Latest example of a larger company spinning off its laboratory consulting businesses

For the second time in recent years, a large organization has spun off its clinical laboratory consulting business. As of April 1, 2010, Chi Solutions, Inc., of Ann Arbor, Michigan, once again became an independent company.

Carilion Clinic of Roanoke, Virginia, sold Chi Solutions to Kathleen Murphy, Ph.D., and Earl Buck. It was April, 2005 when Carilion Clinic originally acquired the Laboratory Solutions Group of Park City Solutions and named it Chi Solutions. Murphy and Buck have been the principal consultants at Chi Solutions.

The divestiture of its laboratory consulting business by Carilion is the second time in recent years that this type of sale has occurred. It was about 24 months ago when Roche Diagnostics divested its laboratory consulting business to the principal consultants, including Trent Ritzenthaler. The new laboratory consulting company adopted the name Ascendium Healthcare Consulting. During 2009, Ascendium merged into EthosPartners Healthcare Management Group of Indianapolis, Indiana.

Executives from these organizations tell Dark Daily that both Roche Diagnostics and Carilion Clinic found their respective ownership of a clinical laboratory consulting business to be problematic when it came to business development. In the case of Roche, it was recognized that potential laboratory customers voiced concerns that its laboratory consultants would favor recommending Roche instrument systems and products when undertaking a consulting assignment. However, during Roche’s ownership and operation of its clinical laboratory consulting business, no laboratory client ever complained of such a situation.

For Carilion Clinic, the market resistance came from other hospitals and health systems that wanted to retain a laboratory consulting company for various projects. Administrators from these hospitals and health systems perceived that, in providing proprietary information about the finances and operation of their clinical labs to Chi Solutions, somehow this information might be leaked to Carilion Clinic in a manner that might provide Carilion with some type of competitive advantage. As in the case of Roche’s laboratory consultancy, no consulting client of Chi Solutions ever made such a complaint to Carilion Clinic.

“By regaining its independence, Chi Solutions now assures all customers and potential clients of its objectivity and absolute confidentiality,” stated Chi’s President, Kathleen Murphy, Ph.D. “What the laboratory consulting industry has learned in recent years is that, when a lab consulting group is owned by an in vitro diagnostics (IVD) company or a provider like a hospital or health system, it becomes more difficult to offer laboratory consulting services that clients consider to be secure, independent and objective.

For pathologists and clinical lab administrators, the divestiture by both Roche and Carilion Clinic of their respective laboratory consulting businesses demonstrates that the market for laboratory consulting is highly competitive. It also provides evidence that clinical laboratory executives want their consultants to be absolutely free of any perceived conflict of interest.

Related Information:

Chi Solutions Management to Complete Acquisition from Carilion Clinic

Carilion Health System Purchases Park City Solutions’ Laboratory Services Group

Earl Buck to speak at Executive War College 2010