Tuesday, February 06, 2007

Reasons behind Quest Diagnostics HemoCue Acquisition

Once again Bruce Friedman at Lab Soft News has produced an intelligent and insightful article, this time on the topic of the Quest Diagnostics acquisition of HemoCue. Friedman offers much well researched information which is one of the reasons that I have so much respect for his writing. He also gives a personal viewpoint on many subjects he writes about as he seems to have a great many industry insiders whom he is in communication with.

The fact that he sites my own thoughts on the issue also tends to cause me to respect what he writes about. So in order for me to pay tribute to him and at the same time make this blog more useful to people who look at it anytime the issue involves Quest Diagnostics I offer this link to Mr. Friedman’s article about the
Quest Diagnostics HemoCue Purchase for your perusal.

It is at this time my belief that the main reason that the purchase was made is that it is simply the objective of Quest Diagnostics to diversify the business in ways that add value to the overall financial health of the company. By doing this with related business ventures it makes perfectly good sense that it would position itself in a market which adds prestige to the name brand.

As far as the Dark Daily comment which is linked to at Friedman’s article suggesting that it is in any way designed as a distraction from the United Healthcare issue, I find that thought to be a little over the top.

Nothing can take that story out of the news and I really don’t think that it is all that significant an issue anyway. Sure, it has caused the company which is just now coming off of a great financial year to rethink some of its business strategy. But it is not so serious that the company is facing any sort of real crises.

The entire staff is doing all that is required to make adjustments so that the overall health of the business remains strong. Everyone in the company understands the situation and most view it as a minor inconvenience. There is no widespread panic and all are sharing the burden in order to soften the blow. In the end the company will do what it must in order to protect the investor.

I do believe that as
I stated in another article that even though C.E.O. Surya Mohapatra might have reported that the company expects to lose much of the United Healthcare business to Laboratory Corporation of America, that he was being careful not to mislead investors.

In the inner sanctum among peers I believe that he is being far more positive that much of that business will remain with Quest Diagnostics. Consider that according to sources speaking on the subject, that when the stock last split two for one the company was not processing as many requisitions as it s doing now on a daily basis even without the United Healthcare business.

Friedman in his Lab Soft News article himself suggests that one of the problems with Quest Diagnostics is the sheer volume of specimens on a daily basis. I here quote his own words in an effort to place a little spin on his words.

1. Moreover, Quest is now hitting-the-wall in terms of its automation support for the myriad specimens processed per day. The major IVDs can no longer provide adequate engineering solutions for a test volume of this magnitude. The solution for Quest may be to move testing (i.e., point-of-care or point-of collection testing) closer to the patient -- that is to say, to the patient service centers or even to those physician offices with enough test volume to support min-labs (also know as physician office labs or POLs) with Quest management and QC oversight.

I could say more but I think that I have already said enough. In fact I know a few people who might suggest as they pound on their desks that I have already said far too much.
Snake Oil Sam
Snake Oil Sam Internet Media Publishing © 2007

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