Another one bites the dust

[Pathbusiness]

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Gone. Distress sale of largest anatomic pathology lab in the country.

Avista to acquire Miraca Life Sciences - PE Hub

 

[AZpath]

Why do you think it is a distress sale? They were a nasty aggressive lab in our area. Picked up a lot of derm and GI outpatient business.

 

[AZpath]

Right again.
They sold it for 1/4 of what they paid for it.

 

[Pathbusiness]

Right again.
They sold it for 1/4 of what they paid for it.

Actually that is just the price they paid for Caris. They acquired few other labs later, and if you count operating costs for many years, they got sold for 10 cents a dollar. A company with 90 pathologists, and $280M in yearly revenue should sell for YRX2.6 or more unless there is something major league wrong with management.

 

[pathslides]

What's going to happe to those 90 pathologists ?

 

[Pathbusiness]

PE firms trim the things, bring new management, and sell the company with in two years.

 

[WEBB PINKERTON]

76 percent loss for 6 years. Sometimes I wonder if the foreign buyers know about client billing and the race to the bottom that is the lab industry in this country. Think about all the foreign buyers of labs that have lost money in the last few decades. It is a TERRIBLE investment.

Sounds like more pathologists are going to be getting released into this great job market.

 

[icpshootyz]

Maybe I can steal some of the derm business from them in the area. Unfortunately they appear to offer perks that we can't match.

 

[AZpath]

What perks?

 

[Pathbusiness]

LIS, setup a lab for you, donation!

 

[Pathbusiness]

76 percent loss for 6 years. Sometimes I wonder if the foreign buyers know about client billing and the race to the bottom that is the lab industry in this country. Think about all the foreign buyers of labs that have lost money in the last few decades. It is a TERRIBLE investment.

Sounds like more pathologists are going to be getting released into this great job market.

Hope more business gets released into the market than the pathologists. Their revenue per pathologist is 3M, which is more than double of any high volume private practice.

 

[Pathbusiness]

I still don't understand why this TC/PC practice has not been banned yet. This is real Sh** not a small scale operation.

 

[AZpath]

LIS, setup a lab for you, donation!

I was wondering if the perks were something new. There are certainly many illegal or questionable practices out there.
These guys are king in this area.

Sure, they can set up a lab for you, PC and or TC. True donation of LIS is not allowed.
They can make a LIS available as part of the basic TC if they are billing it. ( Just like a hospital might provide this to one of us)

I know they like to keep all the IHC and stains to themselves if when they set up TC.

 

[AZpath]

I still don't understand why this TC/PC practice has not been banned yet. This is real Sh** not a small scale operation.

You are correct it is huge.

I doubt it will go away time soon. Too many specialist getting a share of the profits.

CMS basically codified clinician ownership model for pathology nation wide with their rules. They understand what they did.

All you have to do is buy a microscope and have office space to start out with PC.

 

[Pathbusiness]

In my limited experience in business, this does not look like a normal sale. The Japanese holding company is a very solid company listed in Tokyo stock exchange. Their stock price is pretty good too. 135M is nothing in their scheme of things. Looks like they wanted to unload a liability real quick.

 

[icpshootyz]

Hope more business gets released into the market than the pathologists. Their revenue per pathologist is 3M, which is more than double of any high volume private practice.

Supposedly they only pay the actual pathologists around $10-11/bottle. I know everyone there does high volume so they make good money, but I take home way more than $10/bottle, and I read far less cases in my private group.

 

[AZpath]

If you remember CLIA was a response to PAP mills. Now we have worse path mills.

What happens if the error rates are too high and it gets press?

I think the industry could get in trouble if all cases are done in a blink of the eye.

 

[AZpath]

I went to the cafepharma labs sales forum and pulled this.

You just got sold to Avista Capital Partners. Caris and DH sold this pathology lab to Miraca in November 2011 for $725 million. Now Miraca is unloading this corn-filled turd to Avista for $175.6 million. That's a 12.6% average annual loss in value with a total loss of - 76% over 6 years. What a terrible investment by Miraca. The japanese buyers clearly did not know about the IOAS loophole or client billing arrangements for a commoditized product. The only thing that matters in the US anatomic pathology market is monetary kickbacks to the ordering physician. Race to the bottom.

 

[Thrombus]

I went to the cafepharma labs sales forum and pulled this.

You just got sold to Avista Capital Partners. Caris and DH sold this pathology lab to Miraca in November 2011 for $725 million. Now Miraca is unloading this corn-filled turd to Avista for $175.6 million. That's a 12.6% average annual loss in value with a total loss of - 76% over 6 years. What a terrible investment by Miraca. The japanese buyers clearly did not know about the IOAS loophole or client billing arrangements for a commoditized product. The only thing that matters in the US anatomic pathology market is monetary kickbacks to the ordering physician. Race to the bottom.

Where are all the pathology program directors who are responsible for this race to the bottom in the face of this evidence? Where is the CAP? Idiots are conducting a "job fair". What a despicable bunch of leaders this field has. Leading us right off a cliff!!

 

[pathslides]

Supposedly they only pay the actual pathologists around $10-11/bottle. I know everyone there does high volume so they make good money, but I take home way more than $10/bottle, and I read far less cases in my private group.

What number of cases is considered high volume and what amount of money is considered good money ?

 

[AZpath]

Where are all the pathology program directors who are responsible for this race to the bottom in the face of this evidence? Where is the CAP? Idiots are conducting a "job fair". What a despicable bunch of leaders this field has. Leading us right off a cliff!!

Yepper, that's what sales reps think or should I say know about pathology.

Frankly, pathologists have done 90% of this to themselves. Why should they not take advantage.
If there are a lot of people to work for 5 bucks a bottle then that's were the market will go.

When comes to CAP pathologist are still the members and control it. You elect them.

Program director etc need direction from leaders in pp.

I hear many people complain about CAP. Mostly, few participate in any collective activities. So what do you expect?

Many don't even belong to their state society or evolve themselves with CAP. You think a 300$ membership is going help?
So why blame CAP?

I blame pathologist at large for not be in meeting with pick forks and torches.

 

[tiredguy]

Yepper, that's what sales reps think or should I say know about pathology.

Frankly, pathologists have done 90% of this to themselves. Why should they not take advantage.
If there are a lot of people to work for 5 bucks a bottle then that's were the market will go.

When comes to CAP pathologist are still the members and control it. You elect them.

Program director etc need direction from leaders in pp.

I hear many people complain about CAP. Mostly, few participate in any collective activities. So what do you expect?

Many don't even belong to their state society or evolve themselves with CAP. You think a 300$ membership is going help?
So why blame CAP?

I blame pathologist at large for not be in meeting with pick forks and torches.

I agree. Most don't participate in state societies or engage with CAP. It's easy to complain and the solution is not straightforward. Perhaps CAP is not addressing engagement aggressively enough and should be attempting to engage more academic pathologists and trainees. Once people are hired into a particular business model, their political interests will conflict with those of other pathologists. As has been pointed out in this and other threads, there are pathologists who benefit from arrangements that likely hurt other pathologists. There are also pathologists out there doing quite well for themselves who are probably too busy working/spending money to frequent forums like this or involve themselves in CAP.

 

[ViewMaster]

In terms of buying labs, I have a question for all of you practicing pathologists out there about how this works when it comes to partnership track jobs. If a private physician-owned group owns it's own wet lab (grossing, histo, IHC, billing dept etc.) how does making partner work? if you are offered partnership, you are essentially buying part of the lab in essence, right? What sort of money are we talking about in a scenario like that, that would be expected to be ponied up? Or maybe I am understanding this wrong? And does the above discussion mean that buying into a partnership is a fool's errand, or what?

 

[Pathbusiness]

In terms of buying labs, I have a question for all of you practicing pathologists out there about how this works when it comes to partnership track jobs. If a private physician-owned group owns it's own wet lab (grossing, histo, IHC, billing dept etc.) how does making partner work? if you are offered partnership, you are essentially buying part of the lab in essence, right? What sort of money are we talking about in a scenario like that, that would be expected to be ponied up? Or maybe I am understanding this wrong? And does the above discussion mean that buying into a partnership is a fool's errand, or what?

Those labs will have two arms. One will be the lab, and the other pathology practice. Owning a piece of lab(brick and mortar..aka..TC) will depend on how big the operation is, how revenues are divided among two entities, how many shareholders etc. Some labs will make you partner in the pathology practice(which will be worthless when the lab is sold), but keep the ownership of the lab in founders hands.

 

[AZpath]

You can incorporate your TC and PC separately or together as one lab corp.
Buy ins and partnership are extremely varied.
Deals get more complex as the number of physical lab assets grow.

The risk grows if you financially on the hook if the lab gets in trouble and fails.
That can happen if need a loan to buy in off or have to invest hard dollars out of pocket upfront.

This less of problem if you only do PC for a hospital etc.
Most the time the buy is really just a raise some of it going the corporation for awhile. After the buy in period is done your raise is even higher.
Then if you quite or retire that sum is paid back to you since you sell your stock back.

 

[Dave CX]

The CAP has huge cash flow from credentialing and inspecting labs. This cash is independent of the wishes of its individual pathologist membership. There is no comparable model across all the other medical and surgical specialties. So their F*** off to community pathologists is sustainable.

 

[Pathbusiness]

I have never seen CAP inspectors flagging any questionable practices during their inspection. All they do is MSDS and other stupid $hit checklists and then give a clean chit.

 

[AZpath]

The CAP has huge cash flow from credentialing and inspecting labs. This cash is independent of the wishes of its individual pathologist membership. There is no comparable model across all the other medical and surgical specialties. So their F*** off to community pathologists is sustainable.

CAP labs support a multi million dollar operation. Pathologists do the inspections for free too.
I am not so sure that we don't benefit.
If not , we should sell it.


I got a feeling we would be worse off.
Your 300 dollar membership won't buy much in terms of organization.
That's perhaps 4 million dollars to run a organization?

 

[ViewMaster]

Those labs will have two arms. One will be the lab, and the other pathology practice. Owning a piece of lab(brick and mortar..aka..TC) will depend on how big the operation is, how revenues are divided among two entities, how many shareholders etc. Some labs will make you partner in the pathology practice(which will be worthless when the lab is sold), but keep the ownership of the lab in founders hands.

Thanks, should this all this be made clear at the time of joining a group? It seems like it should be if you are trying to determine where the best fit is for a long career.

 

[Pathbusiness]

Thanks, should this all this be made clear at the time of joining a group? It seems like it should be if you are trying to determine where the best fit is for a long career.

These things have to be earned in due course. As a new recruit all you need to make sure is they treat you well, compensate well, and a have a proven record in offering partnership.

 

[ViewMaster]

These things have to be earned in due course. As a new recruit all you need to make sure is they treat you well, compensate well, and a have a proven record in offering partnership.

Thanks. While I guess that seems fair, it does not seem like this would help you evaluate say two places that both seem like good fits, but one is structured as an employed physician model that offers incentives over a certain volume without cut-offs from day one, vs a group that offers partnership track with potential future ownership in a lab with yet undetermined buy-in specifics etc. or knowledge of future earning potential?

 

[Pathbusiness]

That is when you go with your gut feeling. Not everyone is partnership material. A lot of people just want to be employees.

 

[icpshootyz]

What number of cases is considered high volume and what amount of money is considered good money ?

From what I gather they all do a minimum of around 150 bottles/day, while heavy hitters do well above 200/day. Person I know there does 175/day. The actual pay varies on whether they are fully employed there or working as an independent contractor, plus experience/years of service.

 

[pathslides]

From what I gather they all do a minimum of around 150 bottles/day, while heavy hitters do well above 200/day. Person I know there does 175/day. The actual pay varies on whether they are fully employed there or working as an independent contractor, plus experience/years of service.

Is a bottle equal to one specimen? I figure they are all biopsies. So about 150-200 slides (not counting levels)? That's not as bad as I thought. Especially since most are prob quick biopsies and there is incentives if you do more. Please let me know if Ivan interpreting this incorrectly.

 

[icpshootyz]

Is a bottle equal to one specimen? I figure they are all biopsies. So about 150-200 slides (not counting levels)? That's not as bad as I thought. Especially since most are prob quick biopsies and there is incentives if you do more. Please let me know if Ivan interpreting this incorrectly.

Yes, one bottle = one specimen. It works out to good money, and they're not killing themselves - most are in around 8 and out by 5. I think it would hurt me knowing how much revenue I was generating and how little I was getting in comparison.

 

[pathslides]

Yes, one bottle = one specimen. It works out to good money, and they're not killing themselves - most are in around 8 and out by 5. I think it would hurt me knowing how much revenue I was generating and how little I was getting in comparison.

I agree. The psychological component knowing you are making some one way more money than you are getting is difficult (albeit this occurs even in hospital employee models, but probably not as bad compared to corporate labs)

 

[WEBB PINKERTON]

I agree. The psychological component knowing you are making some one way more money than you are getting is difficult (albeit this occurs even in hospital employee models, but probably not as bad compared to corporate labs)

Radiology is learning the same lesson in my neck of the woods. The radiologists are employed by national companies that are paying them just a fraction for their work. Rads is quickly joining us.

 

[Torsed]

I've seen some atrocious reports (flat out wrong diagnosis) from Mireca Life Sciences.

Beware the pathology mills O ye patient. Don't say you were not warned.

 

[yaah]

Agree - if I was a patient I would be hesitant if the physician I was seeing had ownership interest (or significant kickback-type arrangement) in the lab. Leads to excessive testing, sometimes (but not always) at low quality.