State signs off on UMass Memorial stake in Quest

The state’s Health Policy Commission has signed off on UMass Memorial Medical Center’s plan to buy a minority stake in Quest Diagnostics’ Massachusetts subsidiary.

Matthew Kitsos, a spokesman for the commission, said it has decided to not pursue a cost and market review of the medical center’s plan to buy a nearly 19-percent ownership share in the subsidiary, Quest Diagnostics Massachusetts LLC. That essentially clears the way for the Worcester-based hospital, part of UMass Memorial Health Care, to make the deal, he said.

Documents filed with the commission in May said the deal would allow the medical center to nominate one of the subsidiary’s five directors.

A separate statement from UMass Memorial at the time said the organization expected the transaction to be completed this summer.

The Quest subsidiary conducts "substantially all" of the clinical diagnostics testing for the hospital, the document filed by UMass Memorial said.

A request for comment by UMass Memorial on last week’s decision by the commission had not been returned by deadline Monday morning.

In late 2012, Quest, based in New Jersey, bought the UMass Memorial lab business and its anatomic pathology outreach laboratory division. The Quest division is based in Marlborough in the former Hewlett Packard complex.

Under that agreement, UMass secured the option to invest in a minority stake in the business once the Marlborough lab was built. It was completed last year.

At the time the deal was announced, UMass Memorial Health Care said a big reason behind the decision was the difficulty it faced in competing with private lab services, according to then-CEO John O'Brien.