Quest Diagnostics 1999 Annual Report Download - page 4

The second phase of our strategy is to become a leading provider of medical information.
Keep in mind that more than 70% of all health care decisions and spending are
impacted by lab testing results – and our company, which performs more than 250
million tests each year, maintains the world’s largest private database of these vital
results. We are actively exploring ways to leverage this valuable asset to improve patient
care through opportunities ranging from Internet-based health and informatics services to
direct-to-consumer services, such as our new partnership with Caresoft, Inc. to provide
lab results and testing information directly to consumers who request it over the Internet.
Under the umbrella of Quest Diagnostics Ventures, we plan to significantly increase
annual revenues in new, leading edge businesses over the next five years.
The third stage of our strategy is to become recognized as the undisputed quality
leader in the health care services industry. We see an extraordinary opportunity for
Quest Diagnostics to become the “Gold Standard” for quality, service and value in
health care services.
Fundamental to each stage of our strategy is a renewed commitment to quality. In late
1999 much attention was focused on a significant report by the National Academy of
Sciences’ Institute of Medicine, which documented tens of thousands of unnecessary
deaths caused annually by hospital errors. We believe we have the opportunity — and
the obligation — to lead health care services to a new level of quality. Late in 1999 we
hired the Process Quality Leader of GE Capital’s Six Sigma effort to spearhead the Six
Sigma initiative at Quest Diagnostics.
Integrating our Operations
The first step – both real and symbolic – in pursuing our strategy is to successfully
complete the integration of Quest Diagnostics and SBCL. Thanks to careful planning
and the active engagement of tireless teams of employees from both companies, the
integration is progressing according to plan.
Our primary goal throughout the integration has been to realize the benefits from
combining the two companies, while maintaining a consistently high level of service to
our customers. We are on track thus far, and remain committed to this goal as the
integration proceeds.
We created a new leadership structure for our new company, drawing upon the best
talent of both Quest Diagnostics and SBCL to staff key positions across the business.
We have steadfastly avoided any notion of “winners and losers,” seeking instead to
capitalize upon the best each company had to offer in terms of people, processes
and technologies.
We have begun the arduous process of consolidating redundant functions and facilities,
which will ultimately result in a 5-10% reduction in staffing. We are not abandoning any
geographic areas. Instead, we are reducing the excess capacity that has burdened both
companies. The planned consolidations are consistent with our announced goal of
realizing $100 million in net annual synergies over the next three to five years.
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