American Esoteric Laboratories (AEL) announced yesterday that it has acquired DRL Labs (DRL), an affiliate of East Texas Medical Center (ETMC) Regional Healthcare System, located in Tyler, Texas. In purchasing DRL Labs, AEL gets a new, state-of-the-art, 25,000 square foot laboratory facility in Tyler that serves over 1,800 physician and hospital clients. DRL Labs is owned by a hospital system and it is primarily organized to serve office-based physicians.

This transaction is noteworthy to the laboratory community for three reasons. First, DRL is in Tyler, about 100 miles east of the Dallas metro where AEL operates its main reference laboratory. Although AEL is getting some hospital reference work from the acquisition, most of the business it will acquire through the DRL laboratory is routine testing that originates from doctor’s offices.

Second, the transaction is noteworthy because this is the third time that AEL has acquired a laboratory company that is primarily offering routine testing services to office-based physicians. The other two acquisitions were Memphis Pathology Laboratories in Memphis, Tennessee (See The October 2004 Dark Report) and Physicians Medical Laboratory (PML) located in Morristown, Tennessee, in April of 2006.

Finally, fact that AEL has acquired laboratory companies that primarily provide routine testing services to office-based physicians may be a sign that competition for hospital reference and esoteric testing continues to be challenging. Thus, AEL is seeking supplementary growth by acquiring laboratories that provide routine testing to office-based physicians. The Monday issue of The Dark Report includes an assessment of competitive developments in the national market for reference and esoteric testing that are benefiting hospital reference customers.

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