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When two of Portland’s three largest hospital systems announced last year they were selling their testing laboratories to a multinational North Carolina corporation named Labcorp, executives offered reassurances that the transition would be “seamless.”
“Excellent quality” service would continue, Providence CEO William Olson promised in a letter published on the company’s website in May 2023.
Examples to the contrary soon arose. Doctors, nurses and patients interviewed by WW describe a litany of problems that emerged following Labcorp’s official rollout this spring, from long lines at testing centers to test results that arrive late—if at all.
This, to the dismay of the Portland-area medical community, has led to stories like this one:
In June, a man in his 70s with a history of heart failure walked into a Providence urgent care clinic in Hillsboro complaining of shortness of breath.
Dr. Sekou Ford, a family medicine physician, ordered a blood test from Providence’s laboratory to check for troponin, a protein that can indicate damage to the heart muscle.
That test typically takes 90 minutes, he says. This one didn’t come back for seven hours, after the clinic was already closed. The results confirmed Ford’s initial suspicions, and the patient, who’d already been sent home, was called and told to go to the emergency room.
This is one example of what Ford and five others who spoke to WW describe as a pattern. Since Labcorp has taken over Providence’s labs, results have been riddled with errors and delays, Ford tells WW.
“It’s dangerous,” Ford says. “It’s potentially deadly.”
The sale of Providence’s and Legacy’s labs comes as a wave of consolidation has washed over the health care industry, causing states across the country, including Oregon, to pass laws to stop it. But Oregon’s new law was powerless to stop Providence, a tax-exempt nonprofit that continues to refer to its hospitals as “ministries,” from selling itself off for parts.
In a statement released to WW, an unnamed Labcorp spokesperson said the company was making “significant progress” addressing the problems and hiring more staff. “Wait times and turnaround times have substantially improved.”
A hospital’s lab is its beating heart. By one estimate, 70% of health care decisions rely on the results of laboratory testing. Testing blood, stool and tissue helps doctors decide on a treatment, and then assess whether it’s working.
But as costs have increased, insurance reimbursements have fallen. Medicare has cut payments by 27% for “common tests for diseases like diabetes, cancer, and heart disease” since 2017, according to a plea from the American Hospital Association to federal lawmakers to increase payments last year.
Meanwhile, Portland’s hospitals have been hurting. When Legacy announced the sale to Labcorp, an executive told The Oregonian it was losing $10 million every month. (The following month it announced plans to sell itself to Oregon Health & Science University.)
Legacy’s financial squeeze proved a buying opportunity for Labcorp.
In its most recent jargon-laden annual report to investors, Labcorp said it was aware of “overall negative market changes regarding reimbursement,” but that it was well positioned to serve an aging population demanding an increasing number of tests. Despite declining payments, its diagnostics business enjoys an enviable operating margin: 16.9%.
Providence announced its deal with Labcorp first, in May 2023. Legacy followed suit in July. Terms were not disclosed, but investor filings from Labcorp value each acquisition at just over $100 million.
In 2021, Oregon passed a law requiring regulator review of major health care deals to ensure consolidation doesn’t come at the cost of patient care. (The merger of OHSU and Legacy is expected to be the law’s biggest test yet.)
But when Providence and Labcorp forwarded notice of their deal to the state, regulators refused to even look at it.
Despite the deal’s massive price tag, it represented only a small portion of Providence’s Oregon business. Because the deal didn’t cover “all or substantially all of the health care entity’s assets and operations,” it was therefore not subject to review, a spokesperson for the Oregon Health Authority told WW.
That decision came as a surprise to John Santa, a former health care executive who has advocated cracking down on consolidation in the industry. Santa believes the law needs to be changed.
“[The deal] should have been reviewed,” he says. “When resources of that size move in one direction or another, the state should be making sure the public doesn’t end up holding the bag—which they usually do.”
The deals were closed later that year. Soon after, Providence staff began noticing changes.
Kathy Keane, a veteran inpatient cardiology nurse at Providence St. Vincent, says it now takes a week to run tests that once took a day. She worried Labcorp wasn’t being held accountable. “We can complain and Labcorp doesn’t have to do anything to correct it,” she says.
She believes short staffing is the problem. So does another doctor who works with Providence and spoke with WW on the condition of anonymity to protect her relationship with the hospital system. That doctor says samples have been left overnight waiting to be tested.
Legacy says it has not experienced the same problems with Labcorp as Providence. (WW’s sources largely agree.) Still, Labcorp’s Legacy staff has already unionized, and short staffing is one of its chief complaints.
A spokesperson for Providence declined WW’s interview requests, ultimately issuing a short statement saying it “has worked closely with Labcorp to resolve issues as they became apparent.”
In a May 6 email to employees, Providence’s chief medical officer, Dr. Linda Cruz, was direct about the reasons behind last year’s sale: the system’s dire financial straits.
“Things are getting better, but it is not yet where we need to be,” Cruz wrote. “All in all, with these external pressures impacting our ability to pay our bills, I believe the decision to sell the labs was the correct one.”
Such sales, and the resulting blowback, are not just happening here. In 2018, researchers interviewed pathology chairs at 17 academic medical centers about the impacts of outsourcing laboratory services. They described a familiar set of problems: “poor test turnaround time and problems with test quality” leading to “clinician dissatisfaction.”
Corporations typically justify consolidation by arguing it reduces overhead and duplication of services. But, the researchers noted, the initial financial benefits often eroded with time. Several chairs said their hospitals ultimately terminated an outsourcing contract after it ended up losing them money.
Patients and doctors at Providence are eager for change.
When WW visited the testing center at Providence Portland Medical Center on a recent afternoon, the waiting room was full. The woman at the front desk said the wait was around an hour.
“It’s extremely disappointing to me,” says Josh Mayfield, an Intel engineer who gets regular checkups at Providence Portland after beating thyroid cancer. His visits once took 15 minutes. Now they take an hour and a half.
It’s a sign of the times, Mayfield says. He’s paying more for insurance, and getting less in return. “It’s clearly just a cost-cutting measure,” he says. “We were getting superior care before. It’s very easy to see the difference.”