Metropolis Health Services buys into Lister Laboratory

In addition Lister will use the funds for setting up collection centres and for building a 12,000 sq ft laboratory in Chennai that will house all the testing facilities, including an imaging facility. “Patients need not climb up floors to get tests done as everything will be located on the ground floor,“ says Dr Srinivasan.

Dr Srinivasan says, “We will consolidate and expand our activities in corporate and insurance sectors and establish a clinical research unit to support the activities in the field of medical and pharmaceutical research.“ The Metropolis strategy is to have Lister as a hub diagnostic centre for the southern region with lot of small labs set up in other places.

According to Shah the diagnostic lab sector is densely populated with small diagnostic laboratories and soon it will get organised. Driving that will be the health insurance companies.

“We are in the same situation that America was two decades ago.“ Diagnostic laboratories are of three kinds — hospital owned/managed, referral laboratories and private labs. According to Shah, it is the last type that will experience consolidation.

“Twenty years ago the US had around 20,000 diagnostic laboratories. As medicare costs went up and health insurance gained acceptance with the public, insurers perforce had to tie up with top hospitals/pathological laboratories to lure policyholders and to take control over their ultimate claim payout. This ultimately resulted in consolidation and today there are around six major pathological laboratory chains,“ he reasons. Further, for the insurers, it became easier to bill one chain rather than deal with several labs.

Declaring that he is on the lookout for good buys in other regions Shah adds, “We don't acquire for the sake of acquisition. The strategy is to have four major laboratories in the four regions and have several tertiary labs.“ The tertiary labs will do the normal routine tests and will be franchisee owned.