Sale of PAML likely to bring loss of high-paying jobs in Spokane, former official says

Spokane is likely to lose high-paying jobs when PAML, a locally headquartered medical laboratory, is purchased by a North Carolina company, a former PAML official says.

Consolidations are sweeping through the medical lab industry. In most of the purchases and mergers, hundreds of local jobs are lost as new owners centralize operations at existing laboratories to lower costs, said Noel Maring, former senior vice president of marketing for PAML.

“It’s very predictable,” Maring said. “It’s what you have to do to make the acquisition pay for itself.”

Maring said he has no direct knowledge of the pending purchase of PAML by Laboratory Corporation Holdings of America – also known as LabCorp – which is expected to be finalized next year. He said he left PAML amicably in early 2012 after 17 years there and now works in Texas for a medical laboratory company.

But the trajectory after the sale seems clear, Maring said. LabCorp has a large laboratory in downtown Seattle near Swedish Medical Center where it can absorb the diagnostic testing currently done in Spokane, he said. PAML also does some specialty diagnostic work in Spokane, which can be sent to LabCorp facilities in other parts of the country, he said.

PAML, also known as Pathology Associated Medical Laboratories, has had a strong presence and a market share in Spokane for 60 years. PAML employs more than 1,600 people and tests lab samples collected in eight states.

About 850 people work for PAML in Spokane, said Dr. Francisco Velazquez, the company’s CEO and president. In an email, he said he couldn’t speculate on what would happen to local employment after the sale.

LabCorp also has declined to comment. No information on future workforce size was shared last week in PAML employee meetings on the sale, the terms of which have not been disclosed.

“I think they’re being a little disingenuous,” Maring said. “Before they agree on a price, they have a specific, high-level plan in place.”

Spokane likely will retain capabilities for time-sensitive lab testing after the sale, Maring said. People who work in local clinics and hospitals collecting the samples also will remain, along with the couriers who transport and package samples, he said.

But the higher-paying management jobs are likely to disappear from Spokane, and so is PAML’s sophisticated IT department, its billing service and its corps of lab technologists, Maring said.

“This is what is unfortunate for a place like Spokane,” he said. “Your higher-paying jobs are likely to be eliminated.”

In emails to The Spokesman-Review, PAML employees described a close-knit operation with loyal employees and clients that had competed head-on with LabCorp for Northwest lab business in the past.

“Many of my friends are lifers at PAML,” wrote Tina Weaver, who has worked for PAML three different times and is currently employed there.

“I understand that it is a competitive economy, and that this sale has most likely been in the works for years,” she wrote. “What I hope they (LabCorp) gain from this deal, however, is allowing us to continue to work for them in the spirit with which we were founded.”

For patients, physician offices and other customers, the sale is unlikely to make a difference, Maring said.

“The local testing capability will be diminished. Will that be life-threatening? No,” he said.

LabCorp is one of the world’s larger medical testing companies, with operations in 60 countries. The publicly traded company has a good reputation, Maring said.

“It’s well run and it’s probably considered the low-cost leader in the industry,” he said.

While the laboratory medical business has been consolidating for about two decades, the pace has accelerated in the past three years, Maring said. Health organizations are reviewing whether to stay in the lab business.

Northwest-based PeaceHealth recently sold most of its laboratory business in Washington, Oregon and Alaska to competitor Quest. The sale will result in a net loss of 225 jobs.

In a letter to employees about the sale, PeaceHealth officials cited challenging conditions in the lab industry, including competition, new regulations and the need for ongoing capital investment.

Laboratories have high fixed costs in buildings and equipment. To stay profitable, they must run at high volumes, Maring said.

PAML’s sale to LabCorp has been the “widest-known secret” in the industry, Maring said.

He said PAML only entertained offers from LabCorp, which may be related to PAML’s relationship to LabCorp’s Seattle operation and an unwillingness to jeopardize an existing lab contract.

PAML is owned by Providence Health & Services and Catholic Health Initiatives. LabCorp’s Seattle operation provides the lab testing for Swedish Medical Services, which is affiliated with Providence, Maring said.

During the time Maring was at PAML, he said, the company grew rapidly through agreements with hospitals to take over their lab services. Annual sales rose from $30 million to more than $300 million today.

He credited a loyal workforce as instrumental in that growth.

With layoffs likely, Maring said, he hopes “Providence did the right thing for employees” in future severance packages, “knowing that they would be laid off.”