Once Quick-Growing HDL Cuts Jobs

After years of booming growth, Health Diagnostic Laboratory (HDL) has hit a wall, making deep job cuts as the company’s role in potentially illegal activity continues to be scrutinized.The Virginia-based HDL laid off 132 employees last month, about 15 percent of its entire staff. All but 20 of the jobs were based at its Richmond headquarters, a $68 million facility it had opened last year. The Richmond cuts constituted nearly 20 percent of its workforce. Since August, HDL has cut a total of 162 positions, or about 18 percent of its total employees. HDL said in a brief statement from Chief Executive Officer Joe McConnell that it was refocusing on its core capabilities: cardiovascular and diabetes testing. “We deeply regret the business necessity that made this reduction in force necessary and we are all mindful that this will pose difficulties and challenges for our former colleagues and their families,” he said. “At the same time, these necessary changes provide us with the opportunity to re-energize our company.” However, HDL is being investigated as to whether a $20 shipping and handling fee it routinely paid physicians for blood draws was actually a kickback intended to draw in their business. The company grew from virtually no sales to more than $400 million a year between 2009 and 2012, although revenue stalled last year. Sources had told Laboratory Industry Report in late 2013 that HDL was drawing scrutiny for paying the fee, but it was not confirmed until last July. In June, it discontinued paying the fee to physicians after the U.S. Department of Health and Human Services issued an advisory that such practices likely violated the Stark anti-kickback laws. HDL said it was cooperating with an ongoing U.S. Justice Department investigation. In September, HDL co-founder and chief executive officer Tonya Mallory resigned, not long after the Wall Street Journal published a front-page article on the laboratory’s business practices. McConnell, who was the chief laboratory officer, was named as her replacement. Mallory has since begun working for ITS Manufacturing, a precision parts company that supplies the aerospace industry and was founded by her brother. Mallory indicated in a recent interview with the Richmond Times-Dispatch that she continues to hold a stake in HDL and serves as an adviser to the company, keeping in regular contact with the company’s executives and board. Takeaway: Health Diagnostic Laboratory is dialing back its operations as the company tries to get through a federal investigation.