Pathology sale to fund ongoing investment in St John of God Health Care hospital network

St John of God Health Care today announced plans to sell its pathology division and focus on the continuing significant investment and upgrade of the not-for-profit group’s hospital services.

15 Aug 2016

15 August 2016

St John of God Health Care Group Chief Executive Officer Dr Michael Stanford said the sale of the pathology division to Clinical Labs would allow the group to focus its resources and energies on its core activities – the provision of hospital services.

“For decades our dedicated professionals have delivered the full range of pathology services at St John of God Pathology,” Dr Stanford said.

“However, our main capability and Mission is in providing hospital services – an area which already accounts for 90 per cent of our services.

“As a leading national hospital operator, this decision will allow us to focus on that core strength and continue to invest in delivering the highest quality hospital services to our patients.”

Part consideration for the sale includes St John of God Health Care acquiring a minority shareholding in Clinical Labs. Clinical Labs will also have a long term contract to provide high quality pathology services to SJGHC hospitals.

Clinical Labs is the nation’s third-largest pathology services provider, with a proven and successful track record across Australia. The acquisition of St John of God Pathology will result in a Clinical Labs’ presence in Western Australia, in addition to other Clinical Labs’ operations throughout the Australian market.

Subject to regulatory approvals, ownership of St John of God Pathology’s 19 laboratories and more than 180 collection centres in Victoria and Western Australia is expected to be transferred to Clinical Labs by late September.

Dr Stanford said the Australian healthcare system continued to face a changing landscape with new challenges and technologies.

“In this environment, it is essential for all healthcare providers to focus on their strengths in order to maintain the highest quality of healthcare services,” he said.

“This decision is in line with our long-term strategic approach to investing in the quality and strength of our hospital services, ensuring they are world class.”

The sale of St John of God Pathology will assist with the continuing investment and upgrade program directed at the group’s hospital services. St John of God Health Care has invested $860 million of its funds in hospital redevelopment since 2005 in order to better serve the needs of its communities.

Dr Stanford said St John of God Health Care would be able to benefit from joining with a specialist pathology operator.

“Clinical Labs is a large, specialised pathology operator with the scale, expertise and ability to grow and develop these essential services in our hospitals,” he said.

“We are confident this provides the best assurance of long-term, sustainable high-quality pathology services for our hospitals.

“It will be business as usual for our staff in the months ahead as we transition to the new owners.”

Clinical Labs Chief Executive Officer Melinda McGrath acknowledged the skills and experience within the team at St John of God Pathology.

“Clinical Labs is building an iconic, focused pathology provider of scale, specialisation and expertise,” Ms McGrath said. “The acquisition of SJGP represents an exciting and significant step in extending both our presence and specialist capability.”

Ms McGrath said pathology would be central to the development of modern healthcare with the clear trend towards greater personalisation of medicine, new diagnostic testing and earlier disease management programs.

“Meeting future needs requires both investment and scale and the bringing together of Clinical Labs and SJGP represents an important step on that journey,” she said.    

Both St John of God Health Care and Clinical Labs will work closely with staff, practitioners and hospitals to achieve a smooth transition, and ensure patients continue to receive the excellent level of service provided by St John of God Pathology at the hospitals it serves and at its collection centres.

St John of God Health Care was advised in the transaction by Azure Capital.

About St John of God Pathology

  • St John of God Pathology is a division of the St John of God Health Care Group.
  • It has more than 180 collection centres operating in Western Australia and Victoria, together with 19 NATA accredited laboratories.
  • St John of God Pathology performs more than 2.1 million pathology episodes per year, and is Australia’s fourth largest pathology provider.
  • St John of God Pathology services more than 50 hospitals and 24,000 GPs and specialists across Victoria and Western Australia.

About Clinical Labs

  • Clinical Labs is Australia’s third-largest pathology provider.
  •  It operates 50 NATA-accredited laboratories across Australia and around 560 Collection Centres in NSW, Victoria, South Australia and the Northern Territory.