UPDATE: Nov. 7, 2019: LabCorp reported another shakeup to the top ranks of its diagnostics business Wednesday upon CEO John Ratliff's decision to depart the company "to pursue another opportunity."
The announcement comes just a month after Ratliff left his role as head of LabCorp's drug development business, Covance, to take over as chief executive in the diagnostics unit.
LabCorp appointed two executives to help fill the void.
Brian Caveney, who became LabCorp's chief medical officer in 2017 and served as head of managed care, is now president of diagnostics. Prior to joining LabCorp, Caveney was CMO of Blue Cross and Blue Shield of North Carolina.
Mark Schroeder was named president of diagnostics laboratory operations and global supply chain. He started at LabCorp in 2007 and most recently served as enterprisewide chief supply chain officer.
Both are starting their new roles immediately, LabCorp said.
Dive Brief:
- LabCorp announced Thursday John Ratliff will take the reins of its diagnostics business at the start of November, coinciding with LabCorp CEO David King's retirement from the company. Adam Schechter, formerly Merck's executive vice president of global human health, will take over as LabCorp's new president and CEO.
- Ratliff, currently the CEO of Covance, LabCorp's drug development business, will be taking over a diagnostics business that notched $1.76 billion in revenue during the second quarter of 2019. As LabCorp Diagnostics CEO, he will be tasked with leading a business expected to post 2019 revenues down 2% to 3% compared to 2018.
- Protecting the diagnostics business against changes in managed care contracts and headwinds from reimbursement cuts from the Protecting Access to Medicare Act will likely be top of mind for the new CEO.
Dive Insight:
Ratliff joined LabCorp in 2016 as CEO of Covance after nearly a decade in various C-suite roles for clinical research and health IT company Quintiles, now known as IQVIA.
"LabCorp Diagnostics is well-positioned for success in a rapidly evolving industry," Ratliff said in a statement. "I look forward to improving the experience for every one of our customers, while working with Adam and Paul [Kirchgraber] to continue enhancing our integrated capabilities to deliver value to our customers and to our shareholders."
The clinical lab industry has been actively lobbying for legislation to delay the second round of PAMA reporting until 2021, which it argues is needed to properly determine proper Medicare reimbursement levels.
"We continue to work to overcome the inequitable Medicare price reductions imposed by the flawed implementation of PAMA," King said on LabCorp's most recent earnings call. "We are encouraged by the introduction of the Laboratory Access for Beneficiaries Act, significant step at reforming PAMA to produce a truly market-based Medicare fee schedule."
An ongoing lawsuit by the American Clinical Laboratory Association (ACLA) against HHS over the implementation of the Clinical Laboratory Fee Schedule could also prove to be a boon for LabCorp Diagnostics if successful.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said in September 2018 the lab industry's arguments raised "important questions," but she dismissed the case on jurisdictional grounds. ACLA subsequently appealed the dismissal to the U.S. Court of Appeals for the District of Columbia Circuit.
In July, the appeals court found the district court did have jurisdiction to hear the lawsuit because PAMA's data collection provision is distinct from HHS' determination of payment amounts and kicked the case back to the district court.
On Tuesday, ACLA and HHS jointly filed a proposed briefing schedule for the remanded lawsuit, asking the district court to conduct a single round of coordinated summary judgment briefing. Under the schedule, briefing is expected to be completed in early January 2020. ACLA asked the court to schedule a hearing "at its earliest convenience following the completion of briefing" while HHS said it would defer to the court's preference.
