Tuesday, February 27, 2007

L.C. and Q.D. in a Marital Relationship?

Now this is something which I would never have expected to see on any internet site. But from what I read there appears to be some sort of suggested action related to the merging of two giants of the laboratory industry.

I still don’t really believe it and I honestly don’t see how such a thing could transpire in any way that would be good for the employees of either Laboratory Corporation of America or their present chief rival Quest Diagnostics. I doubt that the government would even allow such a merger due to the financial monopoly impact on the industry.

Since Quest Diagnostics walked away from the United Healthcare contract and Lab Corp. signed onto what I see as a bad contract it makes no sense that Quest Diagnostics would then become wed in any way with the company which is obliged to honor that same contract which Quest walked away from.

Perhaps this action, if even true is in some fashion a way for both companies to work around the obstacles created by the strong arm tactics of United Healthcare which have been alleged by some in the healthcare industry.

Through some sort of limited joint venture perhaps each company feels that it can gain some sort of benefit. Quest Diagnostics would stand to lose the burden of any sort of negative financial result of giving up the United Healthcare contract since it would again be in network.

At the same time Lab Corporation would loss the burden of paying to United Healthcare the greater portion of the $200,000,000.00 it is obligated to pay to United Healthcare in order to protect that company from liability caused by leakage to Quest Diagnostics and other labs.

But in such a marriage would Quest Diagnostics then be obligated to live by the terms of a contract which it had just months before walked away from? That would make little to no sense at all.

It would be an admission of irresponsibility on the part of Quest Diagnostics to crawl back to the contract in such a manner. Perhaps such an action is a way by which the executives could enable themselves to do business with the devil and at the same time attempt to save face.

This is of course all speculation since I don’t have any facts at all and I am basing all of this conjecture on a single comment on what might or might not be reliable information. And since I am writing all of this on what is very possibly erroneous information and speculation then perhaps I should take it one step further.

If such a merger were to occur either now or at some future date and it were in fact a full scale merger then it would be one in which the executives of the two companies would do very well for themselves but as for the employees that would be a very different issue.

Let’s face it if two giants got together it would mean that many job functions could be combined and it would seem to me that such a thing would lead immediately to numerous layoffs. Many middle level managers would be looking for a new job. Many low level employees would be following their managers out the door.

But again let’s hold down the panic level until someone clarifies all of these issues. I personally find it difficult to believe that something of this magnitude is even being discussed between these two companies. Time will tell.

I am hopeful that Bruce Friedman at Lab Soft News is looking into this issue as he seems very capable at getting down to the facts which are hidden behind the talk. So, until then I shall continue to watch the developing situation if in fact there even is a developing situation and I don’t know with any certainty that there is. I’m so confused. Mommy!

If anyone has any facts please Gmail me at the link below.

It was this post which sent me off in the wrong direction
. I find this type of post to be very misleading.

As a follow-up to this issue, after extensive research in the Snake Pit I see that a stock blogging
blogger has made some information available which is worth a read. It appears that this issue is related to something which Jim Cramer was doing on his program Mad Money. So I guess that this is the original source of the story. False Alarm.

But this area of the stock market is an area where I don’t even intend to comment. Yet it is an area of interest to many, so if you like the subject, feel free to investigate the issue of anti-competitive mergers further.
Snake Oil Sam
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