
Labcorp to Acquire Baystate Health’s Outreach Laboratory Business; PAMA Driving Continued Lab Consolidation
Labcorp, a global leader in laboratory services, has announced its acquisition of Baystate Health, Inc.’s outreach laboratory business and select operating assets, including laboratory service centers throughout Massachusetts. This strategic move aims to enhance the efficiency of routine and specialty lab testing for patients in Massachusetts.
Baystate Health is a nonprofit integrated healthcare system that serves more than 800,000 individuals in western New England. Baystate Health consists of five hospitals, over 80 medical practices, and currently operates 25 reference laboratories. Labcorp and Baystate Health have an existing reference laboratory relationship, and this acquisition will build upon that foundation. As part of the collaboration, Labcorp will establish a regional laboratory within Baystate Health’s Holyoke facility. Baystate Health will continue to provide professional support services for anatomic pathology and select specialty testing at its existing clinical laboratory. Sam Skura, President of Baystate Medical Center and Senior Vice President of Hospital Operations at Baystate Health, stated his confidence that Labcorp will continue to deliver high-quality outcomes and affordable access to healthcare services.
Both Labcorp and Quest, the two major reference laboratories in the United States, have seen an increase in acquisitions of hospital outreach testing since Congress passed the Protecting Access to Medicare Act (PAMA) in 2014. PAMA uses nationwide data from commercial clinical laboratories to determine rates under the Clinical Laboratory Fee Schedule. However, given large commercial laboratories typically charge significantly less for laboratory services when compared to hospital laboratories, the reimbursement rates for hospital labs have declined significantly since the laws implementation requiring many hospital labs to partner with the large national reference labs to prevent losses.
PAMA cuts have been suspended by Congress for multiple years now. On December 29, 2022, President Biden signed the Continuing Appropriations Act of 2023, which brings relief to the laboratory industry by suspending the implementation of price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) for one year. Additionally, the legislation also grants labs a one-year suspension from PAMA-related reporting requirements in 2023.