LabCorp guarantee or they take their dignity and head for the door. Sounds like they figured out what life would be like ahead of time, took their talent and hit the trail. Well played and these reps should be congratulated for having the foresight to figure it out and get out before they were made miserable.

Anyone who's worth their weight in oatmeal knows that you'll never make a buck at LabCorp.
 






Anonymous said:
"...couldn't make new commissions. With their incomes down..." ??? Well they certainly got a taste of what life is like at LabCorp and decided they were worth more. Either they hung around and took a year's vacation on the LabCorp guarantee or they take their dignity and head for the door. Sounds like they figured out what life would be like ahead of time, took their talent and hit the trail. Well played and these reps should be congratulated for having the foresight to figure it out and get out before they were made miserable.

Anyone who's worth their weight in oatmeal knows that you'll never make a buck at LabCorp.
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Were they expecting large commission checks out of the bankruptcy court?
 












Anonymous said:
"...couldn't make new commissions. With their incomes down..." ??? Well they certainly got a taste of what life is like at LabCorp and decided they were worth more. Either they hung around and took a year's vacation on the LabCorp guarantee or they take their dignity and head for the door. Sounds like they figured out what life would be like ahead of time, took their talent and hit the trail. Well played and these reps should be congratulated for having the foresight to figure it out and get out before they were made miserable.

Anyone who's worth their weight in oatmeal knows that you'll never make a buck at LabCorp.
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In NEW JErsey we call Labcorp:

"THE LAB THAT DOES NOT PAY"
 






Almost all departments got 2 month layoff notices saying their jobs will end by mid June. They already moved most of the Westcliff San Diego accounts to their lab in San Diego. They plan to move the rest of the old Westcliff accounts by mid June to San Diego and will close the Santa Ana lab in 4 months with almost 100% of everyone laid off. They will only keep a few around to run a few tests onsite. Then they plan to move and consolidate their other labs into the Santa Ana building such as Genzyme or US Labs.

LabCorp utterly destroyed and decimated Westcliff. Hopefully, all the Westcliff clients realize the shit that LabCorp has done and move on to a better lab, one that actually cares about their employees.
 






So LabCorp will now get the Managed Care clients back that switched to WestCliff when LabCorp tried to raise the Cap Rates and WestCliff gave them rates even lower rates than LabCorp.

LabWest has lost a lot of business in the last 12 months but none of the losses were their IPAs. Seems like LabCorp will be converting accounts to San Diego that are primarily IPA only accounts.

Post conversion, the LabCorp sales reps will be agressively managed to try to get the discretionary business in order for the acquired IPAs and this acquisition to make any kind of sense.
 






Anonymous said:
So LabCorp will now get the Managed Care clients back that switched to WestCliff when LabCorp tried to raise the Cap Rates and WestCliff gave them rates even lower rates than LabCorp.

LabWest has lost a lot of business in the last 12 months but none of the losses were their IPAs. Seems like LabCorp will be converting accounts to San Diego that are primarily IPA only accounts.

Post conversion, the LabCorp sales reps will be agressively managed to try to get the discretionary business in order for the acquired IPAs and this acquisition to make any kind of sense.
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Once LabCorp raises their capped rates, these clients will just jump ship to a cheaper lab. I doubt these clients will stay with LabCorp since they left once, so the $70+ million LabCorp spent on Westcliff will be a waste of money. They only thing it did was eliminate a competitor and destroy 1,000 jobs, but there will always be another lab coming in. I look to Sonic Healthcare with its 2 new lab purchases in CA to become the third largest presence in CA soon, taking Westcliff's place.
 






Anonymous said:
Once LabCorp raises their capped rates, these clients will just jump ship to a cheaper lab. I doubt these clients will stay with LabCorp since they left once, so the $70+ million LabCorp spent on Westcliff will be a waste of money. They only thing it did was eliminate a competitor and destroy 1,000 jobs, but there will always be another lab coming in. I look to Sonic Healthcare with its 2 new lab purchases in CA to become the third largest presence in CA soon, taking Westcliff's place.
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Woohoo!!!!! West Pacific is now at 1,000 daily Reqs. Less than a year, not bad for a bunch of LabWest trash...can we guess who will have a job and be part of a growing success by the end of summer!?!!!!!!! "Career suicide" lol, you're a funny lady.
 






Anonymous said:
Woohoo!!!!! West Pacific is now at 1,000 daily Reqs. Less than a year, not bad for a bunch of LabWest trash...can we guess who will have a job and be part of a growing success by the end of summer!?!!!!!!! "Career suicide" lol, you're a funny lady.
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In retrospect, you were right. I do hope West Pacific grows and steals all the old Westcliff clients. The job suicide was staying at LabWest, a sinking ship. LabCorp is trash and they just wasted $70 million on nothing. The second round of layoffs was a few days ago and almost everyone was given the 2 month notice. They've almost moved most of their reqs to the San Diego site.

They're increasing their reqs there, but they haven't hired enough people to run the specimens so their TAT is suffering and they won't be able to handle it. Hardly, any of the workers are planning to transfer to San Diego from Westcliff. It was a big tactical error to dump Westcliff, and they will lose out in profitability in doing so because clients will soon leave in droves. I hope Quest, Sonic, West Pacific, and other competitive labs use this information to steal old Westcliff clients. TAT WILL suffer when moving reqs to San Diego, increasing the req count there to 36,000 while keeping almost the same amount of workers. They simply will not be able to handle the extra volume and smart physicians will realize that it's a losing proposition to stay with LabCorp.
 






So what is the latest with the Labcorp/Labwest/Genzyme Genetics merger? Is it true that Genzyme is going to move from Monrovia to the Santa Ana site? And are the 2 histology/cytology labs in the west SF valley and Monrovia getting ready to merge?
 






Anonymous said:
So what is the latest with the Labcorp/Labwest/Genzyme Genetics merger? Is it true that Genzyme is going to move from Monrovia to the Santa Ana site? And are the 2 histology/cytology labs in the west SF valley and Monrovia getting ready to merge?
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If the two histology/cytology labs merged, where would they go?
 












Thanks Einstein. Now does anyone know if so, which lab site the labs will merge to. I hear that the former Westcliff lab in Monrovia is new ans state of the arts. Don't know much about the other lab except it used to be named Pathnet and owned by a guy named Alan Kaye. If GG really moves to Santa Ana, that would leave more space for the anatomical labs to merge. Doesn't make since to have 2 labs so close doing the same thing. But not too much does make sense these days.
 






Anonymous said:
Thanks Einstein. Now does anyone know if so, which lab site the labs will merge to. I hear that the former Westcliff lab in Monrovia is new ans state of the arts. Don't know much about the other lab except it used to be named Pathnet and owned by a guy named Alan Kaye. If GG really moves to Santa Ana, that would leave more space for the anatomical labs to merge. Doesn't make since to have 2 labs so close doing the same thing. But not too much does make sense these days.
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I heard that Westcliff is a sinking ship spurting oil in a newer high-priced lab. The employees are worried because there seems to be a lot of people still there but not enough work. Arent most of their specimens except histo and cyto going to San Diego?
THe think the lab in the SF valley is small but has consistent business and clients, and is more centrally located near major fwys, airports, etc. but they just have histo and cyto.

Any sales reps care to comment on which site they are being instructed to concentrate on?
 






Do you mean that they are being untruthful when they said that they intend to grow the Monrovia lab? If they bring the Van Nuys lab to Monrovia, chances are that not too many employees will want to make that long drive from the west valley. That might explain the Monrovia site overstaffing, somewhat. Or they may be actually truthful when they say that they will grow the lab.
 






Anonymous said:
Do you mean that they are being untruthful when they said that they intend to grow the Monrovia lab? If they bring the Van Nuys lab to Monrovia, chances are that not too many employees will want to make that long drive from the west valley. That might explain the Monrovia site overstaffing, somewhat. Or they may be actually truthful when they say that they will grow the lab.
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LabCorp? Untruthful?? Say it aint so Joe.
ARe you being sarcastic or just really clueless?
 






I would say clueless. LabCorp made it seem like they would keep most of LabWest intact. Shortly after they defeated the FTC in court, they announced that almost all specimens would go to San Diego. The reality is by mid August, billing, processing, almost all of technical, QA, and client services from the Santa Ana site will be gone. Some sales reps and managers will remain in the Santa Ana building but nothing more.

The only thing that remains of LabWest are parts of the Monrovia site with maybe histo and cyto from what I gather on this site. Also, some stat labs will stay. It's only a matter of time before they ship out histo and cyto too so to any former Westcliff employees still employed in LabWest, I suggest you leave before you're cut too. It will happen sooner or later.
 






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