Southeastern Pathology Associates, also known as SEPA Labs, has sold its clinical laboratory business to LabCorp for an undisclosed amount. Its employees (including pathologists) were informed on November 21, 2013.
SEPA Labs was started as an anatomic pathology outpatient laboratory 20 years ago in Brunswick, Georgia by Drs. Patrick Godbey and Mark Hanly, who met while in training at the Medical College of Georgia.
Over time, their modest practice grew and they started to take on hospital contracts in central and southeast Georgia and northern Florida and started a clinical laboratory that now has over 250 employees.
SEPA employs 22 general and subspecialty trained pathologists and services more than 15 hospitals. Subspecialties include dermatopathology, hematopathology, cytopathology, oncologic pathology, uropathology and gastrointestinal pathology.
According to a SEPA pathologist, LabCorp will be taking on the SEPA laboratory employees as well as the inventory, machine contracts, buildings, equipment, etc.
Apparently there were multiple reasons why the laboratory was sold, including the recent cuts to clinical laboratory reimbursement as well as the proposed cuts to the Physician Fee Schedule/Clinical Laboratory Fee Schedule (PFS/CLFS) that SEPA believes will happen in 2014 or shortly thereafter.
In addition, the fact SEPA owned its own clinical laboratory was apparently a source of friction between SEPA and the hospitals with which it has contracts, simply because it was a competitor for hospital outreach programs.
The sale now leaves SEPA pathologists to focus solely on hospital contracts and outpatient anatomic pathology work, according to my SEPA pathologist source.
The deal is scheduled to close in the next few weeks.
SEPA and LabCorp sent a joint letter to SEPA clients informing them of the deal.
I think this transaction is a stark example of just how devastating the recent cuts already made to pathology and laboratory medicine have been, and how frighteningly deep the proposed cuts to the PFS/CLFS are.
If SEPA, with its generously-sized and historically profitable lab, has decided it can no longer continue on in this climate, then that is really saying something.
Note: The final rule on the cuts to the Physician Fee Schedule/Clinical Laboratory Fee Schedule is still not out. Its release, according to CMS, is supposed to be “on or before” November 27, 2013.
So it looks like today is the day. I’ll let you know.