NU Online News Service, Jan. 6, 2004, 12:37 p.m. EST – The Health Alliance, Cincinnati, a nonprofit company that controls 6 hospitals and a primary care physician network in the Cincinnati area, has completed previously announced plans to sell Alliance Laboratory Services, its medical testing laboratory unit, to LabOne Inc., Lenexa, Kan., for $38.5 million in cash.[@@]

Health Alliance has agreed to continue buying routine lab services from LabOne, and it will hire LabOne to run 6 alliance-owned “immediate response” hospital labs. LabOne says the lab services contracts should generate about $48.5 million in total revenue.

Health Alliance first revealed that it was talking to LabOne about a possible lab deal in October 2003. Health Alliance says it made the deal because it could use extra cash and wants to avoid the capital expenditures needed to keep the labs up-to-date.

LabOne expects to cut employment in the labs it has acquired from Health Alliance by about 10%.