Sonic Healthcare Acquires Propath, while PathGroup Buys Pathology Consultants in More Signs of a Consolidating Market
An estimated 80 pathologists will now work for larger pathology superlabs as part of the deals, bringing stiffer competition to independent anatomic pathology groups
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Consolidation among private practice anatomic pathology groups continues with news that two large regional pathology groups decided to sell to larger pathology companies. The first transaction announced was on Dec. 16, 2021, when Sonic Healthcare of Sydney, Australia, disclosed that it had acquired Dallas-based ProPath. Sales price and other terms were not announced.
The second transaction happened last month. On Jan. 24, Nashville-based PathGroup announced it had bought Pathology Consultants of Greenville, S.C. Price and terms of this transaction also were not disclosed.
Pathology Consolidation Continues
The decision by two of the nation’s leading regional pathology groups to sell themselves to larger pathology entities confirms that the trend of consolidation is continuing within the pathology profession. It is also a sign that smaller pathology groups will find it increasingly difficult to compete and stay profitable as new technologies transform the surgical pathology profession, such a digital pathology platforms.
ProPath was considered a financially strong regional super-group, as it operates facilities in three states and has 50 pathologists and 500 employees. Sonic noted that ProPath’s annual revenue was about $110 million.
Sonic Healthcare has been a major acquirer of anatomic pathology practices in the United States. In early 2011, it purchased Physicians Automated Laboratory, and just six weeks earlier, acquired CBL Path for $123.5 million.
Sonic Healthcare also purchased Aurora Diagnostics in 2018 for $540 million. That deal brought it 32 pathology practice sites and added 220 pathologists to its roster.
With its acquisition of Pathology Consultants, PathGroup adds 30 pathologists and 100 employees. Prior to this acquisition, PathGroup said it had 225 pathologists.
Maintaining Independence Gets Tougher
Anatomic pathologists will want to understand why two major regional pathology groups have decided to give up their independence and sell to a larger company. The reasons are several and include:
- Need for cash to purchase the equity of retiring baby boomer pathologist partners in the group.
- Challenges in recruiting new pathologists to the group.
- Need for capital to acquire digital pathology capabilities and other needed advanced diagnostic technologies.
- Access to managed care contracts as private health plans continue to narrow their provider networks.
It should be noted that graduating pathology residents and fellows are tech-savvy and want to work in practices that have all the latest technologies in histology, scanning, and digital pathology. This observation plays into the consolidation of the market.