TETERBORO, N.J., and SAN DIEGO, CA., MAY 18, 1998Quest
Diagnostics Incorporated (NYSE: DGX) and Premier Inc. announced today the establishment of
a strategic alliance to provide a broad range of clinical laboratory testing, information
and services to the more than 1,700 hospitals run by owners and affiliates of Premier.
Quest Diagnostics will offer a wide variety of services to Premiers owners and
affiliates. As the primary provider for reference laboratory testing services, Quest
Diagnostics will provide world-class testing, customer service, specimen collection and
courier service, and appropriate electronic interfaces to meet the needs of Premiers
members and affiliates.
As the exclusive provider of Strategic Services, Quest Diagnostics will offer
comprehensive services to maximize hospital clinical laboratory testing efficiency. These
services include providing laboratory management of hospital operated laboratories and the
newly created concept of Strategic Sourcing. Expanding on traditional outsourcing, Quest
Diagnostics Strategic Sourcing uses a unique process to identify the lowest cost testing
environment available, including on-site and alternate site testing, and route all
appropriate testing to that location. These innovative approaches will be tailored to meet
the needs of interested hospitals and health systems and are structured to achieve savings
in excess of 10% of their current costs to perform laboratory testing.
In addition, a joint quality committee will be formed composed of members from Quest
Diagnostics and Premier, including representatives from its owner hospitals, to measure,
monitor and enhance service quality in laboratory testing.
The Reference Testing Agreement, which establishes Quest Diagnostics as the primary
provider to Premier, takes effect August 1 and has a five year term, which is renewable
for an additional five years. Eligible hospitals may access the agreement by completing an
enrollment form. The Strategic Services Agreement takes effect immediately and has a
10-year term.
Premier will earn cash and Quest Diagnostics common equity, proportional to the volume
of testing generated. As part of Strategic Services arrangements with Premier hospitals
and health systems, Quest Diagnostics will purchase a participants outreach testing
business. The transaction is expected to yield significant revenues in 1999 from reference
testing alone and be accretive to earnings per share for Quest Diagnostics.
"The comprehensive relationship between Quest Diagnostics and Premier, the
nations largest healthcare alliance, provides a unique opportunity to change the
industry," said Kenneth W. Freeman, chairman and chief executive officer of Quest
Diagnostics. "Through our innovative partnership, we have aligned our mutual
interests to help Premier hospitals improve quality and efficiency and at the same time
reduce costs."
"Pressures in the health care industry to reduce costs and improve efficiency have
made it essential for hospitals to join together to leverage their collective
strengths," said Robert W. OLeary, Premiers chairman and chief executive
officer. "Through this innovative, industry-changing partnership with Quest
Diagnostics, we are now able to offer our owners and affiliates the broadest range of
choices available for operating their clinical laboratories. Together, we are aligning our
interests to increase efficiency for hospitals and improve the quality of patient
care."
The development of this creative industry-first relationship with Quest Diagnostics is
the result of a comprehensive evaluation of the clinical laboratory industry by a Premier
owner task force led by William Nydam, executive vice president of Premier and John
Biggers, vice president of Premiers Corporate Business Development unit. Premier
hospitals and health systems account for $5 billion in total annual clinical laboratory
spending, including more than $150 million in testing referred to outside independent
laboratories.
Premier is the largest healthcare alliance enterprise in the United States, with
approximately 230 owner systems that own or operate some 800 institutions and have
affiliations with another 900 hospitals. The organization maintains offices in Charlotte,
Chicago, San Diego, and Washington, D.C. Premier provides hospitals and healthcare systems
across the nation with products and services designed to help them reduce costs, develop
integrated delivery systems, manage technology, and share knowledge. Premiers
decision support business unit is an industry leader that offers healthcare information
solutions through comparative benchmarking and consulting. More information may be found
on the Internet at: www.premierinc.com.
Quest Diagnostics is one of the nation's leading providers of diagnostic testing,
information and services to physicians, hospitals, managed care organizations, employers
and government agencies. The wide variety of tests performed on human tissue and fluids
help doctors and hospitals diagnose, treat and monitor disease. Its Nichols Institute unit
conducts research, specializes in esoteric testing using genetic screening and other
advanced technologies, performs clinical studies testing, and manufactures and distributes
diagnostic test kits and instruments. Quest Informatics collects and analyzes laboratory,
pharmaceutical and other data to help large health care customers identify and monitor
patients who are at-risk for certain diseases. Additional company information can be found
on the Internet at: www.questdiagnostics.com.
The statements in this press release which are not historical
facts or information may be forward-looking statements. These forward-looking statements
involve risks and uncertainties that could cause the outcome to be materially different.
Certain of these risks and uncertainties are listed in the Quest Diagnostics Incorporated
1997 Form 10-K.